The need for more and higher value crops, as well as developmental pressure, has pushed agricultural land values to record high levels. That’s true for farm real estate, cropland, and pastureland.

The National Agricultural Statistics Service’s (NASS) Land Values 2023 Summary released in August reported that average farm real estate value in the U.S., which covers all land and buildings on a farm, climbed $280 to reach $4,080 per acre. That was a 7.4% jump over a 2022 value that was $420 higher than 2021. A decade ago in 2013, the average farm real estate value was $2,730 per acre.

The most expensive agricultural land is found in states with little land remaining for development. Rhode Island tops the group at $18,300 per acre and is followed by New Jersey, Massachusetts, and Connecticut.

After those four states, agricultural land is most valuable ($12,400 per acre) in California, which produces a large volume and variety of high-value and specialty crops. Iowa, Illinois, and Indiana are the heartland states that follow by clocking in at more than $9,000 per acre. Back on the East Coast, so do Delaware and Maryland.

The cheapest agricultural land can be found in New Mexico ($610 per acre), Wyoming ($880), Nevada ($1,060), and Montana ($1,070).

Compared to last year, Kansas saw the most significant jump in agricultural land value, rising 16% to reach $3,060 per acre. New Jersey, Indiana, Nebraska, North Dakota, South Dakota, Colorado, and Georgia were the other states that realized a double-digit percentage gain in value.

When drilling down specifically to cropland, acreage values rose 8.1% in 2023 to reach $5,460 and followed a similar trend as real estate when looking at state values. Ten years ago, the average U.S. cropland value was $3,810 per acre.

Pastureland is also more expensive. After several years of stable prices, 2021 and 2022 saw significant gains that are now furthered by a 6.7% climb in 2023 that pushes pastureland to $1,760 per acre. In contrast to the real estate and cropland trends, many of the states with the highest pastureland values are on the East Coast.

Reflecting these upward trajectories, NASS data shows that farmers who rent are paying their landlords more for agricultural land use. Average cash rent for cropland rose 4.7% to $155 per acre in 2023 ($237 for irrigated land and $142 for non-irrigated land), and pastureland cash rent climbed 7.7% to $15 per acre.

For farmers who own their land, this steady rise in value is good news to build equity. But for young and beginning farmers, it is another challenge. Land access is already often cited as the top barrier to entry for new farmers, and rising prices due to demand and development exacerbate that problem.

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(c) Hoard's Dairyman Intel 2023
September 11, 2023

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