OMAHA (DTN) -- Nebraska's average agricultural land value decreased in 2025 for the first time in six years. Ag land fell 2% to $3,935 an acre, according to the final report from the University of Nebraska-Lincoln's (UNL) 2024-2025 Farm Real Estate Market Survey (https://cap.unl.edu/…).

Jim Jansen, an agricultural economist with Nebraska Extension who coordinates the annual report, said the decline comes as Nebraska crop producers face growing financial pressures. Following years of rising farm income, the land market is beginning to reflect realities like lower crop revenues, elevated production costs and higher interest rates.

"Crop producers are dealing with pressure on their margins," Jansen said. "The combined effect of softer commodity markets and higher costs is being reflected in what people are willing to pay for different types of cropland."

LAND VALUES VARY BY REGION, LAND TYPE

The report details how land values vary by region of the state and land type. Grazing land showed modest gains, reflecting ongoing demand driven by higher livestock prices, he said. Irrigated and dryland cropland are experiencing declines in many parts of the state.

"Higher cattle have helped the value of grazing land, while lower crop prices and tighter margins are putting pressure on cropland values," Jansen said. "We expect these market dynamics to continue influencing land values across different regions and land classes in Nebraska."

Cash rental rates for cropland trended lower across the state, down between 1% and 7% compared to last year. The productivity of rented cropland -- including the type of soil, expected rainfall and local market -- contributed to regional cash rental rates, according to the report.

Pasture rental rates declined 1% in the central region but saw modest gains across the rest of the state, increasing 1% and 5% over the prior year. These rates were driven by stronger cattle markets and demand for grazing land. Cow-calf and stocker monthly rental rates also trended steady to higher across the state in 2025.

Jansen said the financial pressures for many landowners and tenants from rising crop input expenses, combined with higher borrowing costs, are putting increased emphasis on risk management and lease flexibility. Clear communication between landowners and tenants, particularly about weather-related terms in a lease, is essential, he said.

"Provisions regarding drought in grazing land leases need to be reviewed by the appropriate agency or organization providing disaster assistance for pasture or range to ensure the property remains eligible in the event of adverse weather patterns," Jansen said.

EVEN WITH CHALLENGES, AG LAND STAYS STABLE

Despite a decrease in land values in Nebraska, agricultural land values have remained remarkably stable through mid-2025, according to a news release from Farmers National Company (https://www.farmersnational.com/…). The resilience is mainly driven by the basic economic principle of supply and demand; there are simply more motivated buyers than willing sellers.

While producers remain the main buyers of ag land, interest from individual and institutional investors cannot be ignored, according to the company.

As land value stabilizes after reaching peaks within the last five years, investors are increasingly attracted by both annual returns and long-term appreciation. Benchmark Midwest farmland values have increased by 56.9% over the past five years and 38.3% over the past decade, reinforcing land's appeal as a long-term asset.

Farmers National Company said inventory remains limited with listings down 20% to 25% from the peak in 2020-21. Many long-term landowners are choosing to hold onto their properties, recognizing the stability and value appreciation land offers compared to more volatile investments.

Paul Schadegg, senior vice president of real estate at Farmers National Company, said farm profitability will be a key factor affecting land values in the future.

"The USDA forecasts 2025 net farm income to be the lowest since 2020. This will likely influence producer purchasing power and investor returns, especially as input costs, commodity prices and interest rates fluctuate," Schadegg said. "While balance sheets generally remain strong, any negative movements in the ag economy could quickly impact the land market."

Geopolitical developments also influence the land market, according to Farmers National Company.

Trade policies, tariffs and global unrest create uncertainty, affecting both domestic and international markets. While renegotiated trade agreements may present future opportunities, current tariffs could decrease demand for U.S. agricultural exports as other countries expand their production and infrastructure.

Russ Quinn can be reached at Russ.Quinn@dtn.com

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