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April 22, 2004 North Dakota Crop Land Values Show Greatest Increase in 25 Years A recent survey indicates
the greatest annual percentage increase in land values since the late
1970's, according to Andrew Swenson, farm and family resource management
specialist with the North Dakota State University Extension Service. Crop
land rents also increased, but at a more modest rate. The numbers mark the fourth consecutive year of increased land values after slight declines in 1998 and 1999. The strongest increases occurred in the southeast central region where average crop land values increased 17 percent to $549 per acre and in the northeast central region with a 13 percent increase to $470. The values in the southwest central region at $370, the northwest region at $358, the south Red River Valley at $1,059 and the southwest region at $333 represented increases of between 6 and 10 percent from the previous year. Crop land value in northwest central increased 3 percent to $430 and the north Red River Valley showed a 2 percent increase to $752. Land rents increased at a much lower rate than land values. The largest increases were about 4.5 percent in the southeast central and northeast central regions to $39.40 and $33.90 per acre, respectively. The highest rent region, the south Red River Valley at $63.30, and the lowest rent region, the southwest at $24.70, increased between 3.5 to 4.0 percent. The southwest central region increased 2.4 percent to $28.40. The increase was about 1.5 percent in the northwest region to $26.00 and the southwest central region to $28.40. Surprisingly, one region showed a decrease. The surveys indicated that the average crop land rent in the north Red River Valley declined 1.8 percent to $48.70. This region also has the greatest variability of rents because of differences in land productivity. Swenson notes that several agricultural economists have expressed concern that agricultural land values, nationally, may be reaching excessive levels. Although North Dakota crop land values are approaching the all time high of about $530 per acre in 1981, in constant dollars (after adjusting for inflation) current values are about one-half of 1981 levels. Swenson says the future of land values is tied to farm profitability, interest rates and the strength of the overall economy. In recent years, low returns on other investments have made land attractive to outside investors, and farmers have pursued land more aggressively because of improved farm profit and low interest rates. The risk, going forward is that these conditions, which have fueled demand for land, will change. ### Source: Andrew
Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu
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