Federal Reserve Reports Rapid Rise in Land Values and Farm Income!
The Federal Reserve of Kansas City on Tuesday reported that farm land values in their district had risen substantially from the previous year. The year-over-year rise for non-irrigated land were as follows:
- Kansas 19.5%
- Missouri 6.6%
- Nebraska 17.6%
- Oklahoma 5.0%
The overall value for their district was a 14.8 percent rise for non-irrigated crop land and 12.9 percent for irrigated. Rising farm income, especially for crop farmers, drove the prices up almost 20% in Kansas and Nebraska.
Although farmland prices are up sharply, cash rents increased an average of 6% for crop land and 4% for ranch land.
Farm real estate loan-to-value ratios ranged from 50% to 90% with an average of 70%. Many bankers are now putting a cap on a set dollar per acre that they will loan on. For example, if the appraised value is $7,500 per acre, the bank may only allow an use of $5,000 per acre to loan against. This will normally require more of a cash investment by the farmer.
The farm income index soared in the fourth quarter approaching the highs set in 2008. I saw another article where the USDA is perdicting net farm income for 2011 of about $98 billion . It would not surprise me that we will go over $100 billion with the continued strong farm commodity prices across the board.
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.
[…] This post was mentioned on Twitter by JJM and AgProfessional, Kansas Land Brokers. Kansas Land Brokers said: Federal Reserve Reports Rapid Rise in Land Values and Farm Income http://ht.ly/3XDNv #farmland #land #farming #farmer #farm […]