Posted: Thursday, September 27, 2012 12:00 PM
NASS expert says rising farm earnings drive up prices
By TIM HEARDEN
SACRAMENTO -- The value of farmland in California this year is an all-time record $7,200 an acre, which shatters last year's record high by $300, according to a government report.
Irrigated cropland averages $12,000 an acre, a $500 increase over last year, while nonirrigated cropland is $3,550 an acre, according to the report from the USDA's National Agricultural Statistics Service office here.
The rising price of farmland continues a trend that's existed since the mid-1990s. Doug Flohr, a NASS ag statistician here, said the escalating land costs and rents are a product of increasing farm earnings.
"Commodity prices have been relatively good in the last few years," Flohr said. "The income from farming has been more than sufficient to service the debt on purchases at these current low mortgage rates."
The latest report affirms a study released in July by Rabobank International's food and agribusiness research team that asserted higher exports, increased yields and good prices for many crops have pushed California's farmland values higher.
Among the latest findings of NASS:
* All cropland, at $9,810 per acre, is up $360 per acre from last year while the average value of pasture land, at $2,800 an acre, is about equal to last year.
* The 2012 state irrigated cropland rental rate, at an average of $340 per acre, is up $5 from 2011 but still down $5 from 2010. The most significant rent increases have been seen in the San Joaquin Valley, where the $269-per-acre average is up 13 percent from 2011. The highest rents are on the Central Coast at $1,010 an acre, down slightly from last year.
* The statewide non-irrigated rental rate of an average of $40 an acre is down from about $50 in the previous two years, while pasture land's average rental rate of $11.50 an acre is down from $12.50 an acre in 2011.
The report offers mixed news for Mary Kimball, executive director of the Winters, Calif.-based Center for Land-Based Learning. The center operates a farm to teach new farmers the basics of agriculture and helps them rent their first plots of land.
"It's great that land values for agriculture are up because it really means agriculture is viable and doing well," Kimball said. "And obviously ag land is in demand, there's no doubt about that -- especially good land like California's."
However, the biggest challenges that beginning farmers face are access to land and access to capital, she said.
"The higher the price of land, the harder it will be to get into it," Kimball said, adding the center would continue to seek landowners willing to make land available to beginning farmers.
2012 California Land Values and Cash Rents Release: http://www.nass.usda.gov/Statistics_by_State/California/Publications/Other_Files/201209lndvlscshrnts.pdf