Despite lower crop prices
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Land prices in Missouri increased in the past year at a rate higher than expected.
Results of the 2014 University of Missouri Extension annual land value survey of lenders, appraisers and brokers showed an increase for cropland values by 4.6%, nearly double what survey respondents predicted last year.
“That’s a bit surprising given the weakness in crop prices,” says Ron Plain, University of Missouri Extension agricultural economist. “The days of $6 and $7 a bushel corn are behind us, with corn prices headed toward $3 a bushel and maybe in some spots a little bit lower.”
From the Missouri Farm Land Values Opinion Survey
Estimated cropland values per acre for July 2014
Missouri Average: Cropland: Good $4,717; Average $3,640; Poor: $2,700
Daviess and surrounding counties: Good: $4,383; Average $3,478; Poor $2,546
Estimated pastureland values per acre for July 2014
Missouri Average: Pastureland: Good $2,672; Average $2,210; Poor $1751
Daviess and surrounding counties: Good $2,822; Average $2,295; Poor $1,826
Estimated timber and hunting/recreation land values per acre for July 2014
Missouri Average: Timberland $1,820; Hunting/recreation land $1,710
Daviess and surrounding counties: Timberland 1,955; Hunting/recreation land 1,889
Used to be made of farmland purchased in 2014
Missouri Average: Operate farm themselves 70%; Rent it out 20%; Not used for ag production 10%
Daviess and surrounding counties: Operate farm themselves 56%; Rent it out 35%; Not use for ag production 9%
Pastureland values increased by 7.2% over the 2013 level, which is more than five times as much as last year’s survey predicted. However, Plain says, that is not as surprising as the steep increase in cropland, because the cattle prices have been a lot higher than anticipated.
With the huge drop in crop prices, survey respondents figure sooner or later that is going to push cropland values down.
“They predict cropland value will be down 1.2% in July of 2015 compared to July of 2014,” Plain says. “On the other hand, cattle prices are looking strong, so higher pastureland values were forecast, with the average of respondents estimating it up 2.2% next year compared to this year.”
Plain says there is every reason to think that cropland rent will come under pressure due to lower crop prices. He says we could be in for several years of lower cropland prices.
“On the cattle side of it, it is looking awfully good and expected to be better if possible in 2015,” Plain says. “So I don’t see much of a reason for pastureland values to stop going up anytime soon.”
MU Extension has conducted the annual survey for the past 40 years to keep track of what is happening to farmland values in Missouri. Plain says over the years the survey has matched up very well with the numbers that USDA has in its annual report.
See survey results at http://agebb.missouri.edu/mgt/landsurv.