The U.S. Department of Agriculture recently announced Nebraska’s 2015 farm real estate value and cash rent for cropland has decreased by 2 percent.
Allan Vyhnalek, educator at the Platte County Extension Office, said based on the changing prices of corn and soybeans, the decline in real estate value is “absolutely expected.”
In February 2015, the University of Nebraska-Lincoln published a report on farm real estate that gave specific numbers for regions within the state.
The east region, which includes Platte and Colfax counties, saw an overall decrease of 3 percent. Dryland cropland decreased by 9 percent and other types of cropland (pivoted, gravity irrigated, etc) decreased by 3 percent. However, the values of grazing land increased, tillable by 16 percent, non-tillable by 20 percent and hayland by 24 percent.
Due to the 2005 ethanol mandate, Vyhnalek said crop prices jumped to $5 to $7 a bushel for corn and $11 to $15 a bushel for soybeans. When grain prices rose, so did the cost of production and real estate. According to the 2015 UNL real estate report, over the past five years the east region’s real estate values increased by 89 percent.
Statewide, values increased by 116 percent.
Prices for corn are now around $3.41 a bushel with soybeans at $8.85 a bushel, lower than previous years.
Thomas Dobbe, regional vice president of Farm Credit Services of America, said the increased cost of equipment, fertilizer, seeds, etc., could have “acted as a damper” on the real estate market, but it’s too early to tell if this decrease is a fluke or the start of a trend.
“It may be an indication that the market will not go any higher,” Dobbe said, “or a sign that the market is taking a breather. We won’t know if it’s done going up or if it will continue to go up.”
Dobbe and Vyhnalek said the value of an individual plot of land depends more on the quality of its soil and topography than overall trends. Property taxes will continue to increase, and the value decrease is unlikely to affect rental prices.