While cropland prices have received considerable attention in the popular press, pasture land prices have also increased significantly in recent years. The predominant forages on pasture land differ across the United States but regardless of the forage type, pasture land is primarily used for beef production. The factors contributing to agricultural returns to pasture are very different than for cropland and not just because cowboys are different than farmers. As in the old TV show “Green Acres”, many urban dwellers have an affinity for country living. Pasture is also valued for recreational uses such as hunting.

The 2007 National Resources Inventory (NRI) reports 409 million acres of rangeland and 119 million acres of improved pastureland for the contiguous 48 states, which is 21 percent and 6 percent, respectively, of the 1.9 billion acres of land and water. In comparison, cropland accounts for 18 percent of the total with 2 percent in the Conservation Reserve Program. Rangeland is covered primarily by native grasses and plants while improved pastureland has introduced plants. The distribution of these two types of pasture is different from east to west in the United States. With the exception of Oklahoma and Florida, the land in pasture is more than 80 percent rangeland in states in the western half of the United States and 80 percent or more improved pastureland in the eastern half. Oklahoma’s pasture is 63 percent rangeland and Florida’s pasture is 58 percent improved pasture.

Like cropland, pasture land values which includes both improved pasture and rangeland have risen dramatically in recent years (Figure 1). While the average value has leveled off, U.S. pasture values have approximately doubled in the last ten years. Though USDA Agricultural Resource Management Survey data showed farm operator household farm income for beef cattle operations declined from 2005 through 2009, land values continued to go up. Over the last ten years, pasture rental rates have increased much less and when beef profitability slowed, rental rates adjusted more quickly (Figure 2).

As shown in Figure 3, pasture rent-to-value ratios have been mostly decreasing since 1998 with a larger decrease from 2005 to 2007, now stabilized at about 1 percent. U.S. average pasture rent-to-value ratios, historically lower than those of cropland, averaged 1.28 for 2000 to 2010 compared to 3.87 for cropland.

Part of the explanation for pasture land owners’ historical acceptance of relatively low returns is that the livestock enterprises on pasture, particularly beef and horses, often include a lifestyle component for which people are willing to earn less. Pasture suffers less erosion and so it is losing little of its long term value while some cropland is losing value due to erosion and that may partly explain the higher rent-to-value ratios for cropland. But, clearly if the agricultural rental value were the only return from owning pasture, it would be a rather poor investment.

Figure 4 shows the variability across states in average pasture values. A comparison of Figure 4 with a population density map shows similarities in that East Coast states are densely populated and have high pasture land values, with values above the national average for both continuing west to the Missouri river. To the west, California has both high population density and high pasture land values.

Since 2005, pasture land values and rents in the central United States have grown faster than the national average (Figure 5). Factors contributing to the increase include factors that have impacted cropland values, but also others. With the exception of Texas, pasture rent-to-value ratios in the plains states have been above the national average.

In contrast to corn and soybean states, Oklahoma sales transaction data show pasture land average values exceed those of cropland (agecon.okstate.edu/oklandvalues). NRI data show that since 1987 Oklahoma cropland acreage has been decreasing while pasture land has been increasing, suggesting a conversion in use over time. While cropland has historically been worth more than pasture, pasture land began commanding a premium in eastern Oklahoma in the early 1990s. In western Oklahoma where agricultural land is predominantly cropland, cropland still commands a premium, but the gap is narrowing over time.

USDA survey data show that 2010 average pasture land values exceed average nonirrigated cropland values in many southeastern states—Arkansas, Louisiana, Mississippi, Georgia, North and South Carolina, Tennessee—and in New Jersey. In all of these states, the percentage of farms with sales less than $50,000 is above the national average. Other factors contributing to the phenomena are likely varied. In each of the southeastern states, 2007 Census data indicates production of more than 36,000,000 broilers and having land available for application of poultry litter is important. Census data also indicates the number of horse farms exceeds the national average in Arkansas, Georgia, North Carolina, and Tennessee as well as Oklahoma.