Wisconsin Ag Connection - UW Ag Economist Examines Trends in State Farmland Values

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UW Ag Economist Examines Trends in State Farmland Values
Wisconsin Ag Connection - 09/09/2013

Do you ever notice that the jumps in Wisconsin farmland values don't seem to be as volatile as other states in the Midwest? University of Wisconsin-Madison Ag Economist Bruce Jones has--and he says there's a reason why.

"Farmers in America's Dairyland often reinvest their profits in cows rather than land," he points out.

Two reports published in August both showed that states adjacent to Wisconsin recorded double-digit percentage increases in farm real estate values since a year ago. Wisconsin's property values were up 1.1 percent according to a USDA survey; and by about seven percent in the Federal Reserve Bank of Chicago quarter survey of agricultural lenders.

"In Illinois and Iowa, if you're going to increase your returns you need to farm more acres," Jones points out. "In Wisconsin you could increase returns by adding acres, but you can also invest in cows."

He says it also reflects an inverse relationship in profitability between the two enterprises. High grain prices equal high feed prices, and those are offsetting dairy returns.

The USDA survey found that Wisconsin's average farmland value was $4,400 in 2013, compared to $4,350 last year. Increases in the five states touching Wisconsin ranged from 11.3 percent in Indiana to 20 percent in Iowa. The average U.S. farmland price climbed 9.4 percent.

The Chicago Fed survey said the increase in prices in Wisconsin's neighbors ranged from 17 percent in Illinois to 21 percent in Indiana.

Jones says the results from the two surveys don't align perfectly because the two are directed at different groups of people. USDA conducts a comprehensive survey of producers while the Chicago Fed asks farm lenders about changes in the price of 'good' farmland. The two also cover somewhat different territories.

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