U.S. farmland values reach record-high levels

The USDA’s annual land values report is complete, and it found the value of American cropland increased to an all-time high in 2021.

The Aug. 6 report indicated U.S. cropland now is valued at an average of $4,420 per acre, up almost 8 percent from $4,100 in 2020. The 2020 average previously was the highest on record. Additionally, the 8 percent jump was the highest since land values spiked by 14 percent in 2013.

USDA also reported that farm real estate value, which measures the value of all land and buildings on farms, also increased to a record-high $3,380 per acre from $3,160 in 2020. The 7 percent increase in this category was the largest since 2014.

Virginia cropland values came in ahead of the national average, increasing over 2 percent from $4,680 per acre in 2020 to $4,790 in 2021. Virginia’s real estate value also was higher than the national average at $4,700 per acre, up 1.7 percent from 2020.

Tony Banks, senior assistant director of agriculture, development and innovation for Virginia Farm Bureau Federation, noted the increase—and relative stability—of cropland values in Virginia generally is beneficial for farmers.

“Stable land values help farmers who own their land because it improves their equity positions and their ability to see returns on their investments,” Banks explained. “That equity can then help farmers obtain loans for increased production, or help serve as collateral for other future investments.”

The stability of land values also reduces the potential for large swings in the cash rental rates farmers pay, which was the case in 2021, Banks added.

The National Agricultural Statistics Service recently published data regarding cash rental rates for U.S. cropland, finding the average rate was $141 per acre, up from $139 in 2020. In Virginia, cash rental rates for cropland decreased slightly in 2021, dropping to $61 per acre from $62 in 2020.

Grain farmer Craig Giese, who farms over 500 acres of rented land in Lancaster County, noted the continued increase in land value doesn’t necessarily mean Virginia farmers will pay higher rent prices.

“Land values obviously will have some correlation to rent prices, but rent prices mostly are related to commodity prices,” Giese shared. “It’s always a delicate balance of where commodity prices are and what your rent is, but in years like this, with farmers getting good prices, we can afford to pay a little more.”