“The six year surge in U.S. agricultural land values continues to be top-of-mind for many in agriculture,” notes report author Sterling Liddell, Vice President, Food and Agribusiness Research & Advisory. “We expected land values to grow significantly in late 2011 and early 2012 and the growth was even stronger than we predicted; in excess of 30 percent in some cases.”
In the report, “U.S. Farm Land Continues to Dazzle,” Liddell draws a strong correlation between the rate of growth and higher corn, soybean and wheat prices, which resulted from persistently tight global grain stocks and low interest rates.
“Strong fundamentals including elevated commodity prices, low interest rates, increasing rental rates and strong relative returns to agriculture will continue to make U.S. farmland an attractive investment,” says Liddell.
The U.S. Corn Belt region continued to lead land value growth in 2011 and 2012. States including Iowa, South Dakota and Nebraska were estimated by the USDA to have doubled their 2005 values. An expanded group of states, which adds the Northern Plains and Minnesota, saw year-over-year growth in the range of 15 to 30 percent in 2012
The report considers interest rate increases to be the key medium-term threat to maintaining current levels of ag land values.
Looking ahead to the first half of 2013, U.S. farmland values are likely to increase at a slower rate than in 2011 and 2012. The slowdown is a result of the dramatic 2012 jump in values as well as looming macroeconomic worries. This slowdown will help to keep values in line with underlying fundamentals. As a result, such a slowing would be beneficial for the long-term financial health of the U.S. crop production industry.
“The prospect of strongly higher interest rates post 2014 and softening commodity prices from current highs present the key long term risks for U.S. farmland values,” notes Liddell.
Journalists can obtain the full “U.S. Farm Land Continues to Dazzle” report by contacting Lisa Verbeck at Rabo AgriFinance or Sarah Kolell at AdFarm.
FAR Report Requests: Media Inquiries:
Lisa Verbeck Sarah Kolell
Sr. Communications Manager Director, Public Relations
Rabo AgriFinance AdFarm
D: 319-575-5445 D: 816-218-2776
About Rabo AgriFinance
Rabo AgriFinance is a leading provider of financial services for agricultural producers and agribusinesses in the United States, adding value with industry expertise, client-focused solutions and long-term business relationships. The Rabo AgriFinance nationwide network of relationship managers, crop insurance and risk management specialists offers a comprehensive suite of services, including loans, crop insurance and sophisticated risk management products. Rabo AgriFinance is a part of Rabobank International, the premier provider to the global agriculture industry and one of the world’s largest and safest institutions. Visit www.raboag.com for more information.
About Rabobank International Food & Agribusiness Research and Advisory (FAR)
The Rabobank Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to gather key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and look at the megatrends that ultimately influence clients’ capital strategy. These analysts are internationally respected experts in everything from protein to produce, inputs to oilseeds, and their knowledge is shared regularly with Rabo AgriFinance customers.
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