PROVIDENCE – Farmland prices in Rhode Island dropped sharply this year as the biggest real estate crash since the Great Depression hit the agricultural sector, although the state still has the most valuable acreage in the country.
The value of all land and buildings on farms in Rhode Island averaged $15,300 per acre at the start of 2009, a decline of 8.9 percent from the $16,800 average last year, the U.S. Agriculture Department said yesterday in an annual report.
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Nationwide, farmland values averaged $2,100 an acre at the start of 2009, down 3.2 percent from the previous year – the first year-over-year decline in 22 years. By comparison, home prices in cities declined 19 percent last year and commercial values fell 35 percent from their peak in 2007, Bloomberg News reported.
Farming, particularly on a small scale, has been growing at a fast clip in Rhode Island. From 2002 to 2007, the total number of farms in the state grew 42 percent to 1,219, while crop and livestock sales rose 18 percent, according to the USDA.
The decline in acreage value in Rhode Island was the third-biggest of the 11 Northeast states, which saw an average drop of 3 percent for the region, and the fifth-highest in the country.
Average values fell 22.2 percent in Montana to $700 per acre; 13.6 percent in Delaware to $8,900; 12.0 percent in Idaho to $2,200; and 9.8 percent in New Jersey to $13,800.
The total value of all land and buildings on Rhode Island’s farms was $1.18 billion at the start of 2008, up 2.4 percent from the previous year and a 54 percent increase since 2004.
Jeff Conrad at Hancock Agricultural Investment Group in Boston told Bloomberg he expects farmland value to advance once again before too long.
“The market is taking a breather, but demand fundamentals are still in place,” he said. “Population, more Western-style diets and land availability all point toward more growth.”
Jason Henderson, a vice president with the Federal Reserve Bank of Kansas City, also noted to Bloomberg that farmers’ debt is at its lowest level in at least half a century.
