Last Wednesday, the Department of Agricultural Economics at the University of Nebraska released its 2009 Nebraska Farm Real Estate Market Survey. The general tone of the release was that land prices were beginning to stabilize and flatten out towards the end of 2008. The report highlighted that farmland in the area was not immune to domestic and global downturns, which resulted in level per acre prices and flat to slightly down cash rents for the State.

The average price per acre was flat year over year holding steady at $1,424/acre at the end of 2008. The first nine months of 2008 resulted in stable increases largely driven by commodity price increases, however the reversal of this trend in the back half of 2008 offset many of the gains realized in the early part of the year.

The report also showed that values varied by land type; where dryland cropland and grazing land suffered slight reductions in value while irrigated land value actually increased slightly during the year. The East and Northeast Districts suffered the largest losses; however this reduction is offset longer term as these areas have had the highest run-up in value over the past few years.

The survey also indicated that most buyers in the market right now are current landowners looking to expand operations with good quality acreage, while there is still interest in the market from the investor side.

Even though demand in the State remains strong for rental land, cash rental rates were slightly lower in early 2009 compared to 2008. This is likely due to the expectations of compressed margins over the next year due to lowered commodity pricing and overall economic profitability of farmers.

Despite suffering small reductions in land values and cash rents in late 2008 and early 2009, the survey did highlight that these two metrics have not suffered the sharp downward trend that has been witnessed in other markets outside of agriculture (i.e. housing and equities).

-GDH