2023: State of the Texas Region 1 Land Market
ASFMRA puts out an annual report that I find really useful and interesting being in the land sales business. It is quite dense, so I have condensed the most important parts for the regions we serve.
REGION 1 Overview Highlights:
Extreme drought conditions and triple-digit temperatures resulted in 65% to 70% of the region’s 4.5 million cotton acres not being carried to harvest. The normal abandonment rate is 15% to 20%.
The 2022 cotton crop was “one for the record, probably even more difficult than what we saw in 2011, which has been kind of the benchmark we’ve used for one of the worst years we’ve had on record.”
Sales activity was strong though the first half of the year (2022) and tapered off as the year progressed, interest rates rose and drought conditions worsened.
Buyers tend to be existing producers looking to expand operations along with private investment groups and institutional investors.
Distressed sales were virtually non-existent.
Number of sales transactions were down from the prior year; however, sales prices, total acres sold and total dollar volume were significantly higher.
Good demand for cow-ready grass tracts with permanent fencing and developed water sources.
Irrigated cropland continued to be purchased by dairy operators for the purpose of forage production. These buyers have been the primary market makers in some areas of the Panhandle.
NORTH PANHANDLE Highlights:
Sales activity was stable for all land classes in 2022 with a sharp uptick in prices, especially larger irrigated farms with strong groundwater resources.
Water volume and commodity prices continue to be the most important factor impacting irrigated farm land prices in this market.
There has been increased drilling to the Santa Rosa formation to supplement irrigation water that is being pumped from the Ogallala formation.
Cash leases for irrigated farmland is stable to higher probably due to rising commodity prices.
Cash leases for grazing/rangeland is stable to increasing.
CENTRAL PLAINS Highlights:
Prices trending slightly higher for most land types.
The land market for irrigated farms was active with modest price increases being noted. Light water farms were also active with slightly higher prices.
Typical buyer profile is a local producer buying family or rented land to expand operations.
Demand for native/improved grass was strong with premiums typically being paid for cow-ready tracts with permanent fencing and water.
Rental rates and terms remain stable.
Prices for land enrolled in the Conservation Reserve Program (CRP) are stable with moderated demand.
Land enrolled in CRP is being purchased for conversion to organic irrigated cropland.
SOUTH PLAINS Highlights:
2022 was an active year for the South Plains region despite drought conditions and limited cotton production.
The limited number of farmland buyers is typically composed of local farmers.
Some expired CRP acreage being placed back into production, especially those with irrigation potential to grow organic peanuts.
Farmland that used to command prices of $400 to $1,000 per acre are sometimes selling in the range of $1,500 to $4,000. Some listings in areas with irrigation wells are higher.
A new trend in Industrialized Ag Land in the South Plains is development of large solar farms such as a 3,600-ranch property developed to a solar farm.