US Farmland Values Up More than 12% in 2022

If the situation in the US is any indication, Canadian farmland values could be up sharply this year. 

A USDA land values report on Friday pegged the average US farm real estate value - a measurement that includes the value of all land and buildings on farms - at a record $3,800/acre. That is a 12.4% increase over last year and the largest percentage gain since 2006, when values increased 14% over the previous year. In 2021, US farmland recorded a 7% increase from a year earlier. 

Average US cropland values increased to $5,050/acre, a 14.3% jump over 2021 and the largest increase since 2005 when rates jumped 18%.  Meanwhile, American pastureland values climbed 11.5% to an average of $1,650. That was the sharpest gain since rising 30% in 2006 and follows seven years of little to no increase in pastureland values. 

The report showed US cash rents have also moved higher, with increases ranging from 4.6% to 7.7% across cropland, irrigated and non-irrigated, and pastureland compared to a year earlier. 

On a state-by-state basis, (excluding Northeast states with urban pressure), Kansas farmland experienced the largest percent increase (+25%), followed by Iowa and Nebraska (both +21%) and South Dakota (+19%). Half of all the states in the nation posted double-digit farm real estate value increases.    

Across the border from Ontario, farmland values were up 10% in Michigan and increased 9% in Ohio. North Dakota values were up 13%. 

In a Market Intel piece on Monday, the American Farm Bureau attributed the increase in land values to a rise in commodity prices that has translated to a higher farming value for land in row crop-heavy heartland states like Iowa, Illinois and Indiana. Incentives added to government programs, such as those added in 2021 to the Conservation Reserve Program, also contributed to increased competition for active cropland, increasing land prices, it said. 

Other factors contributing to rising land values include competing land-use interests, which includes urban and suburban sprawl, and the increased investments into hard assets, like land, for a safer return on investment during a period of high inflation. 

Farm Credit Canada won’t release its 2022 Canadian farmland values report until next spring, but its most recent report showed an 8.3% increase in the average value of Canadian farmland in 2021, following a gain of 5.4% in 2020. 

Source: DePutter Publishing Ltd.

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