2023 End of Year Report

State-level overview

The average price of agricultural land sold in Wisconsin between January 1 and December 31, 2023, was $5,890 per acre (see Figure 1). This is a 6% increase from 2022.  While the price of agricultural land is still increasing, the rate at which it is increasing seems to be slowing.  The most drastic increase was from 2020–2021, with a 14% increase.  The increase in 2022 was only 11%.   While the price increase seems to be slowing, the number of acres sold is also continuing a downward trend.  In 2022, we saw 26% fewer sales compared to 2021. In 2023, there were 44% fewer sales than in 2022. 

There are marked differences in sale prices across the state, with some regions faring better than others. Despite the difficult economic conditions and substantial losses in the number of dairy farms over the last few years, the land market has been supported by the ability of landowners to hold onto their property and limit the supply of land on the market. Most landowners, even those forced to exit the dairy industry, were not forced to sell their land. Most could continue cropping or renting the land. Thus limiting the supply of land on the market which helped support market values. In some areas, other factors, such as urban sprawl, have helped to maintain or even bring up land values.

Between 2012 and 2020 the average annual growth in Wisconsin agricultural land value was 3%. In comparison, between 2020 and 2023, the average annual growth in value was 10%, which is a 3% decrease from the 2020–2022 average.  It is unknown how long land prices will continue to increase at this heightened rate. However, there does appear to be a slowing in the price increase.

Farmland is the most valuable asset on most farmer’s balance sheets. However, estimating land values is always difficult. Each individual parcel of land is unique. While many thousands of homes are sold yearly, only a small fraction of the state’s agricultural land changes hands on the open market in any given year.

Surveys of farmers, bankers, real estate professionals, and appraisers are sometimes used to estimate changes in land values. While easy to conduct, these opinion surveys are subjective and can be hard to interpret. News of high-priced sales travels quickly – but these sales are often the exception and do not reflect the market.

The Wisconsin Department of Revenue (DOR) collects an alternative source of agricultural land sales data. A transfer return tax is collected when a property is sold, and a transfer return form is collected with the tax payment. Data from these transfer return forms are used in this paper.

Wisconsin’s agricultural land values are lower than some of our highly productive neighboring states. This is because a large portion of our land is not suitable for continuous row crop farming and is used for forage production, woodlots, and pasture. The shorter growing season in northern Wisconsin also limits the potential agricultural value of the land.

While the state average has increased for 2023, there is wide variation in the sales price per acre. Thirteen percent of the sales are less than $2600/acre, and 40% of sales had prices above $6,000/acre. Leaving just under half of the sales between $2600 and $6000.  High-priced sales make good headlines; however, there were very few sales above $10,000/acre (11% of all transactions) (see Figure 2).

Another way to emphasize the large range in the prices paid for agricultural land is illustrated in Appendix Table I.  Appendix Table I reports the minimum, average, and maximum sales price/acre for each county between 2020–2023. 

Methodology

This statewide report is based on bare land sales between non-related parties in Wisconsin townships. All parcels were between 35 acres and 2,000 acres, and their predominant use was agriculture at the time of the sale. Properties with waterfrontage or managed forest acreage were filtered out. Parcels sold with retained property rights or with miscellaneous use notes referring to mining were also excluded.

The Department of Revenue’s transfer return data is an objective and relatively timely data source for measuring changes in agricultural land values over time. Towards the end of every year, the Wisconsin Agricultural Statistics Service posts a summary of agricultural land sales – both bare land and improved properties. The National Agricultural Statistics Service (NASS) uses the same transfer return data as this study. The delay in the publication of the summary document allows county assessors to collect and verify each parcel’s intended future use. This means that some of the parcels included in our analysis may later be eliminated from the NASS summary because they are no longer being used in production agriculture.

There are a few other differences in our approaches. The NASS summary is not limited to parcels 35 acres and above and includes properties in cities and villages. Using only the transfer return data enables us to assess the direction of land values earlier. The NASS reports (typically updated in late summer) are another good alternative with more information about tillable land and land diverted from agriculture. Here is the most current land summary.

Sales Location

Location is an important determinant of value.  In addition to the state-wide averages, land prices are reported using NASS districts.  The map below displays the borders of the various districts.

Table 1 below contains the average price ($/acre) in each of the nine NASS reporting districts. Appendix Table 1 has a complete listing of minimum, average, and maximum sales prices by county. There are often wide variations in the value of individual parcels even within the same township or county due to soil, quality, topography, drainage, and proximity to urban centers. From Table 1, we can see that the average land value increased in seven of the nine reported areas and decreased in two of the areas. The highest average prices paid for agricultural land are in South Eastern, South Central, and East Central Wisconsin, which makes it difficult to gauge market value trends.

