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Trends in US Farmland Values and Ownership

Trends in US Farmland Values and Ownership. Todd H. Kuethe and Jennifer Ifft USDA – Economic Research Service NCRCRD Webinar Wednesday October 10, 2012 The views expressed are those of the authors and should not be attributed to ERS or USDA. Objectives. Motivation

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Trends in US Farmland Values and Ownership

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  1. Trends in US Farmland Values and Ownership

    Todd H. Kuethe and Jennifer Ifft USDA – Economic Research Service NCRCRD Webinar Wednesday October 10, 2012 The views expressed are those of the authors and should not be attributed to ERS or USDA.
  2. Objectives Motivation Major findings of the report Some updates Other ERS research on farmland values
  3. Outline Why study farmland? Recent trends Important drivers
  4. Farm real estate basics “Barometer” of financial health of the agricultural sector Collateral for farm loans Retirement Links to farm policy Price appreciation Source: ERS
  5. Average farm real estate values, 1960-2012 Source: USDA, National Agricultural Statistics Service Inflation adjusted using GDP Chain-type deflator, 2005 = 100
  6. Farmland vs. Other Investments Source: USDA, National Agricultural Statistics Service, St. Louis Federal Reserve AAA = Moody’s Seasoned AA Corporate Bond Yield, 10-Year Treasury Constant Maturity
  7. Drivers of farmland values Returns Interest rates
  8. Farm real estate and net cash income, 1990 - 2011 Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service, Economic Research Service
  9. Farm real estate and net cash income, 1990 - 2011 Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service, Economic Research Service
  10. Farm real estate and 3-month Treasury Rate, 1990 - 2011 Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, Economic Research Service, St. Louis Federal Reserve
  11. Farm real estate and 3-month Treasury Rate, 1990 - 2011 Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, Economic Research Service, St. Louis Federal Reserve
  12. Regional differences
  13. Average farmland values by land use and region, 2012 Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service
  14. Drivers of farmland values Returns Interest rates Non-agricultural drivers?
  15. Rent-to-value ratio Source: USDA, National Agricultural Statistics Service
  16. Urban influence
  17. Share of farmland in urban-influenced areas Source: USDA, National Agricultural Statistics Service
  18. Median cropland values Real estate values are inflation adjusted to 2007 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service
  19. Average Farmland Values Real estate values are inflation adjusted to 2007 by the Consumer Price Index Source: USDA, National Agricultural Statistics Service June Area Survey
  20. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  21. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  22. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  23. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  24. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  25. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  26. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  27. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  28. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  29. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  30. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  31. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  32. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  33. Price-to-Rent Ratio for Cropland Cropland Market Value / Capitalized Value Urban Area Low High 1999 – 2000 – 2001 – 2002 – 2003 – 2004 – 2005 – 2006 – 2007 – 2008 – 2009 – 2010 – 2011 Source: NASS June Area Survey
  34. Presenters Todd H. Kuethe tkuethe@ers.usda.gov (202) 694-5593 Jennifer Ifft jifft@ers.usda.gov (202) 694-5552
  35. Suggested readings… Nickerson, C., M. Morehart, T. Kuethe, J. Beckman, J. Ifft, and R. Williams (2012) “Trends in U.S. Farmland Values and Ownership” EIB 92 Economic Research Service Nickerson, C., J. Ifft, T. Kuethe, and M. Morehart (2012) “Farmland Values on the Rise: 2000 – 2010” Amber Waves Kuethe, T.H., J. Ifft, and M. Morehart (2012) “The Influence of Urban Areas on Farmland Values” Choices 26 (2). Ifft, J. and T.H. Kuethe (2011) “Why Are Outside Investors Suddenly Interested in Farmland?” ARE Update 15(1): 9-11.
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