Kansas study shows USDA land value surveys below market prices

Reuters News
Posted: Apr 10, 2015 2:10 PM

CHICAGO (Reuters) - Actual farmland prices in Kansas, the top U.S. wheat state, generally run far higher than values shown from surveys of farmland owners conducted by the U.S. Agriculture Department, according to a study by a Kansas State University economist.

The Kansas Agricultural Statistics Service (KASS), a USDA department, surveys farmers and landowners annually for their estimates of the market value of crop or pasture land they own. Taylor compared those averages with actual county land sales data from the Kansas Property Valuation Department (PVD) from 2010 through 2014.

Farmland prices are closely watched by U.S. Federal Reserve policymakers, bankers and farm suppliers since land is the basic collateral for most farm loans.

“The KASS-USDA land values estimates are consistently lower than the market-based KSU-PVD estimates,” KSU economist Mykel Taylor said in her report.

“The reason for this difference may be due to (USDA) survey respondents not being fully aware of how much land values have changed over the past several years.”

For 2010 through 2013, actual transactions for irrigated Kansas crop land ran 100 percent or more above what USDA surveys indicated, the study shows. In 2014, as markets softened with lower grain prices, actual sale prices still ran more than 80 percent above farmer-reported estimates to USDA.

For pasture and non-irrigated land values, transacted prices generally ran at least 20 percent above farmer estimates.

Land values increased from 2013 to 2014 for all crop reporting districts, with the largest dollar-per-acre increase in the northwest for irrigated land, the study said. Statewide, non-irrigated farmland values rose 6.2 percent, irrigated cropland was up 9 percent. Pasture land increased by 10.2 percent during the period.

The highest average sale for irrigated land in Kansas in 2014 was seen in south-central Harvey County at $8,517 an acre, compared with an average of $6,008 for the district. The next highest average transaction value was in the northwest district at $5,970 an acre.

(Reporting by Christine Stebbins; Editing by Alan Crosby)