The value of Western Corn Belt farmland rose 1% to nearly 4% in the last half of 2020, according to a recent report from Farm Credit Services of America and Frontier Farm Credit. The appraisal teams for the large ag lenders update semi-annual appraisals of seventy-one farms located throughout their service areas every January 1 and July 1 each year. The firms serve Iowa, eastern Kansas, Nebraska, South Dakota and Wyoming.
Their reports notes “the majority of farmland sales were strong going in to the second half of 2020. The recent increase in grain commodity prices, continued low interest rates, increased government payments and limited supply of available cropland tracts have contributed to strength in the market for good quality farms. The overall availability of dry cropland has decreased as reflected by lower sale numbers in all states when compared to 2019.”
The update notes the COVID-19 pandemic has resulted in many businesses have permitting remote work, which has allowed employees to live in other areas, away from their home office. “This is pushing buyers into more rural areas, where they are seeking the lifestyle that rural living provides, increasing demand for both agricultural and rural residential acreages,” they note. In addition, the update states interest rates have remained at all-time lows, which is helping to keep buyers actively searching for properties.
The six-month benchmark farm trends indicate:
- State average Iowa benchmark farm values increased by an average of 3.5% over the past six months and further reflect an increase of 3.8% over the last year. Of the twenty-one benchmark farms, four saw no change in value, while the remaining eighteen farms increased in value.
- The benchmark farms in Kansas rose 1.1% over the most recent six-month period with an increase of 2.2% over the last year. Four of the seven farms showed an increase in value with the remaining three showing no change over the past six months.
- Nebraska benchmark farm values increased an average of 3.7% over the past six months, with an increase of 3.2% reflected over the past year. Fourteen of the eighteen farms showed an increase in value, while only three declined and one reflected no change.
- Overall benchmark farm values in South Dakota rose 2.4% over the past six months and have increased by 0.1% since January 2020. Sixteen of the twenty-two benchmark farm values experienced no change over the past six months. The remaining six benchmark farms all indicated an increase in value.
- Wyoming’s two benchmark farm values increased by a combined 2.4% over the past six months. The one cropland farm experienced a 4.9% gain while the pasture unit experienced no change in value. Over the past year, benchmark values increased by an average of 2.7%, with the cropland benchmark accounting for all of the gain. Sales have been, and continue to be, limited in this market area.