The Impact of Flooding on Farmland Values

The Impact of Flooding on Farmland Values
Photo Credit:dnr.nebraska.gov | Story Source: Farmers National Company

By: Randy Dickhut, AFMSenior Vice President - Real Estate Operations, Farmers National Company

 

The eyes of the nation were riveted on last month’s epic flooding in parts of Nebraska, Iowa, and Missouri. The toll on people’s daily lives, their homes, and businesses continues to impact those who were in the flooded areas. Our concern goes out every day to those who are struggling to put their lives and businesses back to normal. Callers and media from around the nation have been asking numerous questions about the flooding and how people are coping. One question that came up is how will the flooding impact farmland values. The answer to that question is multi-faceted and really depends on the specific property.There will be short term and longer term effects on flooded farmland and its value. First, it will depend on if the flood water was shallow, drained off quickly, and didn’t damage the land.

 

Unless we get too much rain this spring, one would expect a crop to be raised in 2019 on this quickly drained land. This type of bottom land may or may not have much change in value if the flooding is considered extremely rare and non-damaging. On the other hand, if the land was damaged by the flooding and/or water remains on the land, there is a much higher potential of not getting a crop this year. Some acres may never be farmed again due to cutouts, debris, or silt and sand deposits. Also, if the land continues to be more flood prone or remains too wet to plant in multiple seasons, the value of the tract will be pressured downward.Looking much longer, land values in flood plains could come under more pressure if several scenarios play out. Ultimately, the value of farmland depends on the income it can generate and how consistent production is. The less income the land produces and the riskier production is each year, will impact long term land values. One risk is if we continue to see more frequent flood events resulting in an increase in the number of years when no crops can be produced.

 

Also, future values could be impacted by how well the levees and drainage systems are maintained. Time will tell how much current and future flooding will impact farmland values in the impacted areas, In the meantime, we all hope for more “normal” weather and fewer flood events.

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