Farmland values reflect uncertainty of area's irrigation

Friday, March 24, 2006

A report from the University of Nebraska on Thursday shows just how important it is for all of us to reach a long-term solution to the Republican River water controversy.

It's gone beyond the threat of more legal judgments against Nebraska for Kansas water interests. Now it's translating into the bread-and-butter issues of land values and the factors that result.

While farmland values and cash rental rates are higher everywhere else in the state, Southwest Nebraska values are not so rosy.

According to the Institute of Agriculture and Natural Resources, Nebraska's farmland average value is $1,013 per acre, up 9.6 percent over last year and up more than 33 percent since 2003's $757 per-acre average.

While northeast Nebraska has had several years of good weather and a strong livestock market, resulting in a 15.5 percent increase in land value, southern Nebraska has seen a 4.2 percent decline.

"In southern Nebraska, the Republican River water controversy with Kansas has created uncertainty over both immediate and long-term water availability -- which in turn, appears to be the primary explanation of recent cropland value declines," according to IANR ag economist Bruce Johnson.

"Clearly, water and its availability is becoming a critical variable in many local land markets around the state," he said.

Southern Nebraska, which includes the Republican River basin in the IANR study, showed a 7.6 percent decline in dryland cropland with irrigated potential, 4.8 percent decline in gravity irrigated cropland, 6.3 percent decline in center pivot irrigated cropland and a 4.2 percent overall decline.

Other categories showed slight increases, although far behind the rest of the state. They included a 1.3 percent increase in dryland cropland with no irrigation potential, 1.7 percent increase in tillable grazing land, 3.1 percent increase in nontillable grazing land and 5.5 percent increase in the value of hayland.

Cropland values, of course, have a direct impact on the viability of individual farms and the local businesses that depend on them. Long-term, they affect overall property values and the tax base that keeps our communities in operation.

Only by knowing how much water to expect, and where it will come from, can producers make the decisions that will bring stability to the economy of our region.

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