Friday, February 17, 2012

Farmland: It's Worth Less if It's in the Middle of a Drought

From Agrimoney:
Drought distorts US farmland market
Drought has distorted the US far, market, with the quest for water boosting price growth in land blessed by ready rains, or possessing irrigation, far higher than that in non-watered fields.
Farmland values in key central-US agricultural areas, including Kansas, the top wheat-growing state, ended last year at a record high, with cropping land appreciating particularly fast, by 25% year on year, central bank data showed.
However, the overall rise, attributed to "strong" farm profits, concealed a marked gap in performance between farms in Nebraska, which received relatively plentiful rain last year, and Oklahoma, which suffered a record-breaking drought.
"Drought clipped farm incomes in Oklahoma and Kansas," the US Federal Reserve's Kansas City bank said.
Dry vs wet
Ranchland prices in Nebraska, which overtook Kansas to second place among US cattle states last year as animals were moved north from the dry southern Plains, soared 21.2% last year.
In Kansas, the rise was 13.7%, and in Oklahoma, 6.9%.
"Drought boosted ranchland values in areas with good-quality pasture," the central bank said.
In the arable market, the value of non-irrigated farms in Nebraska soared by 38%, four times as fast as Oklahoma prices....MORE
Here's the U.S. Drought Monitor map. As the northern drought intensifies and expands south toward the Texas-Oklahoma drought I'm starting to think of it as The Interstate-35 Drought. Not as catchy as The Dust Bowl but it might catch on.
Via the University of Nebraska-Lincoln:
US Drought Monitor, February 14, 2012