WOOSTER, Ohio — Some ag economists and farm real estate specialists agree that softening grain prices have put downward pressure on farmland values in some states – but not in Ohio, Indiana and Michigan, according to the USDA.
According to an Aug. 5 report by its National Agricultural Statistics Service (NASS), farm real estate values in Ohio are up 3.6 percent over the last year, at $5,760 per acre, and Ohio’s cropland value (without buildings) increased 3.5 percent to $5,850 per acre.
But the increase is less than half the increase from 2013 to 2014, which was nearly 9 percent, and the 2012 to 2013 increase, which was just under 10 percent.
In Indiana, farm real estate values are up 2.9 percent over last year, at $7,150 per acre. In Michigan the increase is 4.3 percent above last year, to $4,900 per acre. And in Pennsylvania, farm real estate actually decreased by 1.8 percent, to average $5,500 per acre, but cropland increased by 1 percent to reach $5,900.
Barry Ward, an ag economist with The Ohio State University and leader of Production Business Management with OSU, said he’s not surprised by the results. He had predicted a softening of land prices at the onset of the year because of lower returns from crops.
"I think it’s consistent from what we’ve been hearing from appraisers and auctioneers," Ward said. "Land prices may decrease further as the year comes to a close, but values in Ohio are still up over the previous year, compared to the rest of the Corn Belt."
Values in Illinois have dropped 0.3 percent to $7,500 per acre and Iowa farmers have seen a 5.9 percent drop to $8,000.
"Last year, most farmers in Ohio had a good crop and the majority of farmers still have very solid balance sheets," he said. "The years between 2006 and 2013 were good for grain farmers. Many still have significant equity saved, which has allowed them to continue purchasing land."
According to Ward, while grain prices are down, some livestock prices are up, with strong demand and lower feed costs. This is leading some producers to expand their herds and invest in new facilities. This, he explained, is putting upward pressure on some farm real estate values.
Dave Kaufman, an auctioneer with Kaufman Realty & Auctions located in Holmes and Tuscarawas counties in Ohio, said the demand for Ohio land continues to be strong, whether it’s farmland, woodland or recreational.
"In the long run, land prices are strong," he said. "The strongest sales have been in Amish communities, and some of that land has topped $20,000 an acre. People are looking for places to park money."
Key factors in all this, Kaufman said, are low interest rates for savings accounts and certificates of deposit, as well as supply and demand. "Farms don’t go on the market often, and when they do, the neighbors often have an interest."
He said the shale-gas influence has tapered off drastically in counties where drilling has yet to take place.
"But the money from drilling and leasing have likely helped the buyers of land," Kaufman said. "For farmers looking to buy more land to farm, they’ll need to be prepared for tight margins. Looking at futures prices, there doesn’t look to be much relief in sight. Growers are going to just have to continue to be very creative."
