The US Department of Agriculture has reported that Nebraska’s farm real estate value and cash rent for cropland for 2015 dropped with two percent.
According to Allan Vyhnalek, educator at the Platte County Extension Office, the decrease in real estate value is expected due to changing prices of corn and soybeans.
In a report published by the University of Nebraska- Lincoln last February, the East region, which includes Platte and Colfax counties, experienced an overall drop of three percent on their real estate value while Dryland cropland dropped with nine percent and other types’ values have decreased by three percent. On a brighter side, grazing land’s value increased, tillable by 16 percent, non-tillable by 20 percent while hay land by 24 percent.
Corn prices went up to $5- 7 a bushel while soybeans are sold $11- 15 due to 2005 Ethanol Mandate. Real estate and production costs go up when grain prices increased. Over the past five years, East Region’s real estate value rose to 89% while the whole state experienced an over- all increase of 116%.
According to Thomas Dobbe, regional vice president of Farm Credit Services of America, the decrease in the real estate value of their farm lands might be caused by the increased cost of supplies, equipment, etc. but he also said that it’s too early to say if the drop of real estate value is a start of it continuous decrease or just a one- time fluctuation.
He also added that “It may be an indication that the market will not go any higher or a sign that the market is taking a breather. We won’t know if it’s done going up or if it will continue to go up.”
Both Dobbe and Vyhnalek agree that the value of a farm land depends more over- all trends in the market, quality of soil and topography. The real estate values’ decrease has low chance of affecting the rental prices while it can be expected that property taxes will continue to go up.
Dobbe said, “A two-percent drop in farmland prices is not something to be concerned about. A small decline in farmland prices shouldn’t have any dramatic effect on producers in the Columbus area. Prices are still significantly above where they were five years ago.”