Cropland Prices Rise More Than 6%
The Federal Reserve Bank of Kansas City (representing Kansas, Missouri, Nebraska, Oklahoma, and the Mountain States) just reported that non-irrigated farmland prices for the year-over-year ended September 30, 2010 rose more than 6%. Irrigated cropland was up an even more robust 9.6%.
After dipping slightly in the third quarter of 2009, prices have risen each of the last four quarters. Kansas saw their prices rise more than 12% during the year, while Missouri, Oklahoma and the Mountain States only saw modest gains.
Cash rental rates were up about 5% for cropland and 2% for range land.
Rising farmland values were driven by strong demand from both farmers and investors. Bankers reported that investors expect an average rate of return of between 5% and 6% on farmland investments.
There has been a two-year decline in the number of farms available for sale and bankers believe that with the possible rise in capital gains rates in 2011 that more farms may become available.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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