Good fertile cropland has hit the $3,000 level – a record price in Missouri – but it may be a short-lived record if the economy and commodity prices continue their downward spiral.

Good cropland in 12 of 20 survey regions in the latest Missouri Farm Land Survey averaged $3,000 or more per acre, raising the average for the state to $2,952. "There were several individual estimates in the $4,000-$4,500 range for regions with major rivers and Missouri's best cropland," reports Ron Plain, University of Missouri agricultural economist and survey coordinator. "On average, respondents thought good cropland had increased $352 per acre since July 2007."

The survey, conducted this past July, also indicated that Missouri pasture values also increased in 2008 but not as much as cropland. Estimates showed good pastureland had increased $207 per acre since July 2007.

Who Is Buying Land?

Survey responses showed 54% of farmland buyers planned to farm the land themselves -- a 4% increase over 2007. The number planning to rent out the land and the number planning to use for non-farm purposes both declined by 2%.

"Comments indicated weakness in the general economy, fuel prices, and problems in financial markets discouraged purchases for home sites or investment, but strong grain prices [back in July] encouraged farmers to purchase land," Plain says.

Outlook

Most survey respondents were skeptical that Missouri farmland values would continue to increase at the rate of the past few years - again citing concerns about the general economy, increasing fuel and input costs, and volatility in grain prices. They expect the average value for all Missouri farmland to increase 1.5%, with cropland up 3%, but pasture up only 0.2%, and other types of farmland falling 0.2%.

Plain expects a worldwide recession in 2009, which is bound to have a negative impact on land prices and cash rent. "The key driver of farmland prices and rents is crop prices. The financial crisis has pushed down the price of all major commodities - crops and livestock included. Lower crop prices means less return to land," he says.

FYI
To read the full report and find farmland values in your region of the state, visit agebb.missouri/mgt/landsurv.

See related article, "Farmland demand hikes cash rents," in the November issue of Missouri Ruralist.