What is in this article?:
- Western farmland values leap as urban prices tumble
- Leveling of values
- Western states like Arizona and California are reporting more land is being utilized for farming.
- Since 2006, USDA figures indicate land values in rural America have jumped by 20 percent or more.
- "It would be fair to say there is a farming renaissance under way as available crop acreage is in high demand,” says Dr. Charles Gilliland, research economist at the Texas A&M University.
It has been a tough year for farming. Drought, floods, and escalating production costs are just a few of the ongoing concerns of U.S. agriculture producers, and it hasn’t been much easier in urban areas either as higher energy costs, tighter financial markets, falling real estate values and growing food costs add to the problems of an unstable economy.
Yet in spite of the uncertain economy and regardless of wavering consumer confidence, while urban land values have declined by as much as 70 percent since 2006, USDA figures indicate land values in rural America have jumped by 20 percent or more, and perhaps more surprising, Western states like Arizona and California are reporting more land is being utilized for farming.
It is statistics like these that have at least one agriculture economist wondering if there could be a renaissance of farming in America's future.
“Rural land values are essentially being driven by the high prices of commodity crops like corn, rice and cotton. These historically high markets have added greatly to the stability of rural land values. It would be fair to say there is a farming renaissance under way as available crop acreage is in high demand,” says Dr. Charles Gilliland, research economist at the Texas A&M University’s Real Estate Center in College Station.
Gilliland says it is a positive sign when rural land values rise at a time when the overall economy has been suffering.
“We are seeing buyers grab CRP lands that are coming out of the [conservation] program. For one, corn is being driven by ethanol and other alternative fuel development and the demand for soybean crops are being driven by healthy Chinese exports, so there should be little surprise that productive crop land is in high demand,” Gilliland adds.
He says institutional investors and wealthy real estate speculators are contributing to strong rural land values as they buy up crop acres as soon as they are available on the open market and who then lease the acreage to farmers for crop development.
Richard Brock, president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report, agrees.
“It is no secret most rural real estate values have gone through the roof over the last two years. In Arizona and Southern California, for example, values are at a premium,” Brock says, indicating it is a great time to buy or sell rural real estate. “We are going to see a shift in acres to more corn because of the strong market and high demand.”