land prices

Cropland values rose by 7.2 percent in the northern Plains this summer, said agricultural bankers in a quarterly survey by the Minneapolis Federal Reserve Bank. Land values rose even as farm income declined from last summer, lenders said, due to high production costs and lower commodity prices, with a decline expected for this fall, too.

Higher commodity prices are putting cash in farmers' pockets and as a result, farmland values are headed upward this year, said economist Brent Gloy. "The question most are considering is, 'How high will farmland values adjust?'" asked Gloy in a blog.

The University of Nebraska's annual Farm Real Estate Survey says the average value of farmland in the state fell by 10 percent in the past year, to $2,805 an acre. It was the third year of declines since land peaked at an average $3,315 an acre, an overall drop of 15 percent.

Greenhouses in the Salinas Valley of California are selling for millions of dollars because marijuana has come to Monterey County, said the Los Angeles Times. The land rush "was touched off by efforts to ban the crop from the canyons and forests of the Big Sur area and sequester it inside existing greenhouses, where it can more easily be monitored and, perhaps more importantly, taxed."

With U.S. agriculture in the third year of a commodity-price slump, bankers are toughening their rules for lending money to growers, says Reuters, which quoted a Farm Credit Systems official as calling for belt-tightening by farmers.

The founder of a $100 million investment fund that wants to buy and restore ranch land in Texas, with hunting and fishing habitat in mind, expects to buy land at a substantial discount soon. "The timing couldn't be more perfect," Jay Ellis told the New York Times. Oil prices are tumbling and in Texas, that means land values will slide, too.

The steep decline in commodity prices from the records set in 2012 are likely to result in more moderate decline in land rental rates, says agricultural economist Brent Gloy, a former Purdue professor. In his blog, Gloy compared the decline in rental rates and corn prices since 1976.

U.S. farm equity is forecast to rise by 2.3 percent this year as the sector continues to generate wealth despite lower farm income, a cooling off of land prices and higher borrowing costs, said the Agriculture Department.