Farmland values continue to normalize, according to a recent report from Farm Credit Services of America (FCSAmerica). Values declined an average of 0.59% in the first six months of 2019 for the 64 benchmark farms FCSAmerica monitors in Iowa, Nebraska, South Dakota and Wyoming.
Since the farmland market’s peak in 2013, cropland values are down 20% in Iowa, 21% in Nebraska and nearly 13% in South Dakota in FCSAmerica’s semiannual benchmark farmland study.
“Despite continued tight commodity price margins in 2018, real estate values remained stable and were supported by a favorable interest rate environment, market facilitation payments and equilibrium in the supply and demand levels for real estate,” says Tim Koch, FCSAmerica’s chief credit officer.
Here’s a state-by-state overview:
- Iowa: Of the 21 benchmark farms, 10 decreased in value, three increased and eight saw no change.
- Nebraska: Of the 18 benchmark farms, 10 lost value, five increased and three were unchanged.
- South Dakota: Of the 23 benchmark farms, values dropped on five farms. The remaining 18 farms held even.
- Wyoming: The two benchmark farms showed increases for values of cropland and pastureland increase. However, the limited number of farmland sales in the state makes it difficult to accurately track trends.
Farmland sales across FCSAmerica’s territory were down in the first two quarters of 2019 compared to the same period in 2018. South Dakota saw the biggest decline so far this year, with 26.7% fewer sales. In Iowa, sales were down 11%, while Nebraska’s combined sales for irrigated and dry cropland dropped 18.4%.
The average quality of land has not changed in the past year, according to FSCAmerica, and buyer demand for high quality ground remains strong.