The farmland market continues to be stable in Wisconsin. For 2017, the average price of farmland sold was $4,025. That’s identical to the 2016 state-wide average and 3.5% higher than the 2015 average, according to a report from the University of Wisconsin’s Center for Dairy Profitability that is based on Wisconsin Department of Revenue data.
“There were 11% more acres sold in 2017 and 13% more reported transactions,” reports Arlin Brannstrom, faculty associate emeritus at the University of Wisconsin’s Center for Dairy Profitability. “Declining farm incomes helped to dampen demand. With low commodity prices expected and increased borrowing costs again in 2018, producer competition for land will likely soften again.”
Farmland prices varied widely across the state. Only 17% of the 2017 farmland sales notched prices above $6,000 per acre, while 20% of the sales were less than $2,000 per acre. Only a few topped $10,000 per acre.
Compared to neighboring states, Wisconsin farmland is priced significantly lower. That’s due to a large portion of the state’s land not being suitable for continuous row crop farming. The shorter growing season in northern Wisconsin also limits the potential agricultural value for land.
Farmland in Demand
Yet, demand for farmland from potential owners outside of farming is strong in Wisconsin. “The real estate taxes for ag land is much lower than they once were,” Brannstrom says. “Record-low interest rates and changing population demographics have also increased demands for open space.”
This strong demand is a key challenge for the dairy industry in Wisconsin. “Although dairy farming is well suited to the climate, topography and infrastructure of Wisconsin, the continued survival of a viable dairy industry depends upon access to affordable land resources,” Brannstrom explains. “Expanding dairy businesses may need to rely on long-term leases or manure trading arrangements to assure compliance with environmental regulations and land use constraints.”
Land values are highest in the southeastern, east-central and south-central portions of the state, where prices average above $5,000 per acre. If land values stay high, Brannstrom expects, dairy production will continue to shift away from those regions.
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