Ag Land Market Perspectives Damona Doye Regents Professor and Rainbolt Chair in Agricultural Finance Roger Sahs Assistant 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 1
Agricultural Land and the Small Parcel Size Premium Puzzle Brorsen, Doye and Neal. Land Economics, Vol. 91, Number 3. August 215. 6.5% USDA Yearly Percent Change in Land Values January, 215 5.5% 4.5% 3.5% 2.5% 1.5%.5%.5% 2
Cropland Value, 215 (% change) 2.7% 4.% 5.4% N/A N/C 5.3% 1.2% 1.% 3.8%.7% 4.4% 2.5% 8.7% 5.7% 1.1% 2.1% 6.3% 3.5%.6% 2.2% 4.8% 8.% 3.5% 2.1% 1.9% 2.6% 2.8% 1.%.4% 2.4% 3.8%.9% <1 9.5% 5.% 1 9 >1 USDA NASS data Pasture Value, 215 (% change) 1.2% 4.8% 2.5% N/A N/C <1 1 9 >1 1.6% 4.1% 5.6% 13.3% 18.8% 14.% 16.3% 7.2% 7.5% 1.7% 3.3% 4.4% 1.3% 6.9% 5.4% 1.9% 3.1% 4.4% 2.2% 2.9% 1.3% 1.4% 1.4% 1.9% 1.9% 1.3% 3.6% USDA NASS data 3
$/acre 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 US and OK Land Values US Pasture Land Value US Cropland Value OK Pasture Land Value OK Non irrig Cropland Value USDA-NASS Land Value ($/ac) Oklahoma Non Irrigated Cropland Cash Rents and Land Prices 1,8 35 1,6 3 1,4 1,2 25 1, 2 8 15 6 4 1 2 5 197 1973 1976 1979 1982 1985 1988 1991 1994 1997 2 23 26 29 212 215 Cash Rent ($/ac) Land Value Cash Rent USDA/NASS 4
Land Value ($/ac) 1,6 1,4 1,2 1, 8 6 4 2 Oklahoma Pasture Cash Rents and Land Prices 14 12 197 1973 1976 1979 1982 1985 1988 1991 1994 1997 2 23 26 29 212 215 Land Value Year USDA/NASS Cash Rent 1 8 6 4 2 Cash Rent ($/ac) Rent to Value 6 5 4 3 2 1 US and OK Cropland and Pasture Rent to Value Ratios US Cropland Rent to Value OK Non Irrig Cropland Rent to Value US Pasture Rent to Value OK Pasture Rent to Value USDA/NASS 5
Income, $B $5. $45. $4. $35. $3. $25. $2. $15. $1. $5. $. U.S. Value of Agricultural Production, Net Farm Income and Agricultural Land Values 197 1973 1976 1979 1982 1985 1988 1991 1994 1997 2 23 26 29 212 215F Value of sector production, $ B NFI, $B Land values, $/ac $3,5 $3, $2,5 $2, $1,5 $1, $5 $ Land values, $/ac 12 1 Oklahoma Net Farm Income, Value of Ag Production, and Farm Real Estate Value 1,8 1,5 Billions ($) 8 6 4 2 1,2 9 6 3 $ per Acre Net Farm Income Ag Production Value Farm Real Estate 6
Years to Pay for an Acre of Land with Gross Revenue from 3 Bushel Yield per Acre 1 9 8 7 6 5 4 3 2 1 OK Agricultural Land, Means Acquired Percent of Acres 34% 49% Purchased from nonrelative, direct sale or broker Purchased from relative, direct sale or broker Purchased in auction 6% 11% Via inheritance or gift Source: USDA/NASS TOTAL Survey 7
OK Landlord Arrangements 1% 27% 17% 33% Operator landlord Non op LL: Individual Non op LL: Partnership Non op LL: Family corp Non op LL: Trusts 13% 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 8
OK Agricultural Land Use, Acres Rented Out 3% 49% 48% Pasture Cropland Other, including forest Source: USDA/NASS TOTAL Survey OK Non operating Landlords Number of Tenants 23.2 16.8 6.1 1 tenant 2 tenants 3 or more tenants Source: USDA/NASS TOTAL Survey 9
OK Agricultural Land Area Rented Out by Non operating Landlords 4 35 3 25 2 15 1 5 9.3 14.3 5 to 99 acres 1 to 199 acres Percent of Land 34 2 to 499 acres 21 21.4 5 to 999 acres 1+ acres Source: USDA/NASS TOTAL Survey Do you anticipate transferring ownership of any owned land in the next 5 years? Acres ( and %) 2,478,337 (4%) 2,219,8 (36%) Put or keep in a will Sell to a non relative Gift or sell to a relative Put or keep in a trust *[VALUE] (11%) 797,337 (13%) *Unpublished, but derived from subtracting published categories. 1
Do you anticipate transferring ownership of any owned land in the next 5 years? Percent of OK Agricultural Land (34,3, acres) 2% 7% 2% 6% Sell to a non relative Put or keep in a trust Sell to a relative or gift Put or keep in a will Unknown 83% Kansas Farm Management Association Data $18, $16, $14, $12, $1, $8, $6, $4, $2, $ 24 25 26 27 28 29 21 211 212 213 214 Non Farm Income Net Farm Income Total Family Living 11
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/212/ http://www.agcensus.usda.gov/publications/total/ damona.doye@okstate.edu, 45 744 9813 Facebook: OSU Farm Management 12