By Tyler Williams, Extension Educator, Lancaster County
One of the most difficult tasks of renting agricultural land is determining a “fair” price for all parties involved, and the current economic challenges make that task even harder. The University of Nebraska–Lincoln Agricultural Economics Department conducts a yearly survey to help landowners know and understand the value and average rental rates of the land in their area. Overall, the average market value of ag land in Nebraska increased by 3% from 2019, and it is the first time since 2014 the state saw an increase
in the overall market value of ag land.
ABOUT THE SURVEY
On March 11, 2020, the 2020 Nebraska Farm Real Estate Report was released from Cornhusker Economics
(https://agecon.unl.edu/cornhusker-economics/2020/nebraska-farm-real-estate-preliminary-results) and this article contains “preliminary” data from the 2020 Nebraska Farm Real Estate Market Survey. This survey was sent to professional farm and ranch managers, certified general appraisers and agricultural bankers earlier this winter asking about prices and values for the upcoming 2020 growing season. This report is considered “preliminary” because it is publicized once enough surveys are returned in order to have statistical significance. This allows users to see most of the data as early as possible to assist with rental rate negotiations, with the understanding the numbers may be a little different in the final report to be released in June. This March report is simply a “sneak-peak” to the final report and should be used as such.
REPORT FINDINGS
The report provides data based on the eight Agricultural Statistics Districts in Nebraska (see map above). Lancaster County is located in the East District; however, much of the ag land, especially the southern half of the county, will have similarities to the Southeast District. There are two data sets provided: Average Value of Farmland and Reported Cash Rental Rates. The Farmland Values in Table 1 (https://agecon.unl.edu/2020-nebraska-farm-real-estate-preliminary-results-tables) is split into Dryland Cropland (with or without irrigation potential), Grazing Land (tillable or non-tillable), Hayland and Irrigated Cropland (with gravity or center pivot). The table also shows the percent change from 2019, and nearly all locations saw a slight increase in land values. Overall, the All Land Average in the East and Southeast Districts increased by 5% and 4%, respectively; however, there was a slight decrease in hayland in the East District.
The most popular data from the survey is the Reported Cash Rental Rates found in Table 2 (https://agecon.unl.edu/2020-nebraska-farm-real-estate-preliminary-results-tables#table2). This table provides cash rent data on dryland cropland, gravity and center-pivot irrigated cropland, pasture and cow-calf pair rates. The overall cash rental rates have primarily increased as well, when compared to 2019. The East district did see a decrease on Center Pivot Irrigated Cropland.
When using this data, it is very important to remember the report produces values for a region and doesn’t take into account the local “supply vs. demand” that may alter these values for your land. The report also provides a range based on the quality of the ground, which can be highly subjective.
Communication with your tenant or landlord is critical for understanding the needs of both parties as this report does not include the multitude of factors unique to your farm. These numbers should simply serve as a starting point for the communication on rental rates.