Factors such as hunting lease rates, deer density, recreational income from agricultural uses, and acres of elk habitat have been used to explain differences in agricultural land values. U.S. Census of Agriculture data on recreational income showed an average growth of 180 percent from 2002 to 2007. In Oklahoma, deer hunting is the leading recreational use of agricultural land. Pasture offers year-round forage for deer and also often includes the woody cover required by deer. Oklahoma State University (OSU) rental rate survey data indicate that agricultural producers can earn approximately $4 per acre through deer hunting leases. The 2006 National Survey of Fishing, Hunting and Wildlife-Associated Recreation shows that U.S. hunting participation rates range from 2 percent in the Pacific region to 12 percent in the central United States. Almost all (96 percent) big game hunters, including deer hunters, hunt within their resident state. The increase in the value of deer hunting is due directly to increased interest in and opportunities for hunting due to an explosion in deer numbers. A cultural shift to charging hunters and changes in liability laws also increased adoption of hunting as an alternative business enterprise. Also, many hunters are now more than one generation away from the farm and they no longer have access to family land. The increase in the popularity of deer hunting helps explain the increase in the value of pasture relative to cropland in Oklahoma.

Urban Conversion Options

A 2003 NRI study noted that between 1997 and 2001, the rate of rangeland conversion to developed uses continued on an upward trend whereas the conversion of cropland had slowed. A 2007 NRI study reported that 40 million acres of land were newly developed between 1982 and 2007, representing a 56 percent increase, and accounting for more than one-third of all developed land in the lower 48 states. Rangeland with mature trees is often preferred for housing development. Bottomland cropland often is in a flood zone and thus is less desirable for development. Changes in population density, population growth, per capita income, and distance to urban areas often help explain changes in agricultural land prices over time. Agricultural land value studies have historically shown that population density increases land values. Urban pressure increases all agricultural land values, but may be slightly more important for pasture than for cropland.

Other Factors

Bankers note that oil and gas royalty income helps support land prices in the Plains States. Anecdotal evidence in Oklahoma supports this notion as many heads will nod in agreement if you hypothesize in an Extension meeting that much farmland was paid for with oil and gas royalty income. Royalty income affects both crop and pasture land values but where pasture is valued lower, the impact on pasture values will be larger in percentage terms.

Tax policy and the related property tax assessments relative to agricultural land vary from state to state but often distinguish between cropland and noncropland. In Oklahoma, assessed values are a blend of market value and productive value, 25 and 75 percent respectively. Thus, the per acre taxes for pasture would be relatively lower than for cropland. In local areas, IRS Sec. 1031 like-kind exchanges for tax purposes can be important factors in land markets. For instance, when Wal-Mart’s world headquarters were established in northwest Arkansas, the urbanization of the surrounding area led to producers reinvesting proceeds from those sales in land in northeast Oklahoma.