Opinion: Despite tough ag economy, Missouri farmland prices stable

While landowners and banks are thankful for the stable and slightly rising land values, there is another side to the story.”

New data from the U.S. Department of Agriculture show Missouri farmland values holding steady despite the challenging agricultural economy.

The figures, compiled by the USDA’s National Agricultural Statistics Service, found the average value of cropland was unchanged from 2018, at $3,490 per acre.

The stable prices are welcome news to farmers fearing a more serious downturn in the ag economy. Ongoing tariff battles combined with more than a half-decade of low commodity prices have raised worries of a looming crisis.

While cropland prices are stable at the moment, they have lost some value in recent years. The latest figures represent a decline of $260 per acre from a 2014 high, which came at the end of a massive spike in crop prices. This 7.5% decline still pales in comparison to the drop in farm income over the same period. USDA estimates that net farm income has dropped over 35% for American farmers since a 2013 peak.

Some of Missouri’s neighboring states have seen even more significant declines in land values. Iowa cropland dropped 15% since 2014, and Nebraska has lost 14%. Cropland prices had risen to much higher levels during agriculture’s economic boom years and thus had further to drop in a corrective market.

For farmers raising livestock, land values have been heading in the opposite direction. Compared with last year, Missouri pastureland rose just over 3% to $1,980 per acre. Pastureland has actually seen a steady increase in value over the past few years, rising almost 9% since 2014.

While landowners and banks are thankful for the stable and slightly rising land values, there is another side to the story.

Renters and those seeking to expand operations have been frustrated at the continually high cost of land. With farming’s profitability remaining low, land purchases are often cost-prohibitive, as the land will not cash-flow to pay for itself. Cash-rent farmers are increasingly squeezed to turn a profit each year, with prices low but costs remaining high.

Many young and beginning farmers are having the toughest time. Land prices are far too high for someone without huge cash reserves to afford a down payment. Unless the farmer’s family has an existing operation to leverage as collateral, lots of young would-be farmers will be frozen out of the market as long as the status quo continues.

Land values will continue to be watched carefully, as farmers struggle financially, because land is by far the largest financial asset owned by most farmers. Although it is only one indicator of the overall health of the farm economy, it can make or break an operation.

Eric Bohl is director of public affairs for the Missouri Farm Bureau in Columbia. He can be reached at publicaffairs@mofb.com.