I will be out until the beginning of September and will not be posting any new content until then.  Any comments or emails will be addresses when I return. 

Farmland is still one of the best investments going.  You can tell by the shock and surprise of the slight decline in values reported today by the USDA.  Compared to other market losses for the year, farmland did really well.  -But it’s still down.  My personal research of USDA databases indicates that “farmland values” have not declined in 54 years.  CNN is reporting that “farm real estate values” (includes land and buildings) hasn’t been down for 20 years. LINK TO ARTICLE. –But I haven’t done the research on that one.

Pure Ag Land

According to the USDAs most recent report released earlier today, U.S. cropland values declined 3.9% (-$110 per acre) to an average $2,680 per acre for 12 months through January 1, 2009. In the Corn Belt, cropland values decreased an average 4% from the previous year, to $3,870 per acre. However, in the Northern Plains and Delta regions, cropland values rose 1.6% and 0.6%, respectively. Pasture land values declined 1.8% (-$20 per acre) from January 2008 to $1,070 per acre. The Mountain region had the largest percentage decrease in pasture value, 16% below 2008.

Land and Building

Farm real estate values (land + buildings on farms) averaged $2,100 per acre on January 1; down 3.2 % from a year earlier and the first decline in farm real estate value since 1987. Regional changes in the average value of farm real estate ranged from virtually no change in the Northern and Southern Plains regions to an 11% decline in the Mountain region.

Rents

Cropland cash rents rose 5.3%. The Northern Plains region had the highest percentage increase for cropland, 7.6% above 2008. The major corn and soybean producing states of Illinois, Indiana, and Iowa experienced increases of 4.3%, 4.4%, and 5.9% respectively. Illinois, Indiana, and Iowa cropland cash rents averaged $170/acre, $141/acre, and $180/acre, respectively. Pasture rents in the Northern Plains and the Mountain regions remained unchanged from the previous year, rents in the Southern Plains decreased by 20 cents. The cash rent paid for pasture in the Corn Belt region decreased $1 to $31 per acre, which is the highest cash rent paid for pasture in the U.S.

Farmers and Investors

Overall, I think you are sitting pretty if your portfolio was heavily weight towards farmland (which many farmers are) or had any exposure.   Here is a related article I wrote on this very topic (Farmland Investments vs The Stock Market) back at the end of 2008 before this most recent research came out.  I feel like my message is still on point even with the new data. Farmland represents a tremendous investment value and effectively protects wealth in down markets.  I wonder if these lower prices will spark a rally in the coming months.

Link to USDA Farm Values report: http://alextiller.com/agribusiness_resource/usda_farmland_values_08-04-2009.pdf