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Ag Land Market Perspectives

Damona DoyeRegents Professor and Rainbolt Chair in Agricultural Finance

Roger SahsAssistant Extension Specialist

Agricultural Land Value Topics

• Small parcel premium

• Changes in land values

• Land values relative to rents and income

• Land ownership

• Anticipated land disposal

• Random unrelated note 

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Agricultural Land and the Small Parcel Size Premium Puzzle

Brorsen, Doye and Neal. Land Economics , Vol. 91, Number 3. August 2015. 

‐0.5%

0.5%

1.5%

2.5%

3.5%

4.5%

5.5%

6.5%

USDA Yearly Percent Change in Land ValuesJanuary, 2015

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Cropland Value, 2015 (% change)

5.7%

‐2.5%

1.0%‐6.3%

‐0.6%

4.4%

‐2.1%

‐2.2%

8.7%

‐0.4%

2.1%

2.6%

5.0%

1.9%

8.0%

9.5%

3.8%

1.0%

‐0.7%

5.4%

N/C

>10

1‐9

<1

USDA‐NASS data

3.5%

2.7%

4.0%

1.2%

3.5%

4.8%

5.3%

1.1%

‐2.4%

2.8%

3.8%0.9%

N/A

Pasture Value, 2015 (% change)

16.3%

18.8%

‐1.7%

4.4%

13.3%

‐3.3%

6.9% 5.4%

14.0%

3.1%

1.9%

2.9%

‐1.9%

3.6%

1.4%

4.4%

1.3%

1.6%

‐5.6%

4.1%

N/C

>10

1‐9

<1

USDA‐NASS data

1.3%

1.2%

4.8%

2.2%

1.9%

2.5%

7.2%

‐1.3%

7.5%

1.4%N/A

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USDA-NASS

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500$/acre

US and OK Land Values

US Pasture Land Value OK Pasture Land Value

US Cropland Value OK Non‐irrig Cropland Value

USDA/NASS

0

5

10

15

20

25

30

35

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

Cas

h R

ent (

$/ac

)

Land

Val

ue (

$/ac

)

Oklahoma Non‐Irrigated Cropland Cash Rents and Land Prices

Land Value Cash Rent

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5

USDA/NASS

0

2

4

6

8

10

12

14

0

200

400

600

800

1,000

1,200

1,400

1,600

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

Cas

h R

ent (

$/ac

)

Land

Val

ue (

$/ac

)

Year

Oklahoma Pasture Cash Rents and Land Prices

Land Value Cash Rent

USDA/NASS

0

1

2

3

4

5

6

Rent to Value

US Cropland Rent to ValueOK Non‐Irrig Cropland Rent to ValueUS Pasture Rent to ValueOK Pasture Rent to Value

US and OK Cropland and Pasture Rent to Value Ratios

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$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

$500.0

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015F

Land values, $/ac

Income, $B

U.S. Value of Agricultural Production, Net Farm Income and Agricultural Land Values

Value of sector production, $ B NFI, $B Land values, $/ac

0

300

600

900

1,200

1,500

1,800

0

2

4

6

8

10

12

$ pe

r A

cre

Bill

ions

($)

Oklahoma Net Farm Income, Value of Ag Production, and Farm Real Estate Value

Net Farm Income Ag Production Value Farm Real Estate

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7

0

1

2

3

4

5

6

7

8

9

10

Years to Pay for an Acre of Land with Gross Revenuefrom 30 Bushel Yield per Acre

OK Agricultural Land, Means Acquired

49%

11%

6%

34%

Percent of Acres

Purchased from non‐relative, direct sale orbroker

Purchased from relative,direct sale or broker

Purchased in auction

Via inheritance or gift

Source: USDA/NASS TOTAL Survey

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17%

33%

13%

10%

27%

OK Landlord Arrangements

Operator landlord

Non‐op LL: Individual

Non‐op LL: Partnership

Non‐op LL: Family corp

Non‐op LL: Trusts

Operator LL:          2.3 million acres $3.7 billion value Non‐operator LL: 11.6 million acres $29 billion value

Source: USDA/NASS TOTAL Survey

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OK Agricultural Land Use, Acres Rented Out

48%

49%

3%

Pasture

Cropland

Other, including forest

Source: USDA/NASS TOTAL Survey

OK Non‐operating Landlords

60.116.8

23.2

Number of Tenants

1 tenant

2 tenants

3 or more tenants

Source: USDA/NASS TOTAL Survey

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OK Agricultural Land Area Rented Out by Non‐operating Landlords

9.3

14.3

34

21 21.4

50 to 99 acres 100 to 199acres

200 to 499acres

500 to 999acres

1000+ acres

0

5

10

15

20

25

30

35

40

Percent of Land

Source: USDA/NASS TOTAL Survey

Do you anticipate transferring ownership of any owned land in the next 5 years?

2,219,080

797,337*[VALUE]

2,478,337

Acres ( and %)

Put or keep in a will

Sell to a non‐relative

Gift or sell to a relative

Put or keep in a trust

(36%)

(13%)

(40%)

(11%) *Unpublished, but derived from subtracting 

published categories.

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Do you anticipate transferring ownership of any owned land in the next 5 years?

2% 7%2%

6%

83%

Percent of OK Agricultural Land(34,300,000 acres)

Sell to a non‐relative

Put or keep in a trust

Sell to a relative or gift

Put or keep in a will

Unknown

Kansas Farm Management Association Data

 $‐

 $20,000

 $40,000

 $60,000

 $80,000

 $100,000

 $120,000

 $140,000

 $160,000

 $180,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Non‐Farm Income Net Farm Income Total Family Living

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Resources and Contact Info

• OSU Agricultural Economics Department– http://agecon.okstate.edu/oklandvalues

• Kansas City Federal Reserve Bank– http://www.kc.frb.org/

• Chicago Federal Reserve Bank– http://www.chicagofed.org/webpages/index.cfm

• USDA NASS– http://www.nass.usda.gov/Charts_and_Maps/Land_Values_and_Cash_Rents/

• USDA Census of Agriculture– http://www.agcensus.usda.gov/Publications/2012/– http://www.agcensus.usda.gov/Publications/TOTAL/

• damona.doye@okstate.edu, 405‐744‐9813• Facebook: OSU Farm Management