By TAMMIE SLOUP
FarmWeek
BLOOMINGTON – Farmland prices continue to rise but are showing signs of cooling compared to increases in recent years.
Farm property values, a measure of the value of all land and buildings on farms, averaged $4,170 per acre in 2024, an increase of $200 (5%) per acre from 2023, according to the USDA’s National Agricultural Statistics Service (NASS) annual summary of land values. This follows an increase of 6.7%, or $250, between 2022 and 2023 and marks the fourth consecutive increase in farm land values.
Cropland values reached a record high of $5,570 per acre on average, up $250 per acre (4.7%) from the previous year. Pastureland values increased 5.2% from the previous year to $1,830 per acre.
NASS also released the results of its cash rent survey, which showed that farmland values rose 3.2% to a record $160 per acre.
“While record rents mean higher production costs for tenants, stagnant or declining land values also drive down collateral values, limiting farmers’ ability to obtain credit and raise the additional capital they need to purchase more expensive inputs,” said Daniel Munch, an economist at the American Farm Bureau Federation, in a recent Market Intel study.
Agricultural land values vary considerably across the country. The highest property values are concentrated in areas where high-value crops are grown, such as wine grapes and tree nuts in California. Areas near urban centers with limited developable land, particularly in the Northeast states, experience upward pressure on property values due to competing uses. Overall comparable agricultural land values were higher across much of the Midwest, followed by the South and Pacific Northwest, with the Prairie and Mountain states recording the lowest values.
In Illinois, agricultural property values averaged $8,700 per acre, up 3% from 2023, while farmland values averaged $9,550, up 3.2%.
The cash rent rate in Illinois averaged $269 in the first half of 2024, making it the fifth highest in the country after Arizona, California, Hawaii and Iowa.
“As pressure on vacant land increases across the country for residential and energy development, leasing farmland is becoming less profitable,” Munch said. “These trends have been exacerbated by the ability of some workers to work from home or away from a central urban office location, giving people the flexibility to work from rural communities and purchase land that competes with agricultural land use. Previously elevated commodity prices that had led to larger increases in cash rents have cooled, paralleling the slowdown in agricultural land values generally.”
At a time of low crop prices, high rental prices pose a significant challenge to farmers’ balance sheets. Income expectations for this year are even bleaker than originally expected, Munch said, adding that record rental prices are a significant problem for those who rely on rented land as well as new or beginning farmers.
The Economic Research Service of the U.S. Department of Agriculture (USDA) will release updated forecasts for net farm income in 2024 on September 5. These forecasts show that most crops will likely have lower yields in 2024 than previously forecast.
“The current economic environment underscores farmers’ calls for an update to their safety net in the Farm Bill to support the continued stability and productivity of the agricultural sector,” Munch said.
(This article was distributed as part of a cooperative project between the Illinois Farm Bureau and the Illinois Press Association. For more food and agriculture news, visit FarmWeekNow.com.)
