April 17, 2003

 

Crop Land Values and Rents Increase in North Dakota

A recent survey of crop land values and rents showed the greatest annual percentage increase since 1997, according to Andrew Swenson, farm and family resource management specialist with the North Dakota State University Extension Service. The numbers mark the third consecutive year of increases after declines in 1998 and 1999.

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

The strongest increases occurred in the south Red River Valley region where average crop land values increased more than 9 percent to $981 per acre and in the southeast central region with a 7.1 percent increase to $468. The values in the northwest central region at $414, the southwest central region at $351 and the southwest region at $303 all represented increases of between 3.5 and 4 percent from the previous year. Crop land value in northwest central increased 2.7 percent to $417 but values declined slightly to $336 in the northwest region. The only region with a noticeable decline in values was in the north Red River Valley which showed less than a 2 percent decline to $736. However, this followed a strong increase the previous year of over 10 percent.

Crop land rents increased at a more modest rate than crop land values. Again the largest increase, 4 percent to $61.20 per acre, occurred in the south Red River Valley region. All other regions increased except for the southwest and northwest central regions which were essentially unchanged at $23.80 and $32.30, respectively.

Swenson believes that low returns on alternative investments and the low interest rates for land loans have been a primary driver of higher land values. Crop land has provided much better returns the past three years than both bank CD’s, a conservative investment, and the stock market, a higher risk investment.

Also, although government payments were much less in 2002 than the previous four years the passage of a new Farm Bill in 2002 could be considered positive for land values because it removed some of the uncertainty surrounding future government support. Swenson concludes that the immediate future of land values may hinge on interest rates and also on large federal deficits which may put federal farm payments at risk. Higher interest rates will increase the cost of ownership for those who acquire land with debt and will improve the attractiveness of alternative investments for those who would purchase land with cash.

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

Click here for a 31KB gif file of this map showing estimated average cash rent charge per acre of cropland in eight farming regions of North Dakota from 1998 to 2003.
Click here for a 19KB Adobe Acrobat pdf file of this map.
Click here for a 1MB eps file suitable for printing.

Click here for a 29KB gif file of this map showing estimated average per-acre values of cropland in eight farming regions of North Dakota from 1998 to 2003.
Click here for a 19KB Adobe Acrobat pdf file of this map.
Click here for a 947KB eps file suitable for printing.