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2013 Nebraska Agland Market Highlights. by Bruce Johnson UNL Department of Agricultural Economics [email protected]. The Market in a Nutshell “A $ 7 Corn Land Market With $ 5 Corn on the Horizon”. Recent History:. Land Boom Conditions. Nebraska at the “Epicenter” - PowerPoint PPT Presentation
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2013 NEBRASKA AGLAND MARKET HIGHLIGHTS
by
Bruce JohnsonUNL Department of
Agricultural Economics
The Market in a Nutshell
“A $7 Corn Land MarketWith $5 Corn on the Horizon”
Recent History:
Land Boom Conditions
Nebraska at the “Epicenter” of the U.S. Land Boom
USDA Farmland Value Percentage Changes 6/1/2011 – 6/1/2012
10.9
13.6
13.7
17
17.5
19.2
20.9
22.8
23.9
26.58
33.5
48 States
10th Ohio
9th Missouri
8th Indiana
7th Illinois
6th Kansas
5th Minnesota
4th Iowa
3rd South Dakota
2nd North Dakota
1st Nebraska
0 5 10 15 20 25 30 35 40Rank / State
Source: Economic Research Service, U.S. Department of Agriculture
Agricultural Land Markets up Across the Country, but Nebraska And Neighboring
States Leading the Nation
Land Class2013 Average
Value(Preliminary)
1-Year Change
3-year Change
Dollars/Acre % Change in Value
Dryland Cropland:
No Irrigation Potential 3010 25 97
Irrigation Potential 5,270 21 102
Grassland:
Tillable 1230 22 84
Non-tillable 695 19 64
Irrigated Cropland:
Gravity 6835 27 109
Center Pivotb 7590 30 115
All Land: 3040 25 102
a Source: Annual February 1st UNL Nebraska Farm Real Estate Market Surveys.b Value of pivot not included in per acre value.
Nebraska Land Values Climb 25% in Past 12 Months
2013 Values and Recent Trends by Land Class in Nebraskaa
The Current Market
Sharp Upward Advances Across the State
2013 Nebraska Farmland Values and Recent Trends by Sub-State Region
Agricultural Statistics District
2013 All-Land Average Value (Preliminary)
1-year Change
3-year Change
Dollars/Acre Percent Change
Northwest 715 13 54
North 1055 20 69
Northeast 6165 24 113
Central 3750 27 103
East 7185 18 93
Southwest 1750 31 89
South 4460 33 118
Southeast 5400 26 121
Entire State 3040 25 102
Source: Annual UNL Nebraska Farm Real Estate Market Surveys.
Nebraska Nominal Agricultural Land Values
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Price
($/ac
re)
Year
2013P
Longer-Run History:
Upward but not steady climb for several decades
“Boom to Bust” event just 30 years ago
Major climb in nominal values in recent years
2013 Nebraska Values Adjusted For Inflation At New Heights!
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
USDA Real Average Land Values for NE: 1950-2013P
Time
Pri
ce (
$/A
cre)
Key Land Boom Drivers
#1 Record-Shattering Farm Income Levels
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P0
1
2
3
4
5
6
7
8
Annual Net Farm Income In Nebraska: 2001- 2012
Series1
Year
Ne
t F
arm
In
co
me
(B
illi
on
$)
Source:ERS/USDA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012P$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Nebraska Corn Price & Net Farm Income
Nebraska Net Farm Income
Nebraska Average Corn Price
$ p
er
bu
sh
el
$ b
illio
n
Key Land Boom Drivers
Historically Low Interest Rates
Farm Income Levels
Capitalization Rates
#2
Estimated Net Rate of Return on Investment: Selected Years
3.8%
3.2%
2.4%
4.7%
4.1%
3.5%
5.7%
5.4%
3.9%
Percent 0 1 2 3 4 5 6
Irrigated LandDryland Cropland
Grazing Land
Irrigated LandDryland Cropland
Grazing Land
Irrigated LandDryland Cropland
Grazing Land
2012:
2007:
2002:
Source: UNL Nebraska Farm Real Estate Market Developments Survey Series
Value-to-Cash Rent Multiple For Eastern Nebraska Center Pivot Cropland, 1981-2012P
Value–to–Cash Rent Ratio Climbing into New Territory!
What’s On The Horizon?
Prevailing Drought
Cutting Production?
Increasing Input Costs?
$5/Bu. Corn?
Cash Rent Market Trends More Moderate
Question:Are Tenants Taking on
Too-High of Rents?
Answer:
MAYBE!
Depends on 2013 CommodityPrices and Yields
If Paid $350/AC For Irrigatedand $220/AC Dryland Cropland
If Paid $350/AC for Irrigated and $220/AC Dryland Cropland
Summing Up:
The Boom Years May Be Over
Real Estate Meltdown Unlikely --But Some Readjustment on the Horizon
Your Thoughts:
Corn Price In:2013?2014?2015-2020?
Weather Patterns In:
2013?2014?2015-2020?
