Lagging profits for farmers have led to a dip in farmland values statewide, though in Harvey County ag land values have remained stable.
Kansas farmland values overall last year slipped 3.9 percent from the previous year to an average of $1,970 per acre, according to the U.S. Department of Agriculture.
However, Harvey County has remained stable — according to William McCulley, owner of McCulley and Associates. He and his company do consulting work for the Harvey County Appraiser's office along with 15 other counties in Kansas.
“We have not seen much change, at all,” McCulley said. “I have to qualify that. I think some of the land sales that do involve ag land, you are kind of a bedroom community of Wichita and there are some other motivations to buy larger ag properties that you might not have in say, Chase County or Grand County. There might be some development interests that keep those prices up.”
Elsewhere farmland prices in Kansas continued a slow, steady decline last year and a Kansas State University economist believes the trend will continue this year, saying values are being pulled down by four years of negative profitability in the agriculture sector, particularly in grain prices.
“All of the numbers are pointing down, but it’s not falling off a cliff,” said Mykel Taylor, Kansas State University economist, of the near-term outlook for farmland prices. “It will more likely be a slow, steady decline that appears to be in line with negative profitability in the cropping sector.”
Taylor said average net farm and ranch income peaked above $180,000 for cowherd operators in 2014, and more than $80,000 for those who grow non-irrigated crops, but lower cattle and crop prices since then weighed on land values, particularly in the northwest and south-central Kansas. Average net farm income in southwest Kansas in 2017 was about $35,000 while farmers in south-central Kansas lost about $5,000. At the same time, farm-family living expenses for the past six years have been around $70,000.
Twenty-five farmers filed for bankruptcy in 2017, up from 21 the previous year and four in 2015.
“That’s hardly a record, however,” Taylor said. In the farm crisis of the 1980s, 265 farmers filed for bankruptcy in 1987 alone.
Those currently most vulnerable tend to be those who pursued an aggressive growth strategy in 2008-2013 and bought a lot of land and also younger farmers and ranchers who may have more rented land than property they own. In the latter case, those producers are still obligated to make rental payments despite lower crop prices.
Irrigated land prices have fallen 13.1 percent since 2014 to an average of $2,850 per acre and non-irrigated farmland values fell 13 percent in that period to $1,870, according to the USDA. Pasture land values dipped 7.9 percent.
The data Taylor uses from actual sales transactions shows similar trends but more pronounced declines, with irrigated land down 17.4 percent, non-irrigated acreage down 19 percent and pasture land values down 21.4 percent from their peak in 2015.
Unaffected are the tax evaluations of agricultural lands, at least at this time.
“As far as tax purposes, market value of ag land does not come into play,” McCulley said. “It is a use value based on the income and use of the soil. Changes in general market value do not generally affect the tax base.”