The recently released USDA "Land Values 2016 Summary Report" announced an average $40-per-acre decline in cropland values across the nation.
That only represents a 1 percent drop in value, but more significantly, it is the first time since 2009 that cropland values have gone down instead of up.
The first year included in the report was 2002, when cropland averaged $1,590 per acre. Values reached a new high of $4,130 in 2015 before settling at $4,090 per acre this year.
With steady year-over-year growth, it is a bit uncharacteristic to see cropland values move in the opposite direction. In reality, though, it's not all that surprising, considering corn, a major field crop, is likely to fetch a pay price below breakeven for the third year in a row.
While historically low corn prices are hard on crop farmers, they provide a bit of relief to dairy farmers facing low milk prices. Additionally, in states where cows need an abundant source of feed regardless of corn price, cropland values actually rose. In California, cropland averaged $10,910 per acre, up 2.1 percent from last year. In Wisconsin, values rose 4.3 percent to $4,900 per acre. The third largest dairy state, Idaho, saw an upturn of 3.1 percent to $3,300.
Values climbed the most in Georgia, up 7.9 percent to $3,410 per acre. Meanwhile, Kansas prices fell the furthest, down 7.2 percent to $2,050 per acre. Cropland in New Jersey garnered the highest price, at $13,000 per acre.
(c) Hoard's Dairyman Intel 2016
August 15, 2016