Smaller parcels of farmland sell for higher per-acre prices across the U.S. and other parts of the world.

That general rule holds true in Oregon, despite strict land-use laws that limit development and the rich crop diversity of the state.

“Oregon’s farmland sector is unique in a lot of ways. As far as the small parcel premium goes, this is one area where it fits in the crowd,” said Oregon State University economist Dan Bigelow, in a blog post.

Land accessibility challenge

In an interview, Bigelow said the pattern makes land accessibility more challenging for farmers looking to start businesses.

“Younger producers can’t compete with all the people who are pushing up the price of these smaller parcels,” he said.

Bigelow added the trend likely encourages them to target bigger loans and larger properties.

Occurs in every region

Bigelow conducted an analysis that compiled a database of 17,655 Oregon farmland transactions between 2000 and 2023.

The properties were zoned exclusive farm use, outside urban growth boundaries and between 5 and 2,000 acres.

Oregon has vast differences in agricultural production and acreage across the state, but the small parcel premium held true in every region.

More visible with population

The more populated the area, the more pronounced the pattern was.

In the Willamette Valley, an acre in a sale of 5-10 acres went for about $10,000 more than an acre in the 10-20 acre category, and over $25,000 more than an acre in a sale that included 100 acres or greater.

In northeast and southeast Oregon, the smallest acreage sales went for about 20 times the price per acre as properties of 100 acres or more.

Reasons for price premiums

Bigelow said demand is probably driven by the potential for non-agricultural uses.

Small parcels tend to be located closer to existing urban growth boundaries, making them more likely for development in the future under Oregon law.

Builders probably wouldn’t want 100 acres, because that would result in a massive housing development for Oregon.

Hobby and retirement farmers also aren’t looking for huge properties and may be willing to pay above the land’s agricultural value.

Home sites

Venus McBride, a broker with Horsepower Real Estate in Junction City, Ore., said she wasn’t surprised by the analysis.

“It’s common knowledge with agents that primarily work that market,” she added.
Smaller parcels often have homes, McBride said.

John Lee, principal broker for Lee Real Estate in Salem, Ore., said any house, no matter the quality, pushes prices higher.

“It can even be an old 800-square-foot house built in the ’20s, all boarded up,” he added.

Oregon laws make it difficult to construct new homes on exclusive farm use property, but existing houses could be replaced or renovated in most cases.

Properties with houses also probably have utility connections, driveways and other improvements.

Smaller parcels generally have lower overall prices, and affordability means more competition.

“There’s a lot more people who can afford a 20-acre piece compared to a 200-acre piece,” Lee said.