New data from the United States Department of Agriculture show Missouri farmland values holding steady despite the challenging agricultural economy. The figures, compiled by USDA’s National Agricultural Statistics Service (NASS), found that the average value of cropland was unchanged from 2018 at $3,490 per acre.
The stable prices are welcome news to farmers fearing a more serious downturn in the ag economy. Ongoing tariff battles combined with more than a half-decade of low commodity prices have raised worries among many of a looming crisis.
While cropland prices are stable at the moment, they have lost some value in recent years. The 2019 figures represent a decline of $260 per acre from the 2014 high, which came at the end of a massive spike in crop prices. This 7.5-percent decline still pales in comparison to the decline in farm income over the same period. USDA estimates that net farm income has dropped over 35 percent for American farmers since its 2013 peak.
Some of Missouri’s neighboring states have seen even more significant declines in land values. Iowa cropland dropped over 15 percent since 2014, and Nebraska has lost more than 14 percent. Cropland prices had risen to much higher levels during agriculture’s economic boom years and thus had further to drop in a corrective market.
For farmers raising livestock, land values have been heading in the opposite direction. Compared to last year, Missouri pastureland rose just over three percent to $1,980 per acre. Pastureland has actually seen a steady increase in value over the past few years, rising almost nine percent since 2014.
While landowners and banks are thankful for the stable and slightly-rising land values, there is another side to the story. Renters and those looking to expand operations have been frustrated at the continually-high cost of land. With farming’s profitability remaining low, land purchases are often cost-prohibitive, as the land will not cash-flow to pay for itself. Cash-rent farmers are increasingly squeezed to turn a profit each year, with prices low but costs remaining high.
Many young and beginning farmers are having the toughest time. Land prices are far too high for someone without huge cash reserves to afford a down payment. Unless the farmer’s family has an existing operation to leverage as collateral, lots of young would-be farmers will be frozen out of the market as long as the status quo continues.
Land values will continue to be watched carefully as farmers struggle financially, as land is by far the largest financial asset owned by most farmers. Although it is only one indicator of the overall health of the farm economy, it can make or break an operation.
Eric Bohl, of Columbia, Missouri, is Director of Public Affairs for Missouri Farm Bureau, the state’s largest farm organization.