Ag Land Reflects Value of Growing Food for the Future

By Renee Pflughaupt

Land's value not only in price, but in its foodproducing capability

Nebraska is filled with farmland. It doesn't take much to realize it- just cruise along I-80 for a few hours and the evidence is clear: Nebraska is an agricultural state.

But did you stop to think about how much that land is worth?

Dr. Bruce Johnson, professor of agricultural economics at the University of Nebraska-Lincoln, certainly does. Johnson, as part of his research, has tracked the state's agricultural real estate market for more than 30 years.

Only 12 percent of the world's land is suitable for agriculture, consisting of grazing land or cropland. Essentially all of this is in production, he added, with no new frontiers to tap for development.

The worth of agricultural land, Johnson said, is affected by its scarcity and the demand for that land's products. And this demand for highly productive agricultural land will only increase as world's population increases another two billion to reach 9 billion by 2050.

Nebraska, with its strong foundation in research and wealth of natural resources, Johnson said, gives the state an edge to help address this global challenge.

"Nebraska is richly endowed with a natural resource base, to a great extent, unequaled anywhere else," he said.

As the Harlan Vice Chancellor for the Institute of Agriculture and Natural Resources, Ronnie Green, notes, "Nebraska is at the epicenter of food production."

Putting a price on land

Part of Nebraska's natural resource base is its 45 million acres of agricultural land, suitable for growing crops and forage. This equals roughly 90 percent of the state's land area.

More recently, Johnson said, land values in Nebraska have been increasing at a historic rate of over 12 percent annually, or doubling in price every six years.

Not only that, he said, but it is very difficult to even buy farmland in the state. Currently, the annual turnover rate of land is 1.25 percent, less than half the longer-term historical rate.

Nebraska has a large base of agricultural land. But, he said, most land owners are holding on to it. Agricultural land is a precious resource; you can't make more agricultural land than there already is, he said.

"You don't get away from that," Johnson said. "You still need that base of food production."

Feeding a growing world

The amount of land capable of growing food remains the same. That fixed amount, however, needs to produce more food to keep up with worldwide demand. In the face of a growing world population, Johnson said, greater agricultural efficiency becomes a must.

With agricultural efficiency, he said, more food can be grown from the same ground. Or, the correct type of crop or crop strain allows marginal agricultural land to become economically productive.

Land: a shrinking resource

At the same time that countries are trying to secure food supplies, their populations are growing steadily. Demand for food products is growing.

And often, the resources available to grow that food are shrinking.

One of the threats to agricultural land, Johnson said, is city encroachment.

More than 22 million acres of agricultural land in the U.S. have been taken out of agriculture, he said, for urban development.

"And sometimes, ironically," he said, "it's some of the most productive land that happens to be in the path of the urban growth node."

However, Johnson said, Nebraska tends to carefully scrutinize any conflict between agricultural and urban land use.

Much of the protection of agricultural land comes from its zoning designation. A few acres of farmland cannot just be sold to a person to build a house, Johnson said. By county-wide zoning provisions, which are in place in essentially all the Nebraska counties, the land is reserved for agricultural purposes.

Producing more with less

Johnson said, food producers need to produce more with what they have. And Nebraska, with its infrastructure in agricultural research, is poised to make it happen.

Many other places in the world, he added, do not have the research capabilities that Nebraska does, thanks to the University of Nebraska's Institute of Agriculture and Natural Resources.

Nor do other universities have such a climatologically or biologically diverse state in which to conduct its agricultural research, Johnson said.

"The variation in conditions across the state," he said, "represents a greater variation than from the Missouri River to the Atlantic Ocean. "That diversity adds even another mix of richness and challenge and opportunity."

This diversity parallels agricultural conditions around the world, allowing research conducted in Nebraska to benefit other countries.

Johnson said, "Nebraska provides the ideal laboratory for agricultural and food production research."