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2013 N EBRASKA A GLAND M ARKET H IGHLIGHTS by Bruce Johnson UNL Department of Agricultural Economics

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Presentation on theme: "2013 N EBRASKA A GLAND M ARKET H IGHLIGHTS by Bruce Johnson UNL Department of Agricultural Economics"— Presentation transcript:

1 2013 N EBRASKA A GLAND M ARKET H IGHLIGHTS by Bruce Johnson UNL Department of Agricultural Economics

2 The Market in a Nutshell “A $7 Corn Land Market With $5 Corn on the Horizon”

3 Recent History: Land Boom Conditions Nebraska at the “Epicenter” of the U.S. Land Boom

4 USDA Farmland Value Percentage Changes 6/1/2011 – 6/1/ Rank / State Source: Economic Research Service, U.S. Department of Agriculture Agricultural Land Markets up Across the Country, but Nebraska And Neighboring States Leading the Nation

5 Land Class 2013 Average Value (Preliminary) 1-Year Change 3-year Change Dollars/Acre% Change in Value Dryland Cropland: No Irrigation Potential Irrigation Potential5, Grassland: Tillable Non-tillable Irrigated Cropland: Gravity Center Pivot b All Land: a Source: Annual February 1 st UNL Nebraska Farm Real Estate Market Surveys. b Value of pivot not included in per acre value. Nebraska Land Values Climb 25% in Past 12 Months 2013 Values and Recent Trends by Land Class in Nebraska a The Current Market

6 Sharp Upward Advances Across the State 2013 Nebraska Farmland Values and Recent Trends by Sub-State Region Agricultural Statistics District 2013 All-Land Average Value (Preliminary) 1-year Change 3-year Change Dollars/AcrePercent Change Northwest North Northeast Central East Southwest South Southeast Entire State Source: Annual UNL Nebraska Farm Real Estate Market Surveys.

7 Nebraska Nominal Agricultural Land Values 2013P Longer-Run History: Upward but not steady climb for several decades “Boom to Bust” event just 30 years ago Major climb in nominal values in recent years

8 2013 Nebraska Values Adjusted For Inflation At New Heights!

9 Key Land Boom Drivers #1 Record-Shattering Farm Income Levels

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12 Key Land Boom Drivers Historically Low Interest Rates Farm Income Levels Capitalization Rates #2

13 Estimated Net Rate of Return on Investment: Selected Years Percent Irrigated Land Dryland Cropland Grazing Land Irrigated Land Dryland Cropland Grazing Land Irrigated Land Dryland Cropland Grazing Land 2012: 2007: 2002: Source: UNL Nebraska Farm Real Estate Market Developments Survey Series

14 Value-to-Cash Rent Multiple For Eastern Nebraska Center Pivot Cropland, P Value–to–Cash Rent Ratio Climbing into New Territory!

15 What’s On The Horizon? Prevailing Drought Cutting Production? Increasing Input Costs? $5/Bu. Corn?

16 Cash Rent Market Trends More Moderate

17 Question: Are Tenants Taking on Too-High of Rents? Answer: MAYBE !

18 Depends on 2013 Commodity Prices and Yields If Paid $350/AC For Irrigated and $220/AC Dryland Cropland If Paid $350/AC for Irrigated and $220/AC Dryland Cropland

19 Summing Up: The Boom Years May Be Over Real Estate Meltdown Unlikely --But Some Readjustment on the Horizon

20 Your Thoughts: Corn Price In: 2013? 2014? ? Weather Patterns In: 2013? 2014? ?


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