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Farmland Values Show Signs of Stabilizing

beautiful farmland

While cropland continued to gain value in the first half of 2023, Farm Credit Services of America (FCSAmerica) reports signs that the real estate market is stabilizing.

FCSAmerica, a financial cooperative, appraises 63 benchmark farms twice a year to monitor trends in real estate in its four-state territory of Iowa, Nebraska, South Dakota and Wyoming.

The chart below reflects the average change in value for multiple land types: dryland and irrigated cropland farms, crop-pasture farms and pasture-ranch operations. The number of benchmark farms appraised in each state is indicated in parentheses.

STATESix-Month ChangeOne-Year ChangeFive-Year ChangeTen-Year Change
Iowa (21)0.4%4.0%58.1%31.9%
Nebraska (18)3.2%8.4%42.0%22.9%
South Dakota (22)4.6%14.0%42.4%44.1%
Wyoming (2)0.8%13.3%64.3%121.5%

Benchmark values in the first half of 2023 remained strong in markets where the availability of land was limited and were steadier in areas with a consistent supply. Quality cropland also supported higher values, while average to below-average ground saw smaller increases. This is indicative of a more stable market.

Values on pasture and ranchland were supported by high demand and limited supply. Since July 2022, South Dakota has seen pasture values rise 12.2%, much of the increase happening in the past six months. Wyoming values are up 15.5% year-over-year. Nebraska pasture, by comparison, is down slightly.

For all agricultural land types, values remain at record highs. The steepest gains occurred in the last half of 2020 through 2021. The market has remained resilient in the past year despite record inflation, successive interest rate hikes and drought in much of the region.

“The other driver in real estate is farm profitability and the overall financial health of agriculture, which has been extremely strong. Profitability and optimism in agriculture have more than offset the negative pressures.”
– Tim Koch, executive vice president of business development for FCSAmerica

Profit margins are tightening because of higher input costs and lower commodity prices. Producers generally are planning for 2023 profits near break-even levels. This could result in a flattening of land values, with some areas possibly seeing a slight decline, Koch said.  

“There is lots of cash on balance sheets and overall leverage is down significantly,” he said. “So even if profit margins, on average, return to break-even levels, the overall financial strength of some producers will lead them to stay in the real estate market. We still could see instances of aggressive bidding for the right farm in the right location.”

Below are state-by-state trends in benchmark farmland values for the first half of 2023. Information on land sales also is provided.

Iowa Average Cropland Values (at least 85% tillable)

Iowa Values for 15 of the state’s 21 benchmark farms increased by less than 5%, and four declined slightly. The highest increase was 9.1%, the greatest decline, 6.3%. The overall year-over-year gain of 4.0% compares to increases of 37% and 12.8% in 2020 and 2021, respectively.

Since the fourth quarter of 2022, average land prices have held steady. The average price for unimproved cropland was $12,425 per acre in the second quarter of 2023.

Public land auctions in the second quarter were 17% lower than during the same period in 2022. Actual sales declined 34%. Realtor and sealed-bid sales declined slightly, with public auctions accounting for nearly 63% of sales.

Nebraska Average Dryland Cropland Values (at least 85% tillable)
Nebraska Average Irrigated Cropland Values (at least 85% tillable)

Nebraska Seven of the state’s 18 benchmark farms increased in value by at least 5%, with two experiencing double-digit hikes, including a northeast Nebraska farm with an 18.3% gain. Nine farms saw little to no change and two declined in value. The year-over-year increase of 8.4% statewide compares to gains of 22.1% and 14.3% in 2020 and 2021, respectively.

Nebraska dryland cropland prices tend to fluctuate due to limited sales and location. In the second quarter of 2023, dryland cropland sold for an average of $5,887 per acre. This is nearly a 40% increase year-over-year. But it also represents a 6% decline from the first quarter 2023 and marks the second consecutive quarter that average prices dropped.

Nebraska irrigated cropland sold for an average of $8,855 per acre in the second quarter of 2023. This was a gain of 2.7% year-over-year. But as with dryland cropland prices, the average price for irrigated ground peaked in late 2022, then declined for two consecutive quarters in 2023.

Sales of dryland cropland were down 52% and irrigated cropland nearly 31% compared to the second quarter of 2022. Productivity of sold ground was slightly lower than historical averages.

Realtor and sealed-bid sales have remained relatively stable, while the number of public land auctions for the second quarter increased 3% compared to 2022 and private sales declined.

South Dakota Average Cropland Values (at least 85% tillable)

South Dakota Values rose by double digits on five of 22 benchmark farms, with one improving more than 25%. Fifteen farms saw values increase by 5% or less and the remaining two by 5% to 10%. Year-over-year values rose 14% compared to 21% and 17.3% in 2020 and 2021, respectively.

The average price of sold ground in the second quarter of 2023 was $6,520 per acre, a year-over-year decline of 8% and a 5% drop from the first quarter of 2023.

Cropland sales decreased 64% in the first quarter compared to the same period a year ago. The productivity of the ground sold was lower than historical averages.

Private sales increased to 43% of all land transactions, making it the primary method of sale in the first half of 2023. Public auction sales declined 37%, while realtor sales remained steady compared to 2022.

Wyoming The benchmark cropland farm experienced no change in value, while the value on the pasture unit increased 1.5%. 

Completed cropland sales in the first half of 2022 decreased 62% compared to the same period in 2022. This will likely change as more sales are reported. The limited number and diverse nature of the sales, as well as highest and best use, creates a challenge in determining sales trends. However, the sales that have been reported in the second quarter pointed to declines in average sale prices.


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