SDSU economist: Ag land values have doubled since 1998

SDSU economist: Ag land values have doubled since 1998 Agricultural land values per acre in South Dakota jumped 20.3 percent from 2004 to 2005, and have doubled in the past seven years.

SDSU economist Larry Janssen said those are among the chief points SDSU's latest farm real estate survey reveals.

Since 1991, SDSU has gathered the data by surveying ag lenders, Farm Service Agency officials, rural appraisers, assessors, realtors, professional farm managers, and Extension agricultural educators.

Janssen authored the report with the help of SDSU graduate research assistant Erik Gerlach and SDSU Extension Farm Financial Management Specialist Burton Pflueger.

Janssen said federal farm programs, favorable farm mortgage interest rates through late 2004, and low inflation rates are among the factors that make investors see ag land as a good investment. Other contributing factors are crop insurance programs, and better varieties and technologies to increase yields.

This year's 20.3 percent increase is up from a 17.1 percent increase in agricultural land values from 2003 to 2004. It is the largest annual increase Janssen has seen since the survey began in 1991.

"The only major surprise was that it went up as much as it did," Janssen said. "I'd anticipated maybe a double-digit increase. I had not anticipated a 20 percent increase. You have to go back into the late 1970s to find anything similar in terms of percentage rates of increase. Cropland and rangeland values per acre have doubled since 1998."

Janssen adds that cropland and rangeland values per acre have nearly tripled since 1991.

Average values of nonirrigated cropland vary from $1,659 per acre in east-central South Dakota to $871 per acre in the central region and $316 per acre in the northwest.

Average rangeland values vary from $844 per acre in the southeast to $185 per acre in the northwest.

Average cash rental rates per acre of cropland in 2005 vary from $87.20 in the southeast region to $22.90 in the northwest. Average rangeland/pasture rents vary from $40-41 per acre in the southeast region to $9.75 per acre in the northwest region.

Janssen added that the average value of nonirrigated cropland in 2005 exceeds $2,000 per acre and average cash rental rates exceed $100 per acre in two clusters of counties in eastern South Dakota: Minnehaha-Moody, and Clay-Lincoln-Turner-Union.

"Those are the highest average land values and cash rental rates reported in the past 15 years of the SDSU Farm Real Estate Market Survey," Janssen said.

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