Farmland values in eastern Kansas continue to strengthen, building on the gains that followed the 2020 harvest. Supported by low interest rates and the renewed optimism of higher grain prices and farm income, land values increased an average of 5.4% in the first half of 2021.
Frontier Farm Credit has released its July 2021 farmland value report based on seven farms spread across eastern Kansas. Every farm increased in value.
“As anticipated, the substantial runup in farm profitability has resulted in increased farmland values on the whole,” said Tim Koch, chief credit officer for Frontier Farm Credit. “But we also saw significant differences in values at the local level based on market activity, including the number of sales and land availability.”
Similar patterns were seen in grain belt states served by Farm Credit Services of America (FCSAmerica). The 63 benchmark farms in FCSAmerica’s territory of Iowa, Nebraska, South Dakota and Wyoming improved about 7.5% on average.
Areas that saw modest change in value tended to have a higher concentration of pastureland. As cattle operators focus on retaining cash, pastureland values will likely see continued price pressure in coming months, Koch said.
While drought is impacting crops in areas of the grain belt, it is unlikely to be a drag on cropland values. Strong crop insurance price levels will offset drought-related production losses. The majority of grain operators are expected to be profitable again in 2021 and interest rates remain favorable, Koch said: “The outlook for real estate looks pretty strong.”
The chart below shows the average change in farm values by state. The number of benchmark farms in each state is in parentheses.
STATE | SIX MONTH | ONE YEAR | FIVE YEAR | TEN YEAR |
East Kansas (7) | 5.4% | 6.5% | 3.4% | 80.6% |
Iowa (21) | 9.9% | 13.9% | 15.3% | 37.3% |
Nebraska (18) | 5.6% | 9.5% | -1.8% | 62.9% |
South Dakota (22) | 7.0% | 9.5% | -4.8% | 71.3% |
Wyoming (2) | 8.0% | 10.9% | 29.6% | 75.7% |
About Frontier Farm Credit
Frontier Farm Credit operates in alliance with Farm Credit Services of America to provide credit and insurance services to agriculture and rural communities in eastern Kansas. The association has nearly $2.6 billion in assets and $547 million in members’ equity. Learn more at frontierfarmcredit.com.