In pandemic year, cropland values in Farm Belt are steady to slightly lower

The coronavirus pandemic may be the defining event of 2020, driving the United States into a recession and pummeling commodity prices, but cropland values in the Farm Belt have been relatively unaffected — stable to slightly softer, said the USDA on Thursday. From Ohio to Nebraska, from Missouri to North Dakota, the average statewide value of an acre of cropland has changed by no more than $100 from last year.

The pandemic’s effect on land values was counterbalanced by factors such as low interest rates, demand for land among investors and farmers, and the limited amount of land offered for sale, said analysts. Additionally, said former USDA chief economist Joe Glauber, “I think that farm payments have softened the blow for many producers.”

Billions of dollars in federal subsidies, dominated by a coronavirus relief fund, are forecast to limit, but not prevent, a decline in farm income this year.

The USDA’s annual Land Values report is based on a survey of operators during June and early July. Roughly 9,000 parcels of land, each covering a square mile, were selected for the survey, and enumerators tried to contact all producers with land in the sample areas. The report tracks the value of three categories of land — cropland, pastures, and farm real estate, which includes land and buildings — but does not record the factors influencing that value. Land is often a farmer’s greatest asset and the foundation of the farm’s financial standing.

Indiana farmland values have slipped slightly since the pandemic struck, said Purdue University last month in a report based on a survey of farm managers, land brokers, appraisers, and other professionals. The participants expected values to weaken further in the summer and fall.

“Everyone is hoping for a quick economic recovery, but the degree to which Covid-19 will impact land values is yet to be seen,” said associate professor Todd Kuethe, who oversaw the survey.

Cropland values in the Farm Belt have trended slightly downward since peaking, carried by the momentum of the commodity boom, in 2014 or 2015. For example, Iowa cropland was valued at $8,750 an acre in 2014, compared to $7,170 this year, down by $90 from 2019, according to the USDA. Cropland values in Illinois and Indiana were unchanged from 2019, the USDA said. But Illinois cropland was valued at $400 an acre less than the record $7,700 in 2014.

Nationally, the USDA said cropland was worth an average of $4,100 an acre, the same as last year. The value of farm real estate was unchanged, at $3,160 an acre, as was pastureland, at $1,400 an acre.

The Land Values report is available here.

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