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Report Shows Drop in Ag Land Values

The annual Land Values and Cash Rents Report issued by USDA this week made news with word that land value rates as of Jan. 1, 2009 dropped 3.2% from last year. The drop is the first decline in land value rates since 1987. USDA Deputy Chief Economist Jim Hrubovcak says for comparison, in February USDA forecast a 2.1% increase in land rate values.

"Now again it's nowhere near the changes that have occurred in the non-farm sector," said Hrubovcak. "It's not that much of a surprise in that we are seeing some indications from the surveys conducted by the Federal Reserve Banks that, in fact, there was some erosion in the value of farm real estate this year."

Hrubovcak says that is due in part to the carryover of impacts from other sectors of the economy. While land values dropped cash rental rates for the same time period rose 5%. He says one reason for this trend is that possibly landowners are taking a wait-and-see approach with the economy before purchasing land.