Farmland values continue to rise but show signs of cooling off compared to increases in recent years.
The farm real estate value, a measurement of the value of all land and buildings on farms, averaged $4,170 per acre for 2024, up $200 (5%) per acre from 2023, according to USDA’s National Agricultural Statistics Service’s (NASS) annual land values summary. This follows a 6.7%, or $250, increase between 2022 and 2023 and marks the fourth consecutive increase in agricultural land values.
Cropland value averaged a record $5,570 per acre, an increase of $250 per acre (4.7%) from the previous year, and pastureland is up 5.2% to $1,830 an acre over last year.
NASS also released its cash rents survey results, showing values for cropland were up 3.2% to a record $160 per acre.
“While record rental rates are an increased production expense for renters, on the flip side, when land values stagnate or decrease, so do collateral values, limiting farmers’ ability to secure loans and access the increased capital needed to acquire higher-cost inputs,” American Farm Bureau Federation Economist Daniel Munch said in a recent Market Intel.
Agricultural land values vary significantly throughout the country, with the highest real estate values concentrated in areas producing high-value crops, such as wine grapes and tree nuts in California. Areas near urban centers with limited developable land, particularly in Northeast states, experience upward pressure on real estate values from competing uses. Much of the Midwest had higher total comparative agricultural land values, followed by the South and Pacific Northwest, with the Plains and Mountain states experiencing the lowest values.
In Illinois, the farm real estate value averaged $8,700 per acre — a 3% increase from 2023, while the cropland value came in at $9,550, which is a $3.2% bump.
The cash rental rate in Illinois averaged $269 for the first half of 2024, which is the fifth highest in the country behind Arizona, California, Hawaii and Iowa.
“As pressures on open land intensify across the nation for residential and energy development, leasing cropland becomes less profitable,” Munch said. “These trends have been strengthened by some employees’ ability to work at home or away from a central urban office location, which provides people flexibility to work from rural communities and buy properties that compete with agricultural land use. Previously heightened commodity prices that led to larger increases in cash rents have cooled, paralleling the slowing in ag land values more broadly.”
In periods of low crop prices, high rental values pose significant challenges to farmers’ balance sheets, with this year’s income expectations appearing even more dire than originally expected, Munch said, adding record rental rates are a significant problem for those reliant on renting land and new or beginning farmers.
USDA’s Economic Research Service will release updated forecasts for 2024 net farm income Sept. 5, which will likely show lower returns for most crops in 2024 than were previously projected.
“The current economic environment highlights the farmers’ call for updates to their safety net in the farm bill to support the continued stability and productivity of the agricultural sector,” Munch said.
This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.