Farm land value never higher
Ohio farm acreage value jumps 13.6 percent in 2012
By GARY BROCK
The value of an acre of Ohio farm land is greater today than at any time in history.
That is the conclusion of an Ohio State University Extension agriculture business expert who also points out that this record dollar value is both unadjusted and adjusted for inflation.
And he believes that 2013 should be an even better year than 2012.
Barry Ward, OSU production business management leader told Acres of Southwest Ohio that his prediction for 2013 is based on the potential for crop profits, the low interest rates, the strong balance sheets for farmers in 2012 and the recent history for strong profits.
“Price (of crops) has been the driving force in farm land value,” he says.
In addition to Ward’s conclusions about 2013, he also points out that 2012 was a growth year for farm land value, as well.
The U.S. Department of Agriculture’s “Land Values: 2012 Summary” reports that Ohio’s cropland value jumped 13.6 percent in 2012 compared to 2011.
According to the report, the average price per acre of Ohio farmland was $5,000 in 2012. Nationwide, cropland value has increased every year since 2003 — except 2009, when it dipped just slightly, according to the USDA report.
What is driving this increase in farm land value?
He said there are four areas. “As we project farm land value for next year, everything is very positive. The profit potential is above average based on the strong balance sheets and there have been several years of these strong profits.”
Another factor is the belief that today’s low interest rates will remain low in 2013. He also pointed out that the debt to asset ratio for farmers continues to improve.
Despite the 2012 drought, Ward says 2012 crop values were good overall.
And that will translate again this year. He said that once again, corn crops will lead the way. “Corn will be king again,” he said.
In addition to these measures of land value, a more basic guide of this value happens every year. Each year land re-appraisals are conducted in Ohio counties by the county auditor’s office. These reappraisals are done for counties every six years and are staggered, dividing out Ohio’s 88 counties. In 2012, 19 Ohio counties had land reappraisals, and all of those contacted reported to Acres that farm land value jumped this year from 2011.
In Highland County, Auditor Bill Fawley says the value of the farm land is based on what kind of land it is.
It is all about the soil.
Highland County has 275 different soil types, second highest only to Ross County, but the dominant soil type is called “Clermont” soil. And that soil is among the best soil for growing crops. As a result, Highland County CAUV (Current Agricultural Use Value) land values rose 44.2 percent compared to 2011.
“That really isn’t a surprise,” said Foley. “They (the state CAUV board) warned us that it would be going up.” The “it” in this case is the complicated formula used by counties to determine this farm land value.
Foley said that the other measure of land value, agriculture market value, showed a jump of 19 percent compared to 2011.
CAUV is a real estate tax assessment program which gives owners of farmland the chance to have their parcels taxed according to their value in agriculture, rather than full market value. It is the result of a referendum passed by Ohio voters in November, 1973. The Ohio General Assembly subsequently passed Senate Bill 423 in April, 1974, establishing CAUV Program by law. A state board regularly meets and sets the formula that county auditors must use when they determine the value of farm land.
Foley said that in 2008, land with this Clermont soil was CAUV valued at $120 an acre. In 2012, that jumped to more than $1,000 an acre. In Highland County, the CAUV formula is used for 270,000 out of its 351,000 acres of appraised land.
In neighboring Fayette County, Auditor Mike Smith also reported an increase in farm land value during the 2012 re-appraisal. He said market value of farm land jumped 17 percent over 2011. He added that the county’s CAUV value had jumped 29 percent as well. About 95 percent of Fayette County farm land is eligible for the CAUV program.
In Brown County, the Auditor’s Office reported that CAUV land value jumped from $611 an acre to $889 an acre.
The county’s market value also jumped from $2,003 an acre to $2,437 an acre.
In Crawford County, land values jumped, as well. The auditor’s office reported CAUV value jumped about 54 percent between 2011 and 2012, while market value increased 41 percent between 2011 and 2012.
(Gary Brock is editor of Acres of Southwest Ohio.)