FORD COUNTY, Kan. (KSNW) – The USDA released that Kansas’ farm real estate value has dropped nearly 3% in worth averaging $1,900 per acre, a $60 decrease from 2019.
Farm real estate value includes the measurement of all land and buildings on farms. This year’s decrease is significantly impacted by land values.
Kansas has more than 45-\ million acres of farm and ranch land.
The USDA National Agricultural Statistics Service found that cropland has decreased by nearly 4% valuing the land at $2,080 per acre. This is an $80 decrease from last year.
“The drop in land values that we’re seeing is being driven mostly by the volatility in profits in the sector over the last couple of years,” said Mykel Taylor, agricultural economics professor at Kansas State University.
Taylor also said the decrease has been in part from years of trade challenges with China as well as a surplus of grain from strong crop production in previous years which have pushed down prices in the industry.
“For a lot of producers, they’ve been pretty dependent on government payments to make ends meet, and so that doesn’t leave a lot of money left over for bidding on farmland,” said Taylor, “Farmers are our biggest buyers of farmland and so we really need them to be in a financial position to be able to afford that ground, so it’s really softened the demand for land.”
The drop in land investment has translated into slightly lower prices.
Dryland has lost $80 in value, followed by irrigated land at a $50 loss, and pastureland at $20 less per acre.
Dryland average is currently worth around $1,970 per acre, irrigated land comes in at $3,270 per acre, and pastureland $1,370 per acre.
According to Taylor, when excluding metropolitan areas of the state, farmland values can range anywhere from $1,000 to $3,500. With the cheapest land residing in the southwest counties of the state and the most expensive land being located in the eastern part of the state.
The USDA found that even with the decrease in the land, cropland has maintained a premium over pastureland due to its higher per-acre return to crop production.
That decline can impact a farmer’s ability to borrow, their machinery purchases, as well as their operational decisions.
“That is going to cause problems when it comes to farmers are gonna cut back on inputs which has a trickle-down effect to farm input providers and rural economies as a whole,” she said. “Even a small decline in land values can have ramifications.”
As the agricultural industry remains a driving force in Kansas, Taylor says the decrease could have an impact on other industries of the state.
“You don’t want to have adverse impacts on profitability in the sector, because that has ramifications for the state as a whole,” said Taylor.
Although there is a decrease in land value for 2020, Taylor believes it has held strong through the lows of the industry.
“We don’t want to get too concerned that the bottom is falling out of the market, because land has been pretty resilient in its value over the last few years especially given the volatility in profits,” she said. “But we want to keep watching things because if we have a continued run of low profitability that is going to translate into some tougher times for agriculture.”