U.S. Farmland Values Rise as Price Outlook Improves

U.S. farmland values rose last year as crop and livestock prices stabilized and the outlook for agricultural profits improved.

The value of all land and buildings on farms in the 48 continental states averaged $2,140 an acre at the start of this year, up 1.4 percent from $2,110 a year earlier, the U.S. Department of Agriculture said today in an annual report. The gain follows a decline in 2008 that was the first since 1987.

Farm income in 2009 fell 35 percent to $56.4 billion, the lowest since 2002, as agricultural commodities including corn, wheat and soybeans fell from records set in 2008. The USDA expects net-farm income to rise 12 percent this year to $63 billion. Wheat, corn, cotton, hog and cattle prices are all up since the end of December, while soybeans have declined.

“We’re seeing upward pressure in both the Mississippi River Delta and the Midwest,” said Jeff Conrad, the president of Hancock Agricultural Investment Group, which manages $1.2 billion of farmland in the U.S., Canada and Australia. “Farmers are willing to pay for high-quality land,” Conrad said from Boston in a telephone interview.

The most expensive farmland in the U.S. was in Rhode Island at $13,600 an acre, followed by New Jersey at $13,100, according to the USDA. Both states saw declines from the previous year, reflecting lower prices for farmland near urban areas affected by lower residential real-estate values, Conrad said.

Cheapest Land

The cheapest land was in New Mexico, at $480 an acre. Northeast states were the most expensive of the 10 regions in the lower 48 states tracked by the USDA, with an average price of $4,690 an acre. The least-expensive area was the Mountain states, at $911 an acre.

Prices in Corn Belt states including Iowa and Illinois rose 1.7 percent to $3,680 an acre. The state with the biggest increase was Nebraska, where prices rose 9 percent to $1,460 an acre from $1,340.

Wheat prices fell 11 percent last year on the Chicago Board of Trade, while soybeans rose 7 percent and corn rose 1.8 percent. Cattle futures last year rose 0.1 percent while hogs rose 7.8 percent.

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