1. 2013 N EBRASKA A GLAND M ARKET H IGHLIGHTS by Bruce Johnson UNL Department of Agricultural Economics bjohnson2@unl.edu

2. The Market in a Nutshell “A $7 Corn Land Market With $5 Corn on the Horizon”

3. Recent History: Land Boom Conditions Nebraska at the “Epicenter” of the U.S. Land Boom

4. USDA Farmland Value Percentage Changes 6/1/2011 – 6/1/2012 0 5 10 15 20 25 30 35 40 Rank / State Source: Economic Research Service, U.S. Department of Agriculture Agricultural Land Markets up Across the Country, but Nebraska And Neighboring States Leading the Nation

5. Land Class 2013 Average Value (Preliminary) 1-Year Change 3-year Change Dollars/Acre% Change in Value Dryland Cropland: No Irrigation Potential30102597 Irrigation Potential5,27021102 Grassland: Tillable12302284 Non-tillable6951964 Irrigated Cropland: Gravity683527109 Center Pivot b 759030115 All Land:304025102 a Source: Annual February 1 st UNL Nebraska Farm Real Estate Market Surveys. b Value of pivot not included in per acre value. Nebraska Land Values Climb 25% in Past 12 Months 2013 Values and Recent Trends by Land Class in Nebraska a The Current Market

6. Sharp Upward Advances Across the State 2013 Nebraska Farmland Values and Recent Trends by Sub-State Region Agricultural Statistics District 2013 All-Land Average Value (Preliminary) 1-year Change 3-year Change Dollars/AcrePercent Change Northwest715 1354 North1055 2069 Northeast6165 24113 Central3750 27103 East7185 1893 Southwest1750 3189 South4460 33118 Southeast5400 26121 Entire State3040 25102 Source: Annual UNL Nebraska Farm Real Estate Market Surveys.

7. Nebraska Nominal Agricultural Land Values 2013P Longer-Run History: Upward but not steady climb for several decades “Boom to Bust” event just 30 years ago Major climb in nominal values in recent years

8. 2013 Nebraska Values Adjusted For Inflation At New Heights!

9. Key Land Boom Drivers #1 Record-Shattering Farm Income Levels

12. Key Land Boom Drivers Historically Low Interest Rates Farm Income Levels Capitalization Rates #2

13. Estimated Net Rate of Return on Investment: Selected Years Percent 0 1 2 3 4 5 6 Irrigated Land Dryland Cropland Grazing Land Irrigated Land Dryland Cropland Grazing Land Irrigated Land Dryland Cropland Grazing Land 2012: 2007: 2002: Source: UNL Nebraska Farm Real Estate Market Developments Survey Series

14. Value-to-Cash Rent Multiple For Eastern Nebraska Center Pivot Cropland, 1981-2012P Value–to–Cash Rent Ratio Climbing into New Territory!

15. What’s On The Horizon? Prevailing Drought Cutting Production? Increasing Input Costs? $5/Bu. Corn?

16. Cash Rent Market Trends More Moderate

17. Question: Are Tenants Taking on Too-High of Rents? Answer: MAYBE !

18. Depends on 2013 Commodity Prices and Yields If Paid $350/AC For Irrigated and $220/AC Dryland Cropland If Paid $350/AC for Irrigated and $220/AC Dryland Cropland

19. Summing Up: The Boom Years May Be Over Real Estate Meltdown Unlikely --But Some Readjustment on the Horizon

20. Your Thoughts: Corn Price In: 2013? 2014? 2015-2020? Weather Patterns In: 2013? 2014? 2015-2020?