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Image: Farm Economy

Background

Trends in Major Land Uses

The U.S. land area covers nearly 2.3 billion acres. Since ERS' Major Land Uses (MLU) series began in 1945, forest uses of land have accounted for the largest share of the Nation's land base, due to extensive forests in Alaska. In the conterminous 48 States, grassland pasture and range represents the largest share of the land base. About 51 percent of the U.S. land base (including Alaska) is used for agricultural purposes, including cropping, grazing (on pasture, range, and in forests), and farmsteads/farm roads.

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Land shifts into and out of uses for a variety of reasons. Changing commodity and timber prices, agricultural and natural resource policies, urban pressure and, more recently, bioenergy policies prompt private landowners to shift land to uses that maximize economic returns. While land moves into and out of certain uses, such as between forestry, grassland and cropland, once converted to an urban use, land rarely transitions back to less-intensive agricultural or forestry uses. The ERS report, Major Uses of Land in the United States, 2007 analyzes trends in all these land uses and examines general factors driving land-use changes, while other ERS research takes a more in-depth look at particular issues—including research on how farmers altered land use decisions in response to ethanol-induced increased demands for corn (see The Ethanol Decade: An Expansion of U.S. Corn Production, 2000-09, EIB-79, August 2011), the role of crop insurance and other farm programs in grassland to cropland conversions (see Grassland to Cropland Conversion in the Northern Plains: The Role of Crop Insurance, Commodity, and Disaster Programs, ERR-120, June 2011), and how drought risk impacts land retirement program participation (see The Role of Conservation Programs in Drought Risk Adaptation, ERR-148, April 2013).

Technology has also affected land use and regional land-use shifts, especially in cropland. The rapid adoption of new technology, improved crop varieties, improved insect and disease control, and other changes have boosted agricultural productivity so that more production can be obtained from the same cropland base. See The Changing Organization of U.S. Farming (EIB-88, December 2011), for a broader discussion of changes that have occurred in farming since 1982.

Although the spikes in commodity prices and farmland values that began in 2006 might suggest that more land would be shifted into cropland uses, our analyses reveal that in 2007, total cropland area—which includes cropland used for crops, idled cropland and cropland used for pasture—reached its lowest level since the MLU series began in 1945. Trends vary by region, however. While cropland used for crops (the dominant component of total cropland) increased in the Corn Belt over the last five decades, both the Northeast and Southeast have experienced a long-term decline in cropland due to urban pressures and a comparative disadvantage in the production of many crops. Even when cropland acreage appears relatively constant at a national level, the mix of crops produced changes in response to market forces and policy changes. For example, historically high prices for corn in recent years have contributed to significant increases in land planted to corn, which—at 92.6 million acres in 2007—was at its highest level in more than 44 years. At 10.4 million acres in 2007, cotton acreage was at its lowest level since 1963. The MLU report provides trend analyses for principal crops and other ERS research (see, for example, The Ethanol Decade: An Expansion of U.S. Corn Production, 2000-09, EIB-79, August 2011) has analyzed how increases in corn plantings have led to complex adjustments in other cropping decisions. 

Links to key land use data sources:  

  • MLU Data Series: Starting in 1945, and published about every 5 years since, coinciding with the Census of Agriculture.
  • NASS Quick Stats: Access to Ag Census and other National Agricultural Statistics Service data. Choose "AG LAND" under the Commodity selection to get started.

Trends in Farmland Values

Worth $2.31 trillion in 2012, farm real estate (land and structures) accounted for 82 percent of the total value of U.S. farm assets in 2012 Excel icon (16x16). Following the 1980s farm crisis—during which farmland prices declined in response to rapidly rising interest rates and higher energy prices—farm real estate values (land and buildings) have increased consistently, and in recent years have exhibited above-average growth. ERS research (see Trends in U.S. Farmland Values and Ownership, EIB-92, February 2012) examines trends in farmland values, and assesses the affect both macroeconomic (interest rates, prices of alternative investments) and a wide variety of parcel-specific factors (e.g., soil quality, government payments, proximity to urban areas) have on farmland values. Among other findings, this research reveals that in the last few years, U.S. farmland values have been supported by strong farm earnings: since 2009, average income from farming has been more than sufficient to service the debt on farm real estate purchases at current mortgage rates. However, there have been periods of imbalance in the past, including over the 2005-08 period and during the 1978-85 farm financial crisis. In addition to farm earnings, historically low interest rates are a significant contributor to the farm sector's current ability to support higher land values. Strong farm earnings have helped the farm sector in many regions to withstand the downturn in the residential housing market.

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Download larger size chart (500 pixels by 400 pixels, 96 dpi)

Regional variation in farmland values is significant, owing to general economic conditions, the health of the local farm economy, public policy, and location-specific characteristics that affect the returns to farmland. In the Corn Belt, farm real estate values were over twice the national average in 2013, whereas values in the Mountain region were less than half the national average per acre. Farmland values also vary by land use. Historically, U.S. cropland has maintained a substantial premium over pastureland due to higher per-acre returns, as evidenced by cropland's higher rental rates. The value differential between cropland and pastureland has been declining in recent years in most regions, with some regions recently seeing pastureland values (but not rents) exceeding cropland values. ERS research (see Trends in U.S. Farmland Values and Ownership, EIB-92, February 2012) examines factors contributing to these changes in historical relationships.

Farm real estate value and cash rent by farm production region, 2013
  Farm real estate Cropland Pasture
  Value Value Rent Value Rent
  Dollars per acre
Corn Belt 6,400 6,980 209 2,490 35.5
Northeast 4,840 5,280 70.5 3,270 30.5
Lake States 4,660 4,660 155 2,020 30.5
Pacific 4,510 5,820 227 1,680 13
Appalachian 3,840 3,930 90.5 3,410 22
Southeast 3,320 3,410 71.5 3,380 18.5
Delta States 2,600 2,410 96.5 2,270 17
Northern Plains 2,130 2,950 104 816 18.5
Southern Plains 1,760 1,610 35 1,520 7.6
Mountain 1,020 1,750 79.5 558 5
U.S. total (48 States) 2,900 4,000 136 1,200 12
Source: Land Values and Cash Rents, 2013 Summary (USDA-NASS) PDF icon (16x16). Annual data by region and State are available from Quick Stats.

Links to key farmland value data sources:

Trends in Farmland Ownership

Ownership status affects whether the benefits and risks of owning farmland accrue to active farmers or non-operating landowners. ERS research (see Trends in U.S. Farmland Values and Ownership, EIB-92, February 2012) finds that about 40 percent of U.S. farmland has been rented over the last 25 years, but some of this land is rented from other farmers. Non-operators owned 29 percent of land in farms in 2007 (the most recent statistic available), though that proportion has declined since 1992. In 2007, non-operating owners owned more than 30 percent of the land in three of the top four agricultural production regions (Northern and Southern Plains and the Corn Belt). Despite recent increases in foreign ownership of forest land, as of February 2009, only 1.7 percent of privately owned land in farms or forest, or 22.8 million acres, was owned by foreigners.

Last updated: Friday, February 21, 2014

For more information contact: Allison Borchers

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