Not All Farmland is Going Up in Value
When we see in the headlines that farms in Iowa and other parts of the corn belt are going for $10,000, $15,000 and perhaps $20,000 an acre, I think we automatically assume that all farmland values across the US are increasing.
However, in reviewing the Federal Reserve Bank of Richmond, VA agricultural survey for the third quarter of 2011, it indicated that farmland values for their region (Maryland, Virginia, North and South Carolina and most of West Virginia) had actually declined in value. The decline from the second quarter of 2011 was 1.5% and 4.5% from the same quarter in 2010.
The survey presented a chart of farmland values from 2002 until 2011 and most farmland values in this region peaked in early 2007 and have not recovered to that value since. The average price of farmland during the third quarter was $3,263.
In the fourth quarter survey done by the Dallas Federal Reserve, this region actually had an increase in irrigated land values and dry-land and ranch values held fairly steady. Even with the drought conditions in the area, most of the bankers are expecting prices to rise over the next three months.
As the saying goes in real estate, “It is Location, Location, and Location”; it is certainly true about farmland prices. The increase in price depends on where it is located.
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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