Farmland prices reach record levels

Idaho sees greatest increase; California sets bar in the West

Scott A. Yates
Capital Press

August 17, 2007

It's not just commodity prices that are red hot.

In the Capital Press readership area of Washington , Oregon , Idaho and California , agricultural land values are reacting to everything from higher crop prices to recreational pressure as they reach record levels.

Nowhere is the increase more in evidence than Idaho , where average cropland value has risen 87 percent over the past five years to $3,150 an acre, according to a report from the National Agricultural Statistics Service.

That makes Idaho 's average cropland more expensive than land in Oregon , $2,180 an acre (a 30 percent increase over five years), and Washington ($1,750 an acre, a five-year growth of 19 percent). California , however, remains the West's leader in cropland value at $9,780 an acre (a 65 percent increase over five years.)

The "Land Values and Cash Rents" survey, which was released by NASS Aug. 3, looks at land values as of Jan. 1, 2007 . Its data reveals rising numbers across the board with the most expensive cropland- $11,900 an acre- found in New Jersey . The cheapest cropland is found in North Dakota , $670 an acre.

Cropland value is one of the ways the survey measures the value of property in the United States . Another indication of Idaho 's rising profile can be found under the category "Farm Real Estate," which measures the value of farmland and buildings.

In just one year, the value of Idaho holdings increased more than 39 percent to $28.7 billion, catapulting the state ahead of Oregon ($24.2 billion) and Washington ($26.4 billion), which saw farm real estate value increase at a more sedate 5 percent and 6 percent, respectively.

Scott Shimmin, NASS statistician in Washington , D.C. , said the report doesn't tease out the reasons for the rising values.

"We report the facts. We don't try and make projections or go into great detail on what the factors are, especially at the state and regional level," he said.

In general, he said, the pressure on farmland real estate values depends where in the country the land is located. In the Northeast, the increase is about supply and demand and development. In the Midwest , it is about strong commodity prices. In the West, various ingredients come into play.

"We see some cases where pastures are increasing at a higher rate because of recreational use for hunting and preservation type things," he said.

Roger Cramer, senior vice president of risk management at Northwest Farm Credit Services, said mountain states in particular have seen phenomenal growth in the value of property. According to the survey, Montana 's farm real estate increased 57 percent in a year to $48 billion.

Cramer said he believes recreational pressure is driving some of the increase, noting there are a significant number of purchases in cash. There is also development pressure around Idaho cities.

"I think we can't underestimate where the Boise economy has been and probably some of the development in those scenic areas" of Northern Idaho, he said, adding that the influx of dairy into Southern Idaho and the resultant construction of infrastructure to support it may be another factor. Sugar beets and potatoes, two big Idaho crops which are bouncing back, also require significant infrastructure.

"I think a lot of the farmers have done well on their commodities, whether it is grain, livestock or dairy, and I think that gets reflected in their demand for additional real estate, which is typically the farm next door," he said.

Where the distinction applies, the NASS survey also looked at the value of irrigated acreage. Within the Capital Press readership area, California sets the bar at $11,800 an acre, while nonirrigated land averaged $3,500 an acre.

In Idaho , irrigated acreage is valued at an average $4,950; nonirrigated, $1,400 an acre. Washington 's irrigated acreage is worth $4,000 an acre ; nonirrigated, $1,140. Oregon 's irrigated acreage is valued at $3,350 an acre; nonirrigated, $1,700.

Interestingly, the average cash rent per acre for irrigated land is not reflective of the irrigated value, at least not in Idaho . The Gem State has the lowest average cash rent at $130 per acre. In Oregon the cash rent for irrigated ground is $135; in Washington , an average of $210.

California not only tops the list for highest average cash rent within the West, but also the nation. Irrigated ground in the Golden State rents for an average $340 an acre.

The value of pasture is also rising everywhere, but more quickly in the Pacific region, which includes Washington , Oregon and California , than anywhere else in the nation. The three states saw pasture values shoot up 29 percent over the period of a year to an average $1,730 an acre.

Most of the regional increase was driven by California 's 31 percent one-year increase to $2,820 an acre. In Washington , pasture is valued at $700 an acre; Oregon , $630.

Staff writer Scott Yates is based in Spokane . E-mail: syates@capitalpress.com.

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