Estimate the income-based value of western Kentucky cropland — what the land is worth based on what it will produce — and see how that compares to market prices.
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Farmland Valuation Calculator
What share of the rotation each crop occupies. Defaults to a 50/50 corn – wheat/double-crop bean rotation typical of western Kentucky. Shares should total 100%. Values pulled from the Crop Budget calculator will be highlighted.
Gross revenue per acre by crop. Defaults are western Kentucky averages from UK Extension. Use the button below to import yields, prices, and crop mix from your Crop Budget entries.
All costs of producing each crop except a land charge — variable inputs, fixed costs, machinery, and operator labor/management. Based on UK Extension budgets.
Adjust the capitalization rate, financing interest rate, and observed market price to see how each affects the valuation.
How the income-based value changes as the capitalization rate moves. The vertical gold line marks your selected cap rate; the horizontal dashed line is the market price you entered.
What is a capitalization rate? The capitalization rate (or "cap rate") is the annual rate of return an investor expects to earn on the price paid for an income-producing asset. For farmland, it answers the question: "If I pay $X per acre for this land, what percent of that price will the crop income return to me each year, indefinitely?" A 4% cap rate means $40 of net income for every $1,000 of land value. Lower cap rates imply higher land prices relative to income (and signal that buyers are paying for appreciation, scarcity, or non-income benefits); higher cap rates imply land is priced closer to what its income alone can justify. The income-based value formula reverses the question: Land Value = Net Income ÷ Cap Rate.
Methodology & sources. The income approach values land at Net Income ÷ Cap Rate, where net income is gross crop revenue minus production expenses (excluding land charge). Regional defaults come from University of Kentucky Extension grain profitability outlooks (Halich) for corn, wheat, and double-crop soybean enterprises in the Pennyrile region. Farmland cap rates in the Midwest and Mid-South have historically run in the 3–5% range; current farm real estate loan rates typically sit between 6.5% and 8%. Market prices reflect recent Christian County, Kentucky cropland sales but vary widely with productivity, drainage, and location. This calculator is a planning tool, not an appraisal.