US land values drop again, at accelerating pace
US farmland prices have fallen for a 28th successive month, and by an accelerating pace, amid evidence that, in Nebraska at least, reduced concerns over drought have hit particularly demand for irrigated and hay fields.
A US farmland price index compiled by Creighton University came in at 20.2 for March – down from the 29.8 recorded for last month, and well below the 50.0 level which indicates a neutral market.
The decline, which extended a run of declines heading back to late 2013, reflected the weakened agriculture sector profitability which was reflected in reports by "several" bankers surveyed by Creighton of debt restructuring for under-pressure farmers.
"Obviously this practice is a Band-Aid until commodity prices get back in line," one banker, Jeffrey Bonnett at Havana National Bank in Illinois, told the survey.
"Farmers will not be able to sustain in such a low price environment for too many more harvests."
And the report followed data from the University of Nebraska-Lincoln which showed hayland lading a decline in Nebraska farmland prices, tumbling by 17% to $1,945 per acre in the year to February.
Hayland leads decline
The particular decline in Nebraska hayland prices reflected a dampening in the "reverberating effects" of the 2012 drought, which in boosting demand for forage, had sent prices of this land class soaring.
"Adequate precipitation since the drought helped the grazing land across Nebraska recover," the University of Nebraska-Lincoln (UNL) said.
"As hay prices dropped in late 2015 and early 2016, so has the willingness of producers to bid on hayland."
Farmers have proved less willing to pay up for irrigated cropland too, with the average price of gravity-irrigated land dropping by 6% year on year to $6,505 per acre....MORE