UNL Survey of ag Land values in the Panhandle shows increase in crop land, drop in grazing and hay lands

By Tom Holman
UNL Extension Educator

Preliminary results for the year ending Feb. 1, 2010, of the Annual Farm Real Estate Values Survey, authored by University of Nebraska Agricultural Economist Bruce Johnson, have been released.

Panhandle cropland prices, both gravity and pivot, increased by more than 8 percent from the 2009 survey, while grazing lands and hay lands decreased. These results follow several relatively strong crop income years and relatively low income years in the cattle industry.

Average value of Panhandle and state farmland from 2010 preliminary survey (prices are in dollars per acre):

• Gravity irrigated: Panhandle, $1,625, 8.7 percent increase; state, $3,271, 5.2 percent increase
• Center pivot irrigated: Panhandle, $1,660, 8.1 percent increase; state, $3,507, 6.1 percent increase.
• Dry land (no irrigation potential): Panhandle, $490, 5.6 percent increase; state, $1,533, 6.4 percent increase.
• Dry land (irrigation potential): Panhandle, $515, 3.0 percent increase; state, $2,587, 7.3 percent increase.
• Hayland: Panhandle, $525, 4.5 percent decrease; state, $801, 3.1 percent decrease.
• Grazing land (non-tillable): Panhandle, $260, 7.5 percent decrease; state, $424, 5.6 percent decrease.
• Grazing land (tillable): $320, 3.0 percent decrease; state, $647, 0.3 percent decrease.
• All lands (average): $465, 0.9 percent increase; state, $1,494, 4.4 percent increase.

Well-drilling restrictions in many parts of the Panhandle make dry land cropland (with irrigation potential) and grazing land (tillable) thin markets with minimal supplies of acres, which skews those markets. Tax swaps and sales to close neighbors or to relatives are eliminated as “outliers” so that reported sales of all classes are not skewed.

Farmland and grazing cash rental rates are included in this preliminary report. Due to large variations in these two types of land classes, the reported numbers should be used to show trends and as an amount to be used to negotiate rental rates.

2010 crop land cash rental rates for the Panhandle (dollars per acre):

• Dryland cropland: High, $39; low, $22; average, $31.
• Gravity-irrigated cropland: High, $139; low, $82; average, $115.
• Center-pivot-irrigated cropland: High, $165; low, $114; average, $137.
• Pasture: High, $14; low, $8; average, $11.

2010 monthly pasture cash rental rates for the Panhandle (dollars per acre):

• Cow-calf pairs (1.25-1.3 AU): High, $32.50; low, $21.85; average, $26.40.
• Stocker (500-600 pound): High, $20.85; low, $14.50; average, $18.00

The rate of return on real estate over the last 10-15 years has been similar to U.S. Treasury instruments. When held to maturity (five years), U.S. Treasury bonds give an annual return that can be used as a bench mark for annual real estate appreciation. Although both investments can move up and down, over time liquidity and the lack of risk make these two investments more similar than different.