NASS District	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
Central	$2,905	$2,904	$3,093	$3,060	$2,999	$3,515	$3,431	$3,526	$3,739	$4,084	$4,021
East Central	$5,327	$6,034	$6,488	$6,412	$6,065	$6,541	$5,888	$5,797	$6,227	$6,563	$7,505
North Central	$2,469	$2,684	$2,554	$2,910	$2,560	$2,933	$3,084	$2,640	$2,842	$3,167	$4,164
North East	$3,046	$2,963	$3,023	$2,918	$3,256	$3,705	$3,646	$3,358	$3,743	$4,195	$5,260
North West	$2,474	$2,338	$2,471	$2,392	$2,282	$2,132	$2,556	$2,375	$2,945	$3,320	$4,302
South Central	$5,058	$5,468	$5,221	$5,418	$6,163	$6,084	$5,644	$5,777	$6,152	$7,178	$7,666
South East	$6,390	$6,499	$5,775	$6,530	$6,689	$7,505	$6,765	$7,411	$8,052	$7,714	$10,060
South West	$3,494	$3,756	$3,581	$3,880	$3,681	$4,628	$4,364	$4,364	$5,429	$6,356	$6,206
West Central	$3,505	$3,685	$3,304	$3,456	$3,758	$3,891	$3,836	$3,845	$4,215	$4,775	$5,266

Appendix Table 2 contains a more detailed breakdown of real estate sale prices on a county basis. The limited number of sales in each county can cause wide variations from year to year, and the average price reported may not truly represent the local market. These figures should not substitute for an independent appraisal by a qualified professional.

Figure 3 displays the average sales price per acre by county in 2022. Figure 4 displays the average sales prices per county for 2023.  Prices are highest in counties with a strong dairy and row crop industry.  This is illustrated by the higher prices in the counties along Lake Michigan, the Fox Valley, and Southern Wisconsin.

The maps below illustrate the number of sales per county for 2022 and 2023 (Figures 5 and 6, respectively).  From this map, we can see that Marathon County led the state in agricultural land sales in 2021, with 59 sales.  Grant County led the first half of 2022 with 18 sales and ended the year with the most sales (n = 53).  There were relatively few sales in Southeastern WI as urban development pressures have continued to convert land to non-agricultural purposes.  We also see few sales in the northern part of the state as the climate and lack of growing degree days make raising crops more difficult in this area.

Land Values vs. Rental Rates

From 2010 to 2014, rental rates increased an average of 10.25%, while land values increased at a lower rate of 6%. This reflects growing competition for land rental. Increased rental rates make for higher land ownership returns and reflect some degree of stickiness in the rental market. In other words, when rent increases at a higher rate than land values for a prolonged period, instead of a correction/decline in rent, we usually witness a leveling off of rent in subsequent periods until land values can catch up. We have seen this phenomenon from 2014-2020, with rental prices increasing only slightly from $130 to $138 or, on average, 1% per year (see figure 7).

The capitalization rate (i.e. Rent/Value) can be a useful tool to determine the rental value of land. Typically, rent represents about 3% of the land value. Interestingly in recent years the increase in rental prices has not kept pace with the increase in land value.  In 2023 the rental rate increased to $151/ acre which is and $6 increase over 2022 values but is still 2.6% of the value of the land. If we look at the last five years, we see that the rental rate on average is 2.86% of the land value, with the last three years bringing down this percentage. It will be interesting to see if this trend continues as rental rate increases have lagged behind land rate increases since 2021.

Implications for Agricultural Land Owners and Farmers

The appreciation in land value is only realized when the assets are sold. In most cases, the operating agricultural business will not directly benefit from changes in land value. High land values provide the retirement cushion for “last generation” farm businesses. However, high land prices make it more difficult for new entrants to get started without significant help from family members or other benefactors.

Dairy farming in South Eastern, East Central, and South Central Wisconsin is in competition for land from those wishing to purchase it for other uses. If the trend continues, dairy production will continue to shift away from these parts of Wisconsin to parts where land prices are not as competitive.

Dairy farming is a capital-intensive business. A typical dairy cow and her replacement consume approximately 7.5 tons of forage dry matter and 100 bushels of grain each year. Manure management and nutrient balancing are a growing challenge. The typical Wisconsin dairy farm requires 2-3 acres of cropland to grow the forages and grain consumed by each dairy cow.

Wisconsin’s farmland use value assessment has greatly reduced the costs of holding agricultural real estate. The real estate taxes for agricultural land are much lower than they once were. Record low interest rates and changing population demographics have also increased demands for open space. Expanding dairy businesses may need to rely on long-term leases or manure trading arrangements to assure compliance with environmental regulations and land-use constraints.

Although dairy farming is well suited to the climate, topography, and infrastructure of Wisconsin, the continued survival of a viable dairy industry depends upon access to affordable land resources.

Appendix

Download tables as Excel spreadsheet

Table 1: Min, Average, and Max price per acre of Wisconsin Agricultural Land by county

Table 2: Wisconsin Agricultural Land Sales by county, Total sales, total acres sold, and Average price

References:

¹ See USDA-ERS Farm Land Value for details

² Farmland rental rates usually represent about 3% to 3.5% of the land market value. For example, land valued at $3,000/ac would usually rent for $90/ac. to $105/ac., and land valued at $7,500/ac. would usually rent for $225/ac. to $263/ac.

³ For example, see Moody’s Seasoned Aaa Corporate Bond Yield for details