Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit are co-sponsoring a webinar series, Two Economists and a Lender. Our January installment featured Agriculture Economic Insights (AEI) co-founders David Widmar and Brent Gloy and Kirk Manker, chief appraiser. The webinar recording from January 28 is available.
Farmland values increased in 2020 across Iowa, Nebraska, South Dakota and Wyoming, driven largely by gains in the second half of the year. The COVID-19 pandemic shaped much of 2020, and farmland values were no exception. Historic low interest rates following the initial outbreak, higher grain prices and government ad-hoc payments supported a real estate market that has been generally stable the past few years.
The latest report on benchmark farmland values from Farm Credit Services of America (FCSAmerica) marks the first time since 2013 that values have increased in each of the four states served by the financial cooperative. However, values remain well below the record highs of 2013.
|
STATE
|
MARKET PEAK
|
BENCHMARK PEAK
|
CHANGE FROM PEAK TO DATE
|
|
Iowa
|
Q3 of 2013
|
July 2013
|
-16.1%
|
|
Nebraska
|
Q3 of 2013
|
July 2013
|
-20.0
|
|
South Dakota
|
Q4 of 2013
|
January 2014
|
-12.5
|
Many of the same factors that supported farmland values in 2020 remain in place, including low interest rates and opportunities to lock in profits.
“Significant improvement in net farm income, along with a favorable outlook for 2021, has continued to build on the favorable price momentum seen in the second half of 2020, with continued strengthening of real estate values anticipated through the remainder of the current sales season,” said Tim Koch, chief credit officer for FCSAmerica.
Iowa and Nebraska led the region in overall gains. South Dakota and Wyoming each trended up in the second half of 2020, but South Dakota lagged its neighboring states in year-over-year gains.
State-by-State Changes in Benchmark Farmland Values
|
STATE
|
Six Month
|
One Year
|
Five Years
|
Ten Years
|
|
IOWA (21)
|
3.5%
|
3.8%
|
0.6%
|
45.6%
|
|
NEBRASKA (18)
|
3.7
|
3.2
|
-11.5
|
71.2
|
|
SOUTH DAKOTA (23)
|
2.4
|
0.1
|
-14.3
|
72.6
|
|
WYOMING (2)
|
2.4
|
2.7
|
28.2
|
60.3
|
In Iowa, seventeen of the benchmark farms tracked by FCSAmerica increased in value. The remaining four saw no change. Fourteen Nebraska benchmark farms saw an increase, three declined in value and one was unchanged. In South Dakota, six farms increased in value; 16 saw no change. Wyoming’s two benchmark farms saw an overall increase. Weakness in grass land values partially off-set the strength reported in cropland values across South Dakota.
The chart below shows the change in benchmark values from 2019 to 2020 by land type:
|
STATE
|
CROPLAND
|
PASTURE
|
|
Iowa
|
4.29%
|
4.47%
|
|
Nebraska
|
4.34
|
0.24
|
|
South Dakota
|
0.98
|
-1.83
|
|
Wyoming
|
0.46
|
0.00
|
