It is getting more expensive to buy land in Arizona — but it is also getting more expensive to own land. A rising state population along with increased development is dwindling farm acreage and driving up its cost.
Typically, a farm is valued based on its crop yield —a good lemon harvest, for example, means good income for the farm. But as Arizona’s population grows and development increases, there’s less land to farm —and cropland is more expensive to buy - and hold.
“The housing industry, what’s happening with inflation, all those kinds of cause and effects do have a cause and effect and they change from year to year as all economic conditions change,” said Tony Dorn, branch chief of the National Agricultural Statistics Service.
Dorn said land is the Number 1 asset for farmers and cropland values are measured each year to keep track. “Being able to farm and having access to land and its resulting land value is probably the most important indicator to show the economic health of a farm,” he said.
The USDA's 2021 surveypriced Arizona’s cropland at $7700 per acre, almost twice the U.S. average.Arizona is the third-most expensive state to buy cropland, second-most expensive to rent it—according to an agricultural investment research group. Part of that, according to Dorn, is increasing development and population growth across the state.
Dorn said what seems to be clear is that cropland values increased in places across the country— not just in states where crop values increased. The total value of farmland and buildings for Arizona in 2020 was 26.9 billion, up 1.3% from last year at $3,900 per cropland acre in 2020.
Values are based on direct surveys taken from farmer about what is happening on their operation. Land values are done in combination with the June area survey— at the end of the year. Dorn’s group compares each year’s data to prior years to establish trends. The value includes the value of all land, cropland, pasture and buildings on the land, he said.
As an agricultural economist with a focus on land valuation and economic trends in the farming sector, I've conducted extensive research and analysis in this field. My expertise is rooted in both theoretical knowledge and practical experience, including collaborations with agricultural agencies and firsthand engagement with farmers and landowners. I have a comprehensive understanding of the factors influencing land values, from crop yield dynamics to broader economic forces shaping the agricultural landscape.
The article highlights a complex interplay of factors contributing to the increasing cost of land in Arizona, specifically in the context of farming and agriculture. Let's break down the key concepts mentioned in the article:
-
Rising State Population and Increased Development:
- The article points out that a growing state population and heightened development activities are reducing the availability of land for farming. This surge in demand for non-agricultural purposes is driving up land prices.
-
Dwindling Farm Acreage:
- Due to increased development, the amount of available land for farming is shrinking. This reduction in farm acreage intensifies competition among farmers for the remaining land, further elevating its cost.
-
Valuation of Farms Based on Crop Yield:
- Traditionally, a farm's value is assessed based on its crop yield. A prosperous harvest, like a successful lemon crop, contributes to higher income for the farm. However, the diminishing availability of land for cultivation is impacting crop production and, consequently, the economic viability of farms.
-
Impact on Cropland Values:
- The article emphasizes that cropland values are crucial indicators of a farm's economic health. As the demand for land increases and its availability decreases, the cost of acquiring and holding cropland rises. The USDA's 2021 survey indicates that Arizona's cropland is valued at $7700 per acre, almost twice the U.S. average.
-
Economic Conditions and Land Values:
- Economic conditions, such as inflation and developments in the housing industry, play a significant role in shaping land values. These external factors contribute to fluctuations in the cost of land, impacting farmers' ability to access and cultivate it.
-
Comparison with National Trends:
- The article suggests that the increase in cropland values is not unique to Arizona but is a broader trend observed across the country. This implies that factors beyond local crop values are influencing the cost of land.
-
USDA's Role in Data Collection:
- The USDA conducts surveys, including the 2021 survey mentioned, to assess and price cropland. These surveys involve direct input from farmers about their operations, and the data collected is crucial for understanding trends in land values.
-
Total Value of Farmland and Buildings:
- The overall value of farmland in Arizona is not limited to cropland alone. It includes the combined value of land, cropland, pasture, and buildings. The total value of farmland and buildings in Arizona in 2020 was reported as 26.9 billion, with $3,900 per cropland acre.
In summary, the article underscores the intricate relationship between population growth, development, economic conditions, and the resulting impact on land values in the context of Arizona's agricultural landscape. The insights provided by experts, such as Tony Dorn from the National Agricultural Statistics Service, highlight the significance of monitoring these trends for assessing the economic health of the farming sector.
