Lower crop prices trim demand for Nebraska ag land

Farm Forum

LINCOLN, Neb. (AP) – The national drop in corn prices to less than $5 a bushel last year from more than $6 a bushel in 2012 apparently has dampened demand for farmland in Nebraska and cooled off the hot seller’s market.

A regional farmland price index kept by Creighton University economist Ernie Goss has hit its lowest level since 2009. A January report issued recently said the index dropped for the second month.

In addition, a recent report by Farm Credit Services of America says that during the second half of last year, Nebraska farmland value increased at the slowest rate seen in several years, rising less than 1 percent. The financial services cooperative based its conclusions on a benchmark study of 65 farms over three decades, as well as analysis of more than 3,500 ag real estate sales.

“The enthusiasm that might have been there, let’s say a year ago, the enthusiasm is just not as great now” for farmland, real estate broker Doyle Onnen told the Lincoln Journal Star.

Goss said the driving force for land was in agricultural commodity prices, “which put a bubble in land prices.”

“Now a good deal of the air has come out of the bubble in commodity prices, so some of that air will come out of the bubble in land prices,” Goss said on Jan. 20.

The rise in land prices may have slowed or even plateaued, but record highs remain.

Last year, the average value of land irrigated by center pivots in eastern Nebraska topped $10,000 an acre for the first time, according a report by the Agricultural Economics Department at the University of Nebraska-Lincoln.

Onnen, who is based in York, said he’s seen farms go for well above that price.

“There is lots of demand for real-high-quality irrigated land,” Onnen said, especially those with plentiful groundwater. “Those farms are in really strong demand.”