FARM AND RANCH

FARM AND RANCH

Despite weaker farm income, Kansas farmland values continued to increase in 2013.  According to the USDA’s August Land Value Report all property types saw another year of double digit gains.  With drought lingering in parts of the state, irrigated cropland saw the largest gain at 22.5% and gains were almost as good for non-irrigated cropland at 19%.  Pastureland values had the smallest gain at 15%.  The amount of cropland coming on the market was comparable to 2012 and typically, there were multiple buyers competing to acquire the property.  The majority of the sales were to owners of neighboring properties and there was a lot of cash going toward the purchase with financing at a minimum.

Falling crop prices caused farm income to decrease in the second half of the year.  Last year’s extreme drought was mitigated by summer rains which helped increase crop production to normal levels.   The increase in production caused the national price for corn to drop from $7.51 per bushel in March to $4.19 at the end of September, a 44% decline.  Soybean prices dropped 11% during the same time period.  Corn prices are projected to stay below $5 per bushel for a few months and soybean prices are expected to decline even more.  The large drop in values has generated more demand for operating loans and some producers are choosing to store grain, hoping that values will soon start to rise again.

Cattle producers enjoyed a better year in 2013.  The number of cattle reached a low not seen in several decades while demand stayed consistent causing prices to go up.  Cattle producers also benefitted from the lower feed prices.

FORECAST

There could be an adjustment in farmland values in 2014, particularly if income from crop production continues to decrease.  The gains in farmland values are outpacing the increases in rental rates and could be another limiting factor for increases in 2014.  No one is predicting a large decrease in land values, but rather a stabilization of the prices at their current levels with small declines in some areas.

Kansas Cropland Values

Year Irrigated Non-Irrigated
2013 2684 2023
2012 2200 1700
2011 1800 1250
2010 1550 1070
2009 1500 1000

Kansas Pasture & Rangeland Values

Year Values
2013 1092
2012 950
2011 810
2010 770
2009 750
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