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As shale speculation increases the value of agricultural land in the Valley, farmers have to be creative if they want to expand their operation at a reasonable cost.
Land values have been thrown off by shale, said David Marrison, Ohio State University extension agent for Trumbull and Ashtabula counties.
“In Ashtabula County — and we’re on the far north end of the shale — [agricultural] land values went from an average of $2,000 an acre up to $4,000, and then as talk of the shale has changed, they’ve bottomed out back to $2,000 an acre,” he said.
There is a tremendous amount of speculation in the area when it comes to land values, Marrison said.
The speculation has created more of an impact because there is a limited amount of land, he said.
Agricultural land values also have increased in Mahoning and Columbiana counties, said Eric Barrett, extension agent for Mahoning County. The increase has varied by location.
There are steps farmers can take to get lower prices when buying land for agricultural purposes.
“In one instance, someone was willing to take a lower price for the land to keep it in agriculture, but the previous owner kept the mineral rights,” he said.
For someone looking for agricultural property to farm, that might be the best way for them to get access to land at a reasonable price, Barrett said.
The goal is to keep land in agricultural use, if possible, and not have it just sit barren waiting to be drilled, he said. Northeast Ohio is not unique in seeing land values increase because of shale development.
A study by Lucija Muehlenbachs, Resources for the Future; Beia Spiller, Environmental Defense Fund; and Christopher Timmins from Duke University showed in Pennsylvania that shale development led to increased property values.
Properties closer than 1.2 mile to a well pad saw a 10 percent increase unless the property depends on groundwater. If the nearby property contained a water well, then there was a 16 percent decrease, but this was after the well was constructed.
According to an Ohio State University study, shale has a larger impact on agricultural land values due to the fact that most shale development occurs in rural areas. The study said most the development is focused in rural areas because there are fewer landowners with whom to negotiate leases.
Shale hasn’t been the only issue that has increased the cost of agricultural acreage locally. The past two years the typical farmer’s earnings have increased by $20,000 per year nationally, Marrison said.
The additional income combined with low interest rates to buy property have convinced farmers it’s a good time to invest in land, he said. Little available land and more interested buyers have helped increase prices.