Farm land value never higher

Ohio farm acreage value jumps 13.6 per­cent in 2012

By GARY BROCK

gbrock@recordherald.com

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.)

Posted by Tina Murdock on Jan 10 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.