South Dakota Farmland Values Rise Marginally
May 28, 2014
The value of non-irrigated South Dakota cropland rose 6.1% in 2013, according to a survey conducted by ag economists at South Dakota State University. "This percentage increase was smaller than increases reported from each of the past three years," says Kim Dillivan, SDSU Extension Crops Business Management Field Specialist. Dillivan along with Dr. Larry Janssen and Bronc McMurty conducted the 24th annual survey.
The survey showed that the nonirrigated agricultural land average value was $2,470 per acre as of February 1, 2014, $142 from last year. "The 6.1% increase in values for 2014 is similar to the 5.2% increase reported in 2010," Dillivan says. That rise compares to the annual increases of 33.6% posted in 2013, 26.8% recorded in 2012 and 16.5% marked in 2011.
Regional average values by land use are simple average (mean) values of useable survey responses. In each region, per-acre average values of nonirrigated land are highest for cropland followed by per-acre values of hay land, tame pasture, and rangeland. For each land use, Dillivan explained that per-acre values are highest in the east-central and southeast regions and lowest in the southwest and northwest regions.
"These regional patterns in land values have largely remained consistent over time and are closely related to climate patterns, soil productivity difference, and crop/forage yield differences across the state," Dillivan states. That regional agricultural land values are weighted by the proportion of acres in each agricultural land use.
"Cropland is the major land use in the three eastern regions (southeast, east-central, and northeast) and its per-acre average value is more than twice the value of rangeland in these regions," Dillivan notes. "Thus cropland values largely determine the agricultural land average values in eastern regions of South Dakota." However, the two western regions of South Dakota with the lowest average land values are mostly rangeland and pasture.
The 2014 estimates for land values and cash rental rates are based on survey data supplied in February and March by agricultural lenders, Farm Service Agency officials, rural appraisers, assessors, Realtors, professional farm managers, and SDSU Extension field specialists. Land values and cash rental rates are reported only for privately owned land and should not be considered as estimated values for tribal, federal, or state owned lands.
Since 2009, all South Dakota regions have experienced increases in agricultural land average values. The smallest percentage increases in agricultural land values over the 2009 to 2014 period were in the two western regions, with a 50% increase in the southwest and 67% increase in the northwest region. All other regions showed agricultural land average value increases exceeding 110% over the five-year period. The largest percentage increase in land values was 161% in the north-central region, while the second largest percentage increase of 135% occurred in the central region.
"It is interesting and important to note that the greatest percentage increases are occurring in the regions with considerable shifts to higher value agricultural land uses - which includes more corn and soybeans in the crop mix and some shift from pasture/forage uses to crop production," Dillivan observes.
From 2009 to 2014, the largest dollar increases in average values was $3,129 per acre in the east-central region and $3,030 per acre in the southeast region, followed by increases between $2,000 and $2,100 per acre in the northeast and north central region. The smallest increases in average values ($205 and $207 per-acre) occurred in the northwest and southwest regions.
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