In the News -
December 2007
Arkansas farmland values soaring, pushed by developers
LITTLE ROCK - The value of farmland in Arkansas has soared in recent years,
buoyed by the high prices developers are willing to pay for agricultural land.
"Many factors affect farmland values, but I suspect that non-agricultural
uses of pasture land, such as urban sprawl and desire to live in rural areas,
are causing pasture land values to increase faster than other types of
farmland," said Dr. Terry Griffin, assistant professor/economist with the
University of Arkansas Division of Agriculture.
This is especially true in northwest Arkansas where an economic boom has
expanded from cities into the countryside, he said.
Rising farmland value has been the trend over the last 60 years in Arkansas,
with a few exceptions along the way, Griffin said.
During the 1970s, farmland values increased by nearly 200 percent. But that
was followed by a 34 percent decrease from the highest point in 1982 to 1987.
Over the decade of the 80s, values were down 13 percent.
"It wasn't until 1998 for the previous Arkansas highest farmland value set in
1982 to be reached again," Griffin said.
Since the lowest farmland values were set in 1987, farmland has increased 218
percent. This long-term trend in Arkansas farmland values is not unusual.
Farmland values in many other states followed similar trends of increased
values during the 1970s, followed by similar decreased values in the 1980s, with
a steady increase since the mid to late 1980s, Griffin said.
"With only two minor exceptions in 1990 and 1992, Arkansas farmland values
have been on the rise since 1987," he said.
For the last four years, farmland values have increased at or above 10
percent and have increased at least 5 percent since 2001.
All types of farmland values are rising: 1) farm real estate, 2) cropland, 3)
irrigated cropland, 4) non-irrigated cropland, and 5) pasture land.
"The most notable increase has been in pasture land relative to cropland,
whether irrigated or non-irrigated," Griffin said. "Pasture land values have
been increasing at a faster rate than the other types of farmland and have
surpassed the value of cropland."
In 2007, the value of pasture land surpassed that of irrigated cropland and
is approaching the per-acre value of farm real estate, which includes buildings
and facilities. This trend in pasture land values has also been documented in
surrounding states.
Griffin said farmers are right to be alarmed by the trend of rising values as
land is gobbled up around them and high land values make it difficult for them
to buy new land for expansion.
He said the USDA reports that the increase in farm real estate values
continues to be driven by a combination of many factors, including strong
commodity prices and farm programs, outside investments, favorable interest
rates and tax incentives and continued commercial and residential development.
The USDA said it's uncertain if farmland values will continue to increase in
value, remain steady, or begin to decline.
You can read Griffin's agricultural economics newsletter by going to
www.uaex.edu and selecting Agriculture, Newsletters and
Farm Management and Marketing.
The Cooperative Extension Service is part of the U of A Division of
Agriculture.
December 7, 2007
Media Contact: Lamar James
Extension Communications Specialist
U of A Division of Agriculture
Cooperative Extension Service
(501) 671-2187 or (501) 753-0207
ljames@uaex.edu
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