Oregon farmland values ​​are rising rapidly, tripling nationally

The assessed value of Oregon’s farmland has skyrocketed in recent years, exceeding the national average, raising concerns about affordability for the next generation of farmers.

In a recent analysis of data from the most recent U.S. Census of Agriculture, Dan Bigelow, an economics professor at Oregon State University, found that the assessed value of agricultural properties in Oregon increased by $10.7 billion between 2017 and 2022. That’s a 23% increase in just five years and more than triple the 7% increase in total assessed value of agricultural properties nationwide.

“This sustained period of increase is quite unique, at least in modern history,” Bigelow said.

This is due to several factors, including historically low lending rates over the past decade, a general decline in available farmland in the state, and consolidation of remaining farmland.

Between 2017 and 2022, the amount of available farmland in Oregon declined by 4%, according to the U.S. Department of Agriculture’s five-yearly census. Another major factor is investment in farmland by non-farmers. Bigelow said a growing number of investors and publicly traded real estate investment trusts are putting money into farmland across the U.S., including in Oregon.

“Over the last few decades, the value of farmland has increased faster than inflation,” he said. “Farmland retains its value during economic downturns and is not the kind of get-rich-quick investment, but it is a long-lasting asset. It does not lose value.”

The census asks farmers to estimate the value of their farmland and buildings if they were sold on the open market. According to Bigelow, who previously worked for the agency, these are the only regularly updated county-level data the USDA has on the value of farm land.

According to Bigelow’s analysis of census data, assessed values ​​of Oregon farms increased 29% per acre between 2017 and 2022. The average value of Oregon farms is estimated to be about $3,700 per acre. However, there is a lot of variation among counties. The most valuable farmland is in the Willamette Valley, where average assessed property values ​​are above $20,000 per acre. This is due in part to the value of the crops grown on the land. Wine grapes, orchards, and specialty crops can command higher prices than many mass and row crops.

In eastern Oregon counties such as Harney, Grant, Gilliam and Wheeler, the estimated value of farmland is about $1,400 per acre. Still, values ​​in most parts of the region are significantly higher than they were in 2017. In Wasco, Morrow, Lake and Crook counties, farmland values ​​per acre increased more than 60% between 2017 and 2022, according to Bigelow’s analysis. In Jefferson County, values ​​increased 80% during that time. Part of that is due to demand for irrigated land, which already has water rights secured when sold, Bigelow said.

“Because of the increasing awareness of water scarcity and the fact that it is now widely known – or widely believed – that irrigation water is going to become even more scarce in the future. And the value of the land is essentially determined by what you are going to earn from it in the future,” he said.

Challenges for new farmers

According to agricultural industry associations, such enormous increases in land values ​​mean that it is more difficult than ever for young farmers who want to acquire new land.

“To be successful, farms have to get bigger and bigger. And then there are the regulations that the state imposes on farmers large and small. That makes it very difficult for young farmers to get started and do well financially,” says Austin McClister, a spokesman for the nonprofit Oregon Farm Bureau, one of the state’s largest industry associations.

“I have the feeling that there are no young farmers,” he said.

Alice Morrison, co-director of the nonprofit Friends of Family Farmers, works with older farmers to transfer their land to new farming families rather than selling it to large corporations or investment funds.

Many farmers are, as Morrison put it, land rich but cash poor. The average farm in Oregon is worth $1.5 million on the open market, an increase of more than 30% since 2017 and double the national average. But the state’s average farm income was just over $26,000 in 2022, according to census data.

Morrison said Friends of Family Farmers works with retiring or older farmers and potential new farmers to reach an agreement on a land transfer that may bring in less money than an investor can raise, but still results in a reasonable sale price for the outgoing farmer.

“It’s like, as a cash buyer with a speculative portfolio, they could give you 120% of market value, or we could give you 80% of market value,” she said.

Ultimately, Morrison believes more needs to be done to regulate the market and give new farmers the opportunity to compete in the market, and to give older farmers options other than selling to investors and corporations.

“It’s unreasonable to tell a person who’s about to retire, ‘Hey, you have to give up the money you thought you had for retirement in order to live your values,'” she said. “We should have options so you can live your values ​​and retire with dignity.”

by Alex Baumhardt, Oregon Capital Chronicle