The report also cites the balance between cropland versus pasture-land values as an indication of non-ag influences on ag-land prices. Cropland values typically exceed pasture values, and are twice as high in some areas. Those premiums have been shrinking, however, and in the Southeast and Delta regions, average cropland values have fallen below average pasture values since 2004. The authors suggest this trend could be due to pasture land providing income from recreation such as hunting leases. In some areas such as the Southeast, pasture land tends to be closer to urban areas and development demand.
Farm-program payments probably have some influence on land values, although the full impact is unclear. The authors note that uncertainty about the renewal of major farm commodity programs and future interest rates could reduce the attractiveness of farmland as an investment relative to other alternatives.
Read a summary or the full report online from USDA.