Increased Value of Pasture Could Lower Grocery Prices

Cattle expansion may boost pasture values but move beef prices lower.

The 2015 Missouri Farm Land Values Opinion Survey says grassland prices have moved higher and the expectation is for pasture values to continue rising in 2016, says University of Missouri Extension agricultural economist Ron Plain.

While the survey expects a price increase next year, Plain says it is a smaller increase than the last several years. That's because the herd is growing and cattle prices are likely to be lower, he says.

"Over the next several years the trend should be more cattle, more beef and a little bit lower prices in the grocery store."

However, Plain notes that changes in cattle numbers don't happen quickly. While beef prices should come off record highs, it will take time for consumers to see substantial change at the meat case.

The Missouri Farm Land Survey showed fairly steady prices for cropland this year and predicts the price will fall during the next 12 months. Plain says the economics of the crop and cattle businesses have been going in different directions but will likely start moving toward each other.

"The same way lower corn and soybean prices caused us to forecast a 3 percent drop in cropland prices, once the cattle herd increases and cattle prices come down, we should see softer pasture prices as well," he says.

For more than 40 years, MU Extension has conducted a survey of lenders, appraisers, brokers and others to track the value of farmland in Missouri. The annual MU Extension Farm Land Values Opinion Survey provides landowners and potential buyers a benchmark to value their property.

For more information about the survey and 2015 results, visit agebb.missouri.edu/mgt/landsurv/.

Source: University of Missouri Extension