Cooperative Extension Service Communications and Technology Department 3354 1000 E. University Ave. Laramie, WY 82071 (307) 766-2540 • fax (307) 766-3998 • www.uwyo.edu

 

For Immediate Release

 

Contact: Robert Waggener, Editor

Phone: (307) 766-3571

E-mail: robertw@uwyo.edu

 

Date: April 11, 2006

Huge jump in Wyoming ag land prices likely driven by scenic, wildlife values

            Sale prices based on animal units for agricultural land in the Carbon, Natrona and Sweetwater County region experienced a 188-percent jump between 1999-2001 and 2002-2004, according to the latest edition of the Wyoming Farm, Ranch, and Rural Land Market publication.

            The publication is a project of the University of Wyoming’s College of Agriculture.

            Assistant Professor Chris Bastian of the Department of Agricultural and Applied Economics said the jump was likely influenced by sales in the Saratoga area, where demand for scenic and wildlife amenities is steadily growing.

            The three-county average sales price of $11,409 per animal unit was the highest average for a region in the state during the 2002-2004 analysis (an AU is the feed necessary to maintain one 1,000-pound cow and her calf for a year).

This was based on 31 sales and compares to an average sales price of $3,954 from 1999 to 2001.

Bastian said the average sales prices in the survey are measured in AUs instead of acres because different regions of the state have acres with different crop productivities and livestock carrying capacities.

For example, he noted, “A ranch in the southwest part of the state with the same acreage as a ranch in the northeast typically would not carry the same amount of cattle. By pricing ranches on an AU basis, we are comparing apples and apples compared to dollars per acre.”

Wyoming was divided into six regions based on climate, elevation, water availability, population, recreation, scenery, timber, mining, and oil and gas production. Teton County and Yellowstone National Park were excluded from the analysis (see separate story).

The Campbell, Converse, Crook, Niobrara and Weston County region had the second highest average at $9,223 per AU for 53 sales. The 1999 to 2001 average was $6,881.

Johnson and Sheridan counties ranked third at $9,210, which was based on 20 sales. This compares to $8,812 for the previous period.

Other averages follow with the 1999-2001 average in parenthesis:

Lincoln, Sublette and Uinta counties, $8,185 per AU based on 23 sales ($4,211);

Big Horn, Fremont, Hot Springs, Park and Washakie, $7,106 based on 39 sales ($2,631), and;

Albany, Goshen, Laramie and Platte, $4,467 based on 94 sales ($3,333).

During 2002-2004, the average price paid for ranches in Wyoming (not including Teton County and Yellowstone National Park) was $7,238 per AU. This is a 59-percent jump compared to 1999-2001, when the statewide average was $4,545, Bastian said.

“That suggests an annual average increase of 10 percent during the six-year period, which is well ahead of the inflation rate during that same period,” he said. “A figure like the one for 2002-2004 would make it very difficult for a cow-calf operation to pay for itself.”

The average is for all ranches that sold regardless of size, noted Bastian, who pointed out that larger ranches generally had a lower average price per AU.

Bastian said the 2002-2004 average becomes even more interesting when considering last year’s strong cattle market.

“If you are going to finance $7,238 per AU, you’re going to have to generate income of $500 to $600 per AU, on average, just to pay for the land,” he said. “Last year, a cow probably averaged around $700 in sales. That’s figuring the calf plus cull-animal sales.”

Subtracting $550 from $700, Bastian said, “That only leaves $150 for feed, labor, family living expenses, equipment and all the other expenses associated with a ranch.” He emphasized the $150 figure is for a year with a strong cattle market.

“What we’re seeing is that a lot of people in ranching have at least one income from off the ranch to help them make ends meet. That’s for the people who are trying to make a living off the ranch they purchased,” he said.

Commenting about the strong market for ranch properties, Bastian emphasized, “That’s good for those who are selling but not so good for those who are buying. It makes it more difficult for families wishing to purchase a ranch and make a living off it without having other capital to subsidize the purchase.”

The report states that the strongest increases were for ranches in the 200- to 500-AU capacity.

“Those are small enough places a family can manage while still allowing at least one person to work off the ranch. Also, these ranches lend themselves to being purchased by non-agriculturalists looking for recreational and scenic opportunities,” Bastian said.

Ranches greater than 600 AUs in carrying capacity experienced a 10-percent decline in value as compared to the 1999-2001 report.

Cropland and pasture prices continued to strengthen overall since the agricultural land market hit bottom in 1987; however, cropland showed the least increase.

Irrigated cropland averaged $1,417 per acre, a 2-percent increase from the 1999-2001 analysis.

“Largely, that is a result of relatively weak crop prices and potentially reduced income generation associated with lower irrigation water supplies because of the drought,” Bastian said.

For grazing land, the statewide average was $428 per acre, down from $547 in the 1999-2001 analysis.

Productivity, scenic and recreational values were factors that seemed to explain most of the variation in grazing land prices, according to the report.

 “Helping to drive down these prices were factors like drought and the associated lower productivity, which created a softened demand for grazing land,” Bastian said.

The 1997 (B-1049), 2000 (B-1081), 2002 (B-1130) and 2005 (B-1168) Wyoming Farm, Ranch, and Rural Land Market publications can be downloaded free at http://www.uwyo.edu/CES/economic.htm.

The 1994 report is available only in hardcopy. That bulletin, along with the more current editions, may be obtained by e-mailing the College of Agriculture’s Resource Center at bixbyd@uwyo.edu, calling the center at (307) 766-2115, or writing to the University of Wyoming, College of Agriculture, Department 3313, 1000 E. University Ave., Laramie, WY 82071. Prices range from $2 to $5.

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