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The 2005 Kentucky Land Outlook. Prepared for Economic Subject Matter Meetings October 17-21, 2005 By Richard L. Trimble and Craig D. Gibson Extension Farm Management Specialists. Agricultural Economics.

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the 2005 kentucky land outlook
The 2005 Kentucky Land Outlook

Prepared for

Economic Subject Matter Meetings

October 17-21, 2005

By

Richard L. Trimble and Craig D. Gibson

Extension Farm Management Specialists

Agricultural Economics

chart 1 average per acre value of farm real estate kentucky and 48 states 1912 2005
Chart 1. Average Per Acre Value of Farm Real Estate, Kentucky and 48 States, 1912-2005.

Source: University of Missouri: http://agebb.missouri.edu/mgt/bull10b.htm.

Agricultural Economics

chart 2 historical land values us and kentucky 1961 2005
Chart 2. Historical Land Values, US and Kentucky, 1961-2005.

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

2004 land value increases widespread
2004 Land Value Increases Widespread
  • Average value of farm real estate across 48 United States was $1,510 per acre as of January 1, 2005
  • Increase of $150 or 11.0% over 2004 value
  • Largest dollar increase ever recorded
  • Largest percentage increase since 1981

Agricultural Economics

kentucky 2005 real estate values
Kentucky 2005 Real Estate Values
  • Average value of Kentucky farm real estate was $2,200 per acre as of January 1, 2005
  • Increase of $200 or 10.0% over 2004 value
  • Largest dollar increase ever
  • Largest percentage increase since 1980

Agricultural Economics

positive influences on value increases
Positive Influences on Value Increases
  • Low interest rates
  • Good commodity yields
  • Good commodity prices
  • Strong non-agricultural demand for farm land

Agricultural Economics

chart 3 average per acre value of farm real estate kentucky and surrounding states 1998 2005
Chart 3. Average Per Acre Value of Farm Real Estate, Kentucky and Surrounding States, 1998-2005.

Source: National Agricultural Statistics Service, USDA, Washington, D.C.

Agricultural Economics

chart 4 average price per acre of kentucky agricultural land october 2004
Chart 4. Average Price, per acre, of Kentucky Agricultural Land, October, 2004

Source: Survey of participants in ESM Meetings, October, 2004

Agricultural Economics

chart 5 crop land cash rental rates per acre kentucky and surrounding states 2001 2005
Chart 5. Crop Land Cash Rental Rates, per acre, Kentucky and Surrounding States, 2001-2005

Source: National Agricultural Statistics Service, USDA, Washington, D.C.

Agricultural Economics

chart 6 crop land cash rent as percent of value kentucky and surrounding states 2001 2005
Chart 6. Crop Land Cash Rent as Percent of Value, Kentucky and Surrounding States, 2001-2005

Source: National Agricultural Statistics Service, USDA, Washington, D.C.

Agricultural Economics

chart 7 typical kentucky crop and pasture land cash rental rate per acre october 2004
Chart 7. Typical Kentucky Crop and Pasture Land Cash Rental Rate, per acre, October, 2004

Source: Survey of participants in ESM Meetings, October, 2004

Agricultural Economics

outlook potential positive influences
Outlook Potential Positive Influences
  • Low interest rates
  • Good commodity yields
  • Good commodity prices
  • Strong non-agricultural demand for farm land

Agricultural Economics

upward trend in farmland values warrants caution
Upward Trend in Farmland ValuesWarrants Caution
  • Rising interest rates
  • Lower commodity prices
  • Increasing energy costs
  • National budget constrains limiting government program payment support
  • Potential flagging non-agricultural demand

Agricultural Economics

chart 8 corn and soybean gross income as a percent of land value
Chart 8. Corn and Soybean Gross Income as a Percent of Land Value

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 9 corn soybeans and government payments as a percent of land values 1970 2005
Chart 9. Corn, Soybeans, and Government Payments as a Percent of Land Values, 1970-2005.

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 10 cash rent as a percent of land value
Chart 10. Cash Rent as a Percent of Land Value

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 11 cash rent as a percent of land values vs 10 year bond rates 1977 2005
Chart 11. Cash Rent as a percent of Land Values vs 10-Year Bond Rates, 1977-2005.

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 12 u s land values vs yearly average of dow jones industrials
Chart 12. U.S. Land Values vs. Yearly Average of Dow Jones Industrials

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 13 u s land values compared to the prime interest rate
Chart 13. U.S. Land Values Compared to the Prime Interest Rate

1975 1980 1985 1990 1995 2000 2005

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

chart 14 government payments per acre kfbm program land value per acre
Chart 14. Government Payments per Acre – KFBM Program Land Value per Acre

Source: Craig D. Gibson, Unpublished data analysis.

Agricultural Economics

what do you think will happen
What Do You Think Will Happen???
  • Strong Kentucky land value increases will continue
  • Kentucky land values will decrease for first time since 1991
  • The upward trend in Kentucky land values will continue, but at a more moderate rate

Agricultural Economics