Aug. 5 (Reuters) – The value of U.S. farmland rose 2.4 percent on average in the year to early June, slowing from a gain of around eight percent in the previous year, according to a report on Wednesday by the United States Department of Agriculture.
The lowest grain prices in five years coupled with patchy export demand because of a strong dollar have hit farm profits and the USDA has forecast overall net farm income will drop by a third this year to $73.6 billion, its lowest level since 2009.
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Lower incomes can put pressure on rents and consequently eat into farmland values in the United States, where nearly 40 percent of farmland is rented. But the survey showed that in the year to early June, farmland across the country largely held its value.
Land values in the Corn Belt, where most of the country’s corn and soybean crops are produced, were 0.3 percent down at $6,350 per acre according to the survey, which is conducted in the first two weeks of June.
The largest fall of 5.9 percent was in Iowa, the top corn and soybean producer, but even there land values stayed above 2013 levels, at $8,000 per acre.
Average farmland values of $6,350 per acre in the Corn Belt – which covers Iowa, Illinois, Indiana, Missouri and Ohio – were still the most expensive outside the Northeast region, which includes Rhode Island and New Jersey, two of the most densely populated states in the country.
Cropland values, which do not include farm buildings, edged up 0.7 percent overall to $4,130 per acre and again, the Corn Belt showed the only declines, with values down 2.3 percent and with land in Iowa losing 6.3 percent of its value in the year.
Cash rents, which often come under pressure when grain prices fall, edged up to an average $144 per acre from $141 in 2014, according to data released by the USDA on Wednesday.
Cash rents in the Corn Belt were steady to lower, with the exception of Ohio, where rents rose to an average $150 per acre from $144 a year ago.
Pasture land rose 2.3 percent in value to $1,330 per acre.
