Nebraska's farmland price now averages $12,000 per acre for high-quality land

Strong commodity markets continue to increase the value of Nebraska farmland.

In Nebraska, according to a recent report from Farmers National Co., the average sale price for an acre of high-quality irrigated land has reached $12,000. That’s a $2,000 increase from a year ago and a $3,500 increase from two years ago.

Jason Lewis, who farms about 1,200 acres of corn and soybeans with his father-in-law, former State Sen. Curt Friesen of Henderson, told The World-Herald that he has seen irrigated land going for as much as $14,000 per acre. That, he said, makes it difficult for farmers like him who don’t have vast amounts of wealth on hand.

“As a younger producer, that’s difficult,” said Lewis, who is 44. “There’s no way any banker is going to loan me that based on a return on investment.”

Paul Schadegg, a Farmers National vice president, and state agriculture experts cited strong commodity prices as a main factor for high land values. For example, as of Monday, corn was trading at about $6.54 per bushel, while soybeans were trading at about $15.10 per bushel. While those commodities prices are a few dollars shy of their peak value within the last 10 years, they’re both are well above their low points recorded at just above $3 and $8 within that time frame.

“The commodity markets are, without a doubt, the main driver in the land market in general,” Schadegg said.

Schadegg said the threshold for what qualifies as high-quality land depends on the region of the state. Across all regions, above-average soil quality and topography is factored into the category. In central and western Nebraska, irrigation also is factored in. Well quality and water availability also are considered in western Nebraska.

The most valuable farmland is located in the eastern part of the state, which has more rainfall than western Nebraska. In eastern Nebraska, average acre values span from over $6,000 in the northeast and southeast to more than $8,000 in the east-central part of the state, according to a 2022 report from the University of Nebraska-Lincoln.

Last year did see some record prices for farmland sold. In Richardson County, for example, nearly 117 acres sold for about $3.2 million — an average of $27,400 per acre.

The price was driven up by a bidding war between businessman and 2022 Nebraska gubernatorial candidate Charles Herbster and brothers David and Steven Frederick, who farm the neighboring land and won the auction. Industry experts called that sale an outlier.

“Sales are very much a case-by-case basis,” said Austin Harthoorn, an economist with the Nebraska Farm Bureau. “Land might only come up for sale once in a lifetime. With instances like that … that’s where you see families bidding it up — and other investors as well. That’s where you can see the sales come up way ahead.”

Rising interest rates may slow the growth in land value, but they’re unlikely to stop it.

“Our anticipation is that it’s going to be a stable market,” Schadegg said. “Time will tell if we have any hiccups with commodity markets or continued increase in interest rates … that will slow the market.”

Lewis said commodity prices will determine the direction of Nebraska’s farm real estate market. If commodity prices remain strong and farmland values continue to increase, Lewis said, farmers like him eventually may question their hesitancy to not buy now.

But if prices fall precipitously?

“Suddenly,” he said, “that ground may shrink up on everybody real fast, too.”