Agricultural Inputs and Land Values Bryon J. Parman, Ph.d. Mississippi State University Department of Agricultural Economics Mississippi State Extension Service

Fuels Markets Greenville Ag. Diesel Birmingham, AL

Fertilizer Costs, National Averages

Cost per Lb. of Nitrogen

Cost for K/Potash

Yearly Average Phosphate Prices $/Metric Ton

Seed Price Index

Self Propelled Equipment Index

National Animal Feed Price Index

Historical Percentage Changes in Ag. Land Values 1980’s Crash Would take an 11%/year growth rate for 5 years To recover from a 40% drop Great Depression

11th Federal Reserve District (Texas)

Land Values in the 10th Federal Reserve District (OK, KS, RMT’s, Neb, Mizzou)

Federal Reserve Bank of St. Louis, Ag. Finance Monitor, Q1 2017

Volume of Farmland Sales from the 10th Federal Reserve District

Mississippi Ag. Lender Survey

Mississippi Land Sales Values in $/Acre   Average Min Max Delta Dryland $3,287 $2,500 $4,000 Delta Irrigated $4,653 $3,500 $5,500 Non-Delta Dryland $2,625 $1,600 $3,800 Non-Delta Irrigated $3,119 Pastureland $2,309 $1,500 Data From: Mississippi Farm Financial Professionals Annual Survey, May 2017

Mississippi State Land Survey’s 2015-2017 Land Sales Values in $/Acre Region 2015 2016 *2017 Delta Dryland 3,163 3,176 3,287 Delta Irrigated 4,639 4,545 4,453 Non-Delta Dry 2,457 2,417 2,625 Non-Delta Irrigated 3,061 3,058 3,119 Pasture 2,455 1,803 2,309 % Change within survey margin of error

MSU Survey Timber Land Values in $/Acre 2017 Data Average Minimum Maximum Mature Pine 2,392 1,000 3,300 Mature Hardwood 2,250 3,500 Year 2015 2016 2017 Mature Pine 2,300 2,069 2,392 Mature Hardwood 2,545 2,470 2,250

New Housing Starts since 1980

Federal Reserve Bank of St. Louis, Ag. Finance Monitor, Q1 2017

Cash Rents in the 10th Federal Reserve District

Cash Rents in the 11th Federal Reserve District

Mississippi Land Cash Rents in $/Acre   Average Min Max Delta Dryland $112 $85 $175 Delta Irrigated $173 $140 $225 Non-Delta Dryland $78 $50 $165 Non-Delta Irrigated $132 $100 $185 Pastureland $28 $20

Mississippi State Land Survey’s 2015-2017 Cash Rents in $/Acre Region 2015 2016 *2017 Delta Dryland 124 117 112 Delta Irrigated 191 176 172 Non-Delta Dry 105 79 Non-Delta Irrigated 145 132 Pasture 34 31 28 % Change within survey margin of error

Recently Historic Cap-rates & ROE Rent And Sales Value Cap Rate Return on Equity Mississippi 2015 (Delta Irrigated) $191 $4,600 4.1% (-3.9%) W.C. Indiana 2013 (Poor) $220 $7,500 2.9% (-5.11%) Indiana 2013 $175 $5,600 3.1% (-4.9%) Rent needed for Even ROE Indiana 2013 $336.42/Acre Band of Investment Formula ****Assuming 75% on Rm and 25% on Re…..Implies a mortgage constant at 5% interest of 0.0802

Farmland Area/Type Land Value Cash Rent ROE Delta Irr (Break Even)   $4,453 ($2,686)** $172 ($267)* -8.3% Delta, Non-Irr $3,287 ($1,867)** $112 ($197)* -10% Non-Delta, Irr $3,119 ($2,134)** $128 ($187)* -7.3% Non-Delta, Non-Irr $2,625 ($1,300)** $78 ($157)* -12% Pasture Land $2,309 ($473)** $28.33 ($138)* -19%

Summary Input Costs Land – Sales mostly flat Seed – Leveling off Rents Coming Down Seed – Leveling off Fertilizer – Leveling off, or falling for some fertilizers Equipment – Leveling off When rent is included, costs exceed revenues in most southeastern ag. enterprises in 2016-2017.

Thank You Bryon J. Parman Mississippi State University Department of Agricultural Economics Mississippi State University Extension Service 662-325-2887 bparman@agecon.msstate.edu