This analysis is provided by Thomas V. Boyer AFM, ARA, AAC
In sunny dry Utah and southeastern Idaho, land prices are holding firm, even in light of one of the most severe droughts in the state’s history. Wild land fires have destroyed substantial amounts of fall and winter grazing, raising prices on alfalfa hay significantly. Further hay prices are high due to reduced production from the drought. This has maintained confidence in firm land prices and anticipated farm income for 2018 and 2019 due to decreasing hay inventories. The remainder of crop income continues to be low along with depressed dairy income which is pressuring land prices, but so far no significant decrease is apparent.
Further, there is no increase either due to low farm returns. Southeastern Idaho has not experienced the drought as Utah has, so crop yields are near or at record levels for small grains and potatoes. Recent and new construction in dairy processing facilities along with new potato plant expansion in the Magic Valley of Idaho has kept land prices firm in that region. Eastern Idaho land prices also remain firm in spite of huge grain and potato yields.
Multiple investment groups have discovered Idaho farm investment opportunities which has also maintained price pressure. While farmers are accustomed to saying - next year will be the year, their current mantra is - surely next year will be the year - it about has to be given how long we have been suffering low commodity prices! This winter is critical for Utah as without strong snowpack and precipitation accumulation, next summer will be a very low production year. The upside is Utah is currently experiencing a massive residential and commercial building boom which is gobbling up huge acreage along the Wasatch Front which is now extending into rural communities that are within driving range of that area.