High Farmland Values Not Good for All Farmers

Nebraska farmland values have jumped 40 percent in the last year. That's according to the Federal Reserve in Kansas City.

The Federal Reserve says its third quarter survey of 243 banks
showed the largest annual increase in land values since the survey
started in 1980.

And while that may seem like great news for farmers, it's not good news for everyone.

Ryan Krenk is a fourth generation farmer. His family has farmed this land for more than 100 years.

He tells 10/11, "Since 1886, so quite a few years."

Three years ago, Krenk added to his family's more than 700 acres and watched the value of that new land grow.

Krenk says, "We bought it for $2300 an acre and land around here is going for $4500 to $5000 an acre so it's roughly doubled."

Tuesday the Federal Reserve confirmed what Krenk is experiencing. The 10th Federal Reserve District said bumper crops and strong farm income in northern Plains states, like Nebraska, helped push up prices despite drought and flooding. It said farmland values increased in northern plains states and Nebraska saw the largest spike compared to other states.

Keith Olsen is President of the Nebraska Farm Bureau Federation and is a farmer himself. He says, "We had a number of years of extremely dry weather in the early 2000's and ag land values really stayed steady where they may have been going up in other states. The last few years have been very profitable and we've seen ag land values go up."

He also says Nebraska has seen an influx of outside money buying land in the state.

While the value of land may look great on paper, for young farmers, the high price can actually make things tougher.

Krenk says, "The downside is that I don't have a lot of equity in that land, being that I just bought it three years ago, so it's good in the regard that it makes my balance sheet look better, however if I want to go buy more land, and I go walk into a bank and I go ask a banker for a half million dollars to go buy a piece of land, they're going to laugh at me."

Olsen adds, "If you don't have equity, it's very tough to buy land, even if you think the price is right, so it's a real challenge for young people to get started in agriculture, to expand their operation or even if their family wants to bring in another family member."

The other difficulty for young farmers is it's also expensive to cash rent land. Olsen says higher valued land, will be more expensive for young farmers to rent.

He just hopes the recent spike, doesn't mean a crash in values.

But if you have the money Olsen says there's land to buy. He says a farmer will sell for different reasons, but there's always someone looking to buy.


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