By Robert Pore
robert.pore@theindependent.com

Preliminary results of the Nebraska Farm Real Estate Market Survey were released on Thursday.

They show that the average price of all farm and ranch land in south Central Nebraska climbed from $1,302 per acre last year to an average of $1,628 per acre this year.

Over the last five years, according to the survey, the average value of all farm and ranch land in south Central Nebraska has climbed $440 per acre.

In south Central Nebraska, center-pivot-irrigated land averaged $3,034 per acre, up 34.6 percent from a year ago. Gravity-irrigated cropland, at $2,689 per acre, was up 22.3 percent.

Dryland crop land with no irrigation potential, at $1,214 per acre, was up 30.3 percent. Tillable grazing land, at $887 per acre, was up 29.7 percent. Non-tillable grazing land, at $658 per acre, was up 19 percent. Hay land, at $859 per acre, was up 19.8 percent.

Statewide, strong commodity prices last year increased Nebraska farm real estate values 23 percent. That's the steepest gain in the 30 years UNL has tracked the ag land market, said Bruce Johnson, a UNL agricultural economist, who conducted the survey.

Last year, statewide, corn prices averaged $4 per bushel, up from $3 per bushel in 2006. Soybean prices averaged $9.95 per bushel last year, up from $6.05 per bushel. Recently, soybean prices have been averaging more than $11 per bushel and corn more than $5 per bushel.

The state's all-land average value was $1,425 per acre as of Feb. 1, according to the survey's preliminary findings. That's up from $1,155 last year.

Johnson said the increase continues a five-year trend that puts average agricultural land values 88 percent higher than they were in 2003.

"Today's level represents a new historical peak value, not only in nominal terms but also in real, inflation-adjusted terms," Johnson said.

He said the previous peak in inflation-adjusted dollars was in 1981, just before a major drop in land values during the farm crisis of the early and mid-1980s.

"The underlying causes of this new plateau are fairly obvious," Johnson said. "Corn demand from the rapidly growing ethanol industry in the state fueled prosperous returns across the corn-producing areas of the state."

There are more than 20 ethanol plants running in Nebraska. Corn use for ethanol is expected to run at more than 800 million bushels this year.

"This, in combination with rising world demand for essentially all of Nebraska-grown commodities, has created a phenomenal income effect across the entire state," Johnson said.

In Central Nebraska, the average for all farm and ranch land values climbed from $1,329 per acre in 2007 to $1,614 per acre this year. That's up $609 per acre since 2004.

Preliminary estimates from the 2008 survey, Johnson said, show the largest percentage gains in the northeast region, up 28 percent, followed closely by the southeast region, up 26 percent. The smallest of the regional gains was 15 percent in the northwest, where the impact on land values of commodity-price surges has been more recent.

The average for all farm and ranch land value in the northeast was $2,750 per acre; southeast, $2,626; and east, $3,478.

And the impact higher corn and soybean prices are having on the state's livestock industry was also reflected in the land value survey, Johnson said.

For example, he said non-tillable grazing land recorded the smallest statewide percentage gain for the year 12 percent as the cattle economy strains to adjust to higher feed costs.

"The fact that the state's cattle industry is effectively using the distillers grains byproduct from the ethanol industry has partially mitigated the feed-cost impact on the fed-cattle component," Johnson said. "Still, profits have all but disappeared in the short run."

In the longer run, though, Johnson said the economic picture seems brighter.

"The limited supply of forages as well as greater substitution of forages for corn in the cattle-feeding cycle may be part of the market participants' willingness to bid grazing-land values upward," he said.

In regions where irrigation water moratoriums on future drilling are already in place, such as the Central Platte Natural Resources District, the value of dryland cropland with irrigation potential showed only modest gains in the last year.

There are 2.1 million acres in the Central Platte NRD, with about 1 million acres certified as irrigated ground.