Agriculture

High-quality farmland is still in demand, but the activity of a year and a half ago seems to be tapering off or hitting a plateau, say area people selling agricultural land or following its trends.

For what seemed like an unusual string of good years to some ag producers, Nebraska farmland continued its historic trend of increasing land valuations, but with more significant growth.

University of Nebraska-Lincoln researchers compile annual agriculture figures in February of each year and release their report on land values and trends in the spring. This year’s report was not yet available the end of February.

The 2013 report indicated ag land values continued to climb from February 2012 to February 2013 with an all-land average increase of 25 percent for Nebraska, despite extreme drought across the state in the last half of 2012.

In the east district, where Washington County is situated, the average growth in ag land values from 2012 to 2013 was 18 percent. The east district had the highest value of Nebraska farmland, at an average value of $7,185 per acre.

This growth seems to be slowing down as corn and soybean prices have dropped significantly from a year ago, but there are still buyers.

“High-quality land is doing very well,” Dick Wardell of Blair said. “Farmers are buying it if the land fits into their operation.”

Wardell is a “semi-retired” associate broker who works in Nebraska and Iowa for Farmers National Company and does custom farming as well.

“I still see a lot of buyers at the present time, more buyers than sellers,” Wardell said.

“The farmers are pushing the market,” Wardell said. The last figures he had seen indicated that 71 percent of ag land buyers were farmers.

County Assessor Steve Mencke also notices trends in ag land sales.

“We have seen less farms for sale the last six months,” Mencke said. “Where we were seeing markets moving consistently up, we’re now seeing more erratic patterns. It’s like the market is seeking direction at this point.”

Russ Nelsen has owned WC Real Estate for

30 years and has been doing appraising for 28 years. He called the last couple of years a “perfect storm” for farmers.

“Over the last 20 years, land values have gradually gone up,” Nelsen said. “In the second half of 2012, they took a pretty good jump due to crop prices. Good weather helped produce pretty good crops in this area.”

Better prices for corn and soybeans gave producers more favorable cash flow. Farmers had money to spend and were buying equipment and land, Nelsen said. Auctions brought out a lot of bidders, he said.

Farmers who were buying did not have to borrow as much money.

“A lot of buying interest in farmland really spiked prices,” Nelsen said. A favorable farm program and low interest prices also influenced the jump in valuation, he said.

“It was the perfect storm for investing on the farm side,” Nelsen said.

Nelsen, who also raises corn and soybeans, said higher crop prices means optimism on the buying side and farmers feel they can spend more for the land.

Wardell also credited proposed changes in tax laws for some of the selling in 2012.

“If you were going to sell, there was a big rush to sell in 2012 before Jan. 1, 2013,” when tax laws changed, Wardell said.

Nelsen called 2013 “a pretty stable year.”

“In the second half of 2013, when crop prices retreated some, buyer interest in farmland leveled off,” Nelsen said. “Land values have not come down significantly. It’s always a stair-step approach. They will rise, plateau, rise, plateau.”

“There is still interest in highly productive farmland,” Nelsen said. “Interest in marginal land has leveled off.” Overall, there is still buyer interest in farmland in Washington County, he said, and most of the buyers are existing farmers expanding their operation.

Wardell said annual gains in ag land valuation seem to be going from 15-20 percent to the more normal gains of 3-5 percent over a long period of time.

Why is eastern Nebraska ag land valued so high?

In the 2012-13 report, the eastern district’s average value of farmland at $7,185 per acre compared to $6,165 per acre in the northeast and $5,400 in the southeast parts of the state.The central district of the state averaged $3,750 per acre.

“All of eastern Nebraska from north to south is the best crop-producing region,” Nelsen said. “This part of the state historically has high values for ag land. It’s always been that way.”

Investors from the metropolitan area, who want to buy land in proximity to their homes, may have some impact on high land values, Nelsen said.

Wardell said he is seeing some retired farmers buying land as an investment. Land is still called the best investment as it appreciates in value and provides an annual income, he said.

“You have to know what you are doing,” Wardell said about buying land for investment.

Most buyers continue to be farmers wanting to expand their operations.

“Mostly, buyers have another generation coming,” Wardell said. “They will continue operations with another generation.”

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