A quarter century of change: land values in Kansas and Nebraska from 1997 to 2022

Abstract

Developing a comprehensive understanding of the factors influencing agricultural economics, land values, and farm incomes is crucial for informed decision-making and strategic planning in the agricultural sector. This study uses historical data from the USDA-NASS Census of Agriculture to analyze trends over the past 25 years, focusing on Kansas and Nebraska. Since 1997, these states have experienced significant increases in land values, with the most dramatic rise occurring in 2012. Kansas land values increased by an average of 79% compared to 2007, while Nebraska saw an even more pronounced rise of 109%. This surge correlated closely with the steady increase in commodity prices from 2008 to 2014. However, the 2017 Census showed a slowing in this upward trend, recording the smallest increase in land values since 1997. This was attributed to declining commodity prices beginning in 2015, leading to decreased profitability for farmers and a slower rise in land values. This trend highlights the critical interdependence between commodity prices and land values. Further examination of the relationship between land values and farm incomes reveals that land values generally track income trends, with 2017 being an exception with low farm income levels, despite a slight increase in land values. This resilience in land value appreciation, likely driven by cash reserves, underscores the complex dynamics of agricultural economics. By 2022, commodity prices rose again, and land values followed suit, demonstrating the cyclical nature of agricultural economics. This study also calculated county level land values for intervening years between each agricultural census, which occurs every five years. This was done beginning in 1969 to provide land values for each year and is particularly useful for people needing to determine tax basis. This study underscores the importance of monitoring commodity prices and understanding their impact on land values and farm income, providing valuable insights for agricultural business professionals navigating the complexities of the agricultural sector.