title: Agricultural Resources: Agricultural Land Values and Markets
author: USDA Economic Research Service
date: 22 June 1993
almanac-area: ers s-and-o
June 22, 1993
U.S. Farm Real Estate Values Likely To Post Seventh Straight
The per acre value of U.S. farm real estate is expected to
average 1 to 3 percent higher in 1993, a range that includes last
year's slightly over 2-percent increase.
The January 1, 1993, value of U.S. farm real estate averaged $700
per acre. Although values have risen 6 consecutive years,
bringing combined gains to 17 percent above the 1980's low of
$599 in 1987, the January 1, 1993, value remained 15 percent
below the record $823 in 1982.
With a 2.6-percent inflation rate (as measured by the Gross
Domestic Product implicit price deflator) in 1992 just offsetting
the slightly over 2-percent increase in the U.S. average farm
real estate value, the inflation-adjusted value showed negligible
change from January 1992. Real values have trended downward
since 1981, placing the current value 49 percent below the 1981
Changes in regional and State farm real estate values during 1992
differed as investors responded to regional and local economic
factors and to their interpretations of national economic
indicators. During 1992, average values rose in all regions
except the Pacific.
Strongest regional increases (4 percent) occurred in the Lake
States, Appalachia, and the Delta States. Gains in the Lake
States averaged 5 percent annually over the past 6 years, raising
the average by 34 percent from its 1987 level. Appalachia's
nominal value ($1,129 per acre) reached a record high. Recovery
from the Delta States' 1987 low value in the 1980's has been
uneven, averaging 2 percent higher annually. The current average
($802 per acre) represents 70 percent of the region's 1981 record
Three-percent gains in the Corn Belt and Northern Plains brought
regional averages 33 and 40 percent, respectively, above 1987
values. Both are predominately agricultural regions that
experienced substantial drops in values from record highs in the
early 1980's to decade lows in 1987.
Several regions, representing widely differing land uses and per
acre values, recorded 2-percent increases in 1992. Value gains
brought regional averages for the Northeast ($1,753 per acre) and
the Southeast ($1,235 per acre) to near record highs. The
Southern Plains' $480 per acre reflected the first increase since
values peaked at $675 in 1985 and then declined in subsequent
years. Annual increases in the Mountain region have averaged 2
percent since 1988, raising the current $295 per acre to 90
percent of the region's 1984 record high.
Although the Pacific region recorded 1-percent declines in 1991
and 1992, annual changes since 1988 have averaged 2 percent
higher. The current $1,190 per acre is 85 percent of the
region's record high in 1984.
Cash rents for farms in 1993 are higher for most States. Higher
cash rents for irrigated cropland are expected in most Western
States. Changes in cropland rents in other States are mixed, as
are most pasture rents.
Voluntary and estate sales accounted for about 72 percent of all
farmland transfers in 1992, while family transfers represented an
additional 18 percent. The share of foreclosures and other
involuntary transfers has declined since 1987 and constituted
only 7 percent in 1992.
Based on 6,070 reported sales in late 1992, owner-operators
participated in 58 percent of farmland purchases, involving 66
percent of the acres bought and 62 percent of the total value of
farmland purchased. Nonfarmers made 30 percent of the reported
purchases, which were associated with 23 percent of acres
purchased and 28 percent of the total value. Owner-operators
controlled 50 percent of the farmland prior to sale, and survey
respondents expect them to operate 70 percent of the land after
sale. Tenant shares are expected to decline from 39 percent
operating the land before sale to 12 percent following sale.
About 93 percent of farmland sold in late 1992 is expected to
remain in agriculture over the next 5 years. Largest shifts to
nonagricultural uses are anticipated in East Coast regions, where
demand for nonagricultural uses is strongest.
Sixty percent of reported sales involved financing, with the
proportion of debt to purchase price averaging 72 percent. At
the national level, the Farm Credit System provided 33 percent of
the credit extended for reported sales in late 1992, up from the
previous year's 25 percent. The commercial banks' share also
increased from 30 percent to 36 percent. Seller financing and
insurance companies had smaller shares.
Foreign interests reported owning 14.5 million acres of
agricultural land as of December 31, 1992, down from 14.8 million
acres a year earlier. U.S. corporations in which foreigners held
a significant interest or substantial control owned 54 percent of
this acreage. Foreign-owned land currently represents just over
1 percent of all privately owned U.S. agricultural land and about
0.6 percent of all U.S. land. Most foreign-owned agricultural
land is forest land (49 percent), with cropland (17 percent) and
pasture or other uses (34 percent) accounting for the rest.
Taxes on U.S. agricultural real estate totaled $4.8 billion in
1991, 4 percent above a year earlier. Nationwide, taxes averaged
$5.51 per acre in 1991, compared with $5.27 in 1990. Taxes per
$100 of full market value averaged 80 cents, up from 78 cents in
Printed copies of Agricultural Resources: Agricultural Land
Values and Markets will be available in about a week. For more
details contact Roger Hexem (202) 219-0423. Text of the full
report also will be available electronically.
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