While still at or near record levels, farmland values have stabilized in Iowa, Kansas, Nebraska, South Dakota, and Wyoming, the five states served by Farm Credit Services of America and Frontier Farm Credit.
As a whole, benchmark values ticked up an average of 0.07 percent in the first half of 2024, according to the associations.
Land values made modest gains in Nebraska, South Dakota, Wyoming, and eastern Kansas. Each state experienced increases in cropland and pasture.
Iowa by comparison, saw values decline for the first time in five years. Iowa generally serves as a leading indicator for the real estate trends.
The market there has been relatively stable to slightly decreasing since 2022. Despite the recent pullback, Iowa’s benchmark values are up nearly 60 percent since 2019.
“The combination of higher interest rates and tighter margins for grain producers is having an impact on cropland values,” said Tim Koch, Farm Credit executive.
Some of the factors that supported a strong real estate market in recent years are still in play. This includes financially strong buyers and a limited supply of ground.
Cropland sales reported in the first half of 2024 were off as much as 80 percent in areas compared to the same period in 2023. In South Dakota and eastern Kansas, however, public auctions were up.
The buyers in the market are primarily agricultural producers with cash from back-to-back years of record farm profits or debt locked in when interest rates were near historical lows.
However, Koch said, there likely are fewer buyers as a result of tighter margins. Investors also have left for higher returns.
Profitability created optimism in the market and helped to offset the impact of the Federal Reserve’s rate hikes in late 2022 into 2023.
Declining grain prices have shifted attention to the need to preserve working capital and managing costs, Koch said.
Iowa’s benchmark values for cropland have shown an average decline of 3.6 percent for both the past six and 12 months.
Public auctions in Iowa during the first half of 2024 were down 24 percent compared to the previous year.
Total Iowa cropland sales were down 28 percent compared to the second quarter of 2023.
The average sale price for unimproved Iowa cropland in the second quarter of 2024 was $12,784 per acre.
Cropland values in the eastern part of Kansas served by Frontier Farm Credit rose an average of 1.9 percent and 5.8 percent during the past six and 12 months, respectively, pointing to stable values.
Kansas pasture values, supported by profitability in the cow-calf sector, are up an average of 2.7 percent and 14.8 percent for the same time periods.
The demand for pasture remains strong and Flint Hills pasture continues to show a steady increase.
Public land auctions in Kansas increased 24 percent compared to the same period in 2023.
Very few sales of highly tillable farms in Kansas were reported in the second quarter of 2024. Those that have been recorded had an average per-acre price of $4,469, about 21 percent lower than in the first quarter of 2024.
Nebraska cropland values increased an average of 0.5 percent in the past six and 4.8 percent in the past 12 months. The market is relatively stable, with continued strength for top quality cropland.
Nebraska pasture benchmark values increased an average of 0.4 percent and 6.5 percent in the past six and 12 months, respectively.
Public land auctions in Nebraska during the first six months were down 13 percent compared to the same period a year ago.
Total Nebraska dryland cropland declined nearly 70 percent from the first to second quarter of 2024, with an average per-acre price of $6,134 in the second quarter.
Sales of Nebraska irrigated land dropped nearly 60 percent during the same period, with an average second-quarter price of $7,830 per acre.
South Dakota cropland values increased an average of 1.1 percent and 4.5 percent for the past six and 12 months.
Pasture values in South Dakota increased an average of 10.4 percent and 14.7 percent for the same periods.
Public land auctions in South Dakota rose 19 percent in the first half of 2024 compared to the same period in 2023. The average second-quarter price for unimproved cropland was $6,751.
Wyoming cropland values increased 4.4 percent and 9.2 percent during the past six and 12 months.
Pastureland in Wyoming is up 1 percent and 2.5 percent for the same time periods. Wyoming sales reported in the second quarter of 2024 averaged $2,130 per acre.
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