Topping the list of issues that could change land values are ongoing international trade negotiations among members of the World Trade Organization and the next federal farm bill that will take effect in 2007, says University of Nebraska-Lincoln agricultural economist Bruce Johnson.
Significant cuts in agricultural commodity programs, which have been proposed before by the current administration and are on the table again this year, could lead to some downturn in land values by cutting ag income potential. Ongoing concerns about water availability and energy costs for crop production also could have an impact, as could near-term crop and livestock commodity price levels.
"A downturn of 10 to 15% in agricultural land over a couple of years could be possible," Johnson says.
On a related front, there continues to be strong demand on the land-rental market, with cash rental rates moving steadily upward in recent years. As for crop-share rental leases, it may also be time to reassess some of the traditional crop-share arrangements between landowners and tenants, Johnson says.
In many cases, he says, those arrangements are "out of sync" with farming trends that have a significant impact on bottom lines, including higher land values, new crop-production technology, the move toward no tillage and increased cost of irrigation systems.