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Corn+Soybean Digest

Ag land values have doubled since 1998

Agricultural land values/acre in South Dakota jumped 20.3% from 2004 to 2005, and have doubled in the past seven years.

South Dakota State University (SDSU) economist Larry Janssen says 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. The report is available online at an SDSU Web site, agbiopubs.sdstate.edu/articles/C270.pdf.

Janssen says 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% increase is up from a 17.1% 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," says Janssen. "I'd anticipated maybe a double-digit increase. I had not anticipated a 20% 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/acre have doubled since 1998. That's only seven years."

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

Average values of non-irrigated cropland vary from $1,659/acre in east-central South Dakota to $871/acre in the central region and $316/acre in the northwest part of the state.

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

Average cash rental rates/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/acre in the southeast region to $9.75/acre in the northwest region.

Janssen adds that the average value of non-irrigated cropland in 2005 exceeds $2,000/acre and average cash rental rates exceed $100/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 says.

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