title: Agricultural Outlook Summary
author: USDA Economic Research Service
series-info: USDA ERS Situation and Outlook Report Summaries
document-date: 17 Jun 94 20:07:04 GMT
contact-name: Diane E. Decker, USDA ERS
posting-date: Mon Jun 20 09:30:19 EDT 1994
length: 276 lines
June 17, 1994
FARMLAND VALUES FORECAST UP FOR 8th YEAR
Farmland Values Continue Rising
U.S. farmland values in 1994 are forecast to increase 3-4
percent from a year earlier, below last year's 6-percent gain
but surpassing the increases of 0-2 percent during 1990-92.
This year's expected increase--the 8th consecutive rise in
nominal value since 1987-- reflects recent trends in farmland
values offset by expectations of higher interest and inflation
Several developments supported last year's 6-percent nominal
gain in farmland values. Continued economic recovery in the U.S.
in 1993 along with lower interest rates may have stimulated
demand for farmland for nonagricultural uses, particularly near
urban centers. As of January 1, 1994, the value of farmland and
buildings averaged $744 per acre.
Crop Programs & Rural Areas
Rural communities and agricultural production have changed to
such an extent that farmers are no longer the dominant economic
force in most rural areas. And members of farm families now
participate in the nonfarm economy to such an extent that, on
average, these families receive more income from nonfarm
activities than from farming. For these reasons, commodity
programs today have less direct effect on the income of nonfarm
rural households, and the impact on average farm households has
diminished since these programs were put in place in the 1930's.
Also, commodity programs are focused on relatively few
commodities in the farm sector. At present, one-third of farm
households receive payments from these programs.
However, in several regional pockets of the U.S., producers
receive payments that amount to a significant portion of their
gross cash farm income--such as farmers who specialize in
program crops. In 1992, over two-thirds of payments went to
producers in the 14 states in the Midwest and Plains regions.
Cash grain farms, which receive the bulk of direct government
payments, are concentrated in these areas.