WASHINGTON, D.C. – U.S. agricultural land values have increased by $200 an acre over last year, according to the USDA’s latest Land Values 2024 Summary Report, released Aug. 2.

Daniel Munch, American Farm Bureau Federation economist, in his Aug. 6 analysis, said the report “shows a 5 percent increase to an average $4,170 per acre, which follows a 6.7 percent, or $250 increase, between 2022 and 2023, and marks the fourth consecutive increase in agricultural land values.”

He added cash rent values for cropland were up 3.2 percent to a record $160 per acre, and up 3.3 percent to $15.50 per acre for pastureland.

“This annual report provides one of many indicators of the overall health of the agricultural economy,” he said. “While record rental rates are an increased production expense for renters, on the flip side, when land values stagnate or decrease, so do collateral values, limiting farmers’ ability to secure loans, and access the increased capital needed to acquire higher-cost inputs.”

He said the report indicated agricultural land values vary significantly throughout the country, with the highest real estate values concentrated in areas producing high-value crops, such as wine grapes and tree nuts in California.

“Additionally, areas near urban centers with limited developable land, particularly in northeast states, experience upward pressure on real estate values from competing uses,” he said. “Much of the Midwest had higher total comparative agricultural land values, followed by the South and Pacific Northwest, with the Plains and Mountain states experiencing the lowest values.”

When asked how the data are gathered for the report, he told Farm World the estimates of land values in this report are based primarily on the June Area Survey, conducted during the first two weeks of June.

“This annual survey uses a complete, probability-based, land-area sampling frame,” he said. “A sample of approximately 9,000 segments of land is selected, each approximately one square mile in size.”

He said those collecting data for the June Area Survey contact all agricultural producers operating land within the boundaries of the sampled land segments, and record land value information for cropland and pasture within these segments.

“They also collect an estimated value of all land and buildings for the operator’s entire farming operation, and the estimated percent change from the previous year,” he said. “Survey-reported data are reviewed for reasonableness and consistency by comparing with other data reported in the survey, and with data reported within the segment the previous year.”

Once the data are summarized, he said each USDA regional field office conducts an analysis of the summarized indications, and any other available information for their states. Regional field offices then set estimates for land values and submit these recommendations, along with their assessment of survey and other administrative information, to the USDA Agricultural Statistics Board.

Moreover, he said the regional and United States estimates are weighted by the amount of cropland and pasture in each state, based on the most recent Census of Agriculture; for the purposes of this report, cropland pastured is defined as cropland, he added.

“Cropland values typically are based on how profitable farming the land is expected to be in the long-term, so part of the continued increase we’ve seen in agricultural land values can be linked to the lingering effects of high commodity prices in 2021 and 2022, and expectations of the return from productive land in row crop-heavy heartland states,” he said.

However, he said, this effect has cooled significantly as commodity prices recede.

“Between 2022 and 2023, five Midwest states experienced double-digit percentage increases in farm real estate values,” he said. “In this report, only states in the Southeast experienced such increases. Increases in the Southeast are likely linked to competing land-use interests, which can include urban and suburban sprawl.

“For example, between 2022 and 2023 agricultural land values rose 14 percent in Indiana; 9 percent in Michigan; 8 percent in Missouri; 8 percent in Ohio; 6 percent in Iowa; and 4 percent in Illinois,” he added. “Between 2023 and 2024, agricultural land values rose 3 percent in Indiana; 7 percent in Michigan; 4 percent in Missouri; 9 percent in Ohio; 2 percent in Iowa; and 3 percent in Illinois.”

Of these six states only, he said Ohio saw a larger magnitude increase in land values in 2024 over 2023: “On the other hand, in the Southeast, most states saw larger increases between 2023 and 2024 than the prior period.

“Florida experienced the largest percent increase between 2023 and 2024, at a 13 percent increase (compared to just 5 percent increase the year before), followed by Tennessee at an 11 percent increase (compared to a 9 percent increase the year before), and Virginia at a 10 percent increase (compared to an 8 percent increase the year before),” he added. “Kentucky ranked in at an 8 percent increase both years.”

He said, “Increases in land values and rents result from rising expectations of higher, long-term (nominal) operating profits, and while those increases benefit landowners by enhancing their equity and their rental returns, it also puts farmers on a treadmill, forcing them to cover ever-rising costs for purchased or rented land.”

He said the top four states in terms of percentage growth in cropland values are Tennessee, Ohio, Florida and Kentucky, posting gains of 11 percent, 10 percent, 9 percent, and 9 percent, respectively. He added this report did show several states with declines in cropland value such as Wyoming (-2 percent), Montana (-1 percent), and New Jersey (-1 percent).

He said the average U.S. cropland rent increased to $160 per acre this year, a 3.2 percent rise over 2023; cash rents for pastureland increased 3.3 percent this year, reaching $15.50 per acre.

“Washington and heartland states of Iowa, Illinois and Indiana made up the next highest cropland rental rate category, linked to higher-value specialty crops for the former, and a high density of high-value commodity crops in the latter,” he said.