American farmers have seen their land rise in value over the past year. According to the Ministry of Agriculture, this is the strongest price increase in more than ten years.
The demand for productive agricultural land in the United States is currently high. Last year, demand increased at a pace not seen in years. The value of arable land and grassland has therefore risen in much of the country. This is evident from a NASS study by the United States Department of Agriculture (USDA) into the value of agricultural land in 2021.
Increase across the board
The value of cropland rose $128 per hectare last year to an average of $1.768 per hectare. This amounts to an increase of 7,8% compared to 2020. Grassland also increased in value, albeit slightly less rapidly. The average price rose by $32 to $592 per hectare, an increase of 5,7%. Real estate values – all land and buildings on American farms – average $1.352 per acre this year, up 7% from 2020.
Prices for agricultural land in the US rose across the board, although there are differences between the various states. For example, the overall increase was largest in the Northern Plains region (Kansas, Nebraska, North Dakota and South Dakota), where farmland increased in value by 9,4%. Despite severe drought on the West Coast, farmland values rose by similar percentages there too (including in California and Oregon). The increase was the smallest in the Delta states of Arkansas, Louisiana and Mississippi, at 1,6%.
Different drivers
According to research economist Charles Gilliland, there are several reasons for the significant price increases reports Successful Farming. For example, farmers and landowners have benefited from government support programs introduced due to the coronavirus pandemic and trade war with China. Low interest rates and high commodity prices have also given a positive boost to the value of agricultural land.
Finally, there is a movement of city dwellers moving to the countryside. A direct consequence of the corona pandemic. As a result, there has been a relatively large amount of trade in large plots of land that have subsequently been resold in smaller pieces of 4 to 8 hectares.
Trend continues
Analysts expect that the upward movement will not end anytime soon. There are no indications of a trend break. “Most agricultural appraisers are quite optimistic about the land market for the next few years,” says Mykel Taylor of Auburn University. Gilliland can confirm that. "We are in a demand market and supply is scarce. There are no signs that this will change in the short term."