U.S. farmland values jumped 12.4% this year compared to 2021, with an average value of $3,800 an acre nationwide, according to the USDA National Agricultural Statistics Service.

Cropland value, at $5,050, is up an average of 14.3%, and pasture value at $1,650 is up 11.5%.

The $420 an acre average increase in real estate value is the largest since the reporting series began in 1997 and the largest year-over-year percentage increase since 2006, according to a report by the American Farm Bureau Federation.

Real estate values vary significantly across the country, with the highest values in areas with large volumes of high-dollar crops — such as wine grapes and tree nuts in California — and areas experiencing upward price pressure due to their proximity to urban areas with little remaining developable land, the report said.

Much of the Midwest had the highest real estate values, followed by the South and Pacific Northwest, and finally the Plains and Mountain states.

“Part of this increase can be linked to the rise in commodity prices that have translated to a higher farming value for land in row crop-heavy heartland states like Iowa, Illinois and Indiana,” said Danny Munch, Farm Bureau economist and author of the report.

“Incentives added to government programs — such as those added in 2021 to the Conservation Reserve Program — that provide financial compensation to landowners who voluntarily enroll and retire highly erodible and environmentally sensitive lands also contributed to increased competition for active cropland, increasing land prices,” he said.

Other factors contributing to rising land values include competing land-use interests, which includes urban and suburban sprawl, and the increased investments into hard assets like land for a safer return on investment during a period of high inflation, he said.

Of the 48 contiguous states, 23 experienced double-digit percentage increases in value. The largest increases were in Kansas, up 25.2% to $2,630 an acre; Iowa, up 21.4% to $9,400; Nebraska, up 21% to $3,750; and South Dakota, up 18.7% to $2,600, according to USDA.

The states with the highest farmland values were Rhode Island at $17,500 per acre; New Jersey at $15,400; Massachusetts at $15,200; Delaware at $13,700; and California at $12,000.

Like overall agricultural real estate values, average U.S. cropland values increased sharply in 2022, rising to $5,050 per acre.

“The distribution across the country follows a similar pattern as overall farmland value, with California and Northeast urban states claiming the highest average cropland values. Again, following that top category is much of the Midwest and Northern Plains, followed by the South and then the rest of the country,” Munch said.

Similar to overall agricultural real estate values and cropland values, pastureland values posted strong gains from the previous year, coming in at $1,650 per acre on average for the U.S.

“However, the distribution of pastureland values across the country differs from the cropland values and real estate values,” he said.

Some of the more valuable pastureland is concentrated in the South and the mid-South, areas with less density of high-value row crops and more regular precipitation, he said.