March 27, 2015

What will ag land value correction mean for conservation

Anyone who has been watching the paper for the past 3-4 years knows that farm land in the Midwest and Great Plains regions had reached record levels.  The psychological push to invest in ag lands when times are good (corn prices were high) is intriguing--as we normally think of trying to do the opposite for long-term investment (buy low/sell high).

Of course, our landscapes are affected by the economics of land sales and land use.  In recent years, the Conservation Reserve Program (CRP) acres in the central US fell by over 20% in many states--because it made more sense ($$$) to plant corn than to take the lower lease price offered by USDA for CRP land.

I've just published an article in the Journal of Soil and Water Conservation that details the history of land values and conservation efforts in the US.  You can click here to read the entire article--which has a fun cartoon if that makes you want to click!

The bottom line is that we are poised near the top of a peak in land values and history suggests a correction is coming.  Previous corrections, as you can see from the figure above, include the Great Depression, the Recession of the 1950s, and the Farm Crisis of the 1980's.  Although this correction may not be of the scale of those previous corrections, we are not in good company folks!  There are signs that ag loan repayments are declining and extension requests are up.  The Wall Street Journal reported recently (as my manuscript was in press) that ag land values dropped by 3% this year--the first decline in decades.

My colleagues who work in the field of conservation on private lands--essentially people who help farmers and ranchers develop programs to fund conservation on their land--have had a rough go of it in the past 10 years.  The high commodity prices made it tough to convince folks to "leave some for the wildlife."

Now, that dynamic has changed.  I make some suggestions in the article about the innovative new tools that might appear in the next Farm Bill, because political will (to help farmers in a poor economy) and the economic payoff (CRP lease prices are now looking pretty good, with corn down to $2.50 a bushel instead of over $6/bushel) will collide.

What will we see in the next Farm Bill?  It will be fun to watch, and I encourage my colleagues in wildlife and conservation to participate in the discussion.  This opportunity seems to only happen every 30 years, so it won't happen again during our careers!

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