What is it worth?

Survey respondents gauge land prices in Missouri

A survey collected in mid-summer 2011 shows what the evidence around your place has been telling you—land prices continue to climb in the central Midwest. The survey, conducted by University of Missouri agricultural economist Ron Plain and co-author Joyce White, sought land price estimates from landowners, lenders and other rural thought leaders throughout Missouri. While there is no state or federal reporting of land prices in Missouri, the annual survey provides feedback from people who are affected by rural land prices. Of the 220 persons responding in 2011, 72 percent were lenders, 13 percent were rural appraisers, 5 percent were MU extension specialists, 4 percent were broker/realtors, and 6 percent were in other related occupations. They provided their opinions to questions concerning current farmland values and trends. Respondents were asked to exclude from their answers tracts smaller than 40 acres or land being converted to development or commercial uses. Respondents were asked to give their estimates of land values as of July 2011. Classification of land was left to the judgment of each respondent. You can find a full map set for the survey at agebb.missouri.edu/mgt.

{gallery}decjan12/value:210:270:1:1{/gallery}According to the survey, this year cropland values increased in 17 of the 20 areas of the state, with the state average for good cropland increasing by $347 to $3,235 per acre. Pasture values increased in 14 areas, with the state average for good pasture up $125 to $2,067 per acre. Non-crop/non-pasture land values averaged higher in 8 areas but statewide averaged 1.5 percent lower.

Land with timber was up $59 at $1,645 per acre, while hunting/recreation land was down $107 at $1,418.

Who is buying?

Survey respondents thought 66 percent of farmland buyers planned to farm the land themselves—a 3-point increase over 2010. The number planning to rent out increased 1 point, and the number planning to use the land for non-farming purposes declined

4 points to 12 percent.
According to respondents, high corn and soybean prices, low interest rates and the limited amount of high quality land available were primary factors in the increase in cropland values.

The ethanol subsidy and crop insurance guarantees also were cited as supporting cropland values. Profitability encouraged more renting of land and higher rents. Higher returns also attracted more outside investors.

Weakness in the general economy was cited as having a negative effect on values for land with little capacity for growing grain. Pasture prices were somewhat supported by good cattle prices and comments from cropping areas indicated a possible shortage of pasture could be a positive factor there.

A report from the south central area noted an increase in timber sales, but most saw a stagnant land market there.

As for the future, most respondents expect cropland values to increase about 4 percent over the next 12 months and pasture to decrease slightly—about 0.6 percent. They expect the value of other types of rural land will decrease about 1.9 percent. Some indicated the possibility of lower grain prices, a reduction in the ethanol subsidy, or a poorer-than-expected harvest were considered in their cropland.