May 18, 2001

NDSU Ag Economist: 2001 Crop Land Values and Rents Up in West, Weaker in East.

Crop land values and rents are higher in western North Dakota but continued to be flat to weak in the eastern half of the state. Statewide, crop land values and rents are slightly below 1998 levels because they have been flat to declining the previous two years, according to Andrew Swenson, extension farm and family resource management specialist at North Dakota State University.

Swenson bases his calculations on surveys conducted by the North Dakota Agricultural Statistics Service.

The 2001 per acre crop land value in the southwest, $286, and southwest central value, $320, increased 7 percent and 8 percent, respectively, from 2000. The northwest region at $342 and northwest central region at $400 saw more modest increases. The values in the southeast central region at $426 and south Red River Valley region at $877 were nearly unchanged from the previous year. Values in the northeast central region at $381 and the north Red River Valley region at $680 were both down for the third consecutive year.

Land values in North Dakota have always been greater in the eastern part of the state and decrease toward the west because of climate and soils. However, Swenson says this trend has weakened since 1993, probably because of a series of wetter-than-normal years which has helped crop production in the west but has caused problems in the east. He notes that crop land values in the southwest and southwest central are 24 percent higher than in 1993 but values in the northern Red River Valley are 11 percent lower. Also, land values in the northeast central region are now less than land in the region to the west, the northwest central region.

A sharp downward adjustment in land rents has been avoided the past two years because net farm income has been bolstered by extraordinary government payments and crop insurance income, Swenson notes.

Even so, Swenson says he was somewhat surprised at the strength of land values and rents in northwest and northwest central North Dakota where the profitability of the major enterprise, durum, has been challenging the past few years.

The survey results indicate that producers are anticipating emergency government legislation in 2001, similar to 1999 and 2000, to provide income to offset low grain prices. Swenson cautions that the scheduled Agricultural Market Transition Act payment will decline 20 percent in 2001. That reduction, coupled with continued low grain prices would weigh on the crop land market.

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Source: Andrew Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

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