By Chuck Sutton

In 2016, land sales in southeast South Dakota and southwest Minnesota conducted by Chuck Sutton Auctioneer and Land included some noteworthy results, including a small 40-acre parcel of land located near Harrisburg, S.D., that sold for $12,750 per acre.

Land at several other auctions in Lincoln County, S.D., sold for $8,150, $8,100, $9,500 and $7,550 per acre.

Noteworthy: Minnehaha County, S.D., included land sales at $10,100, $7,700 and $8,300 per acre.

A 49-acre parcel of development land in the city limits of Brandon, S.D., sold for $19,500 per acre.

A very good 160-acre unimproved farm in Moody County, S.D., sold for $9,400 per acre. Numerous other Moody County farms with varying degrees of tillable and non-tillable land sold very well.

Several Lake County, S.D., parcels, including three near Rutland, S.D., sold for $8,700, $8,000 and $7,725 per acre, and two others near Chester, S.D., sold for $7,850 and $7,800 per acre.

Minnesota farms in Rock, Pipestone, Lincoln, Murray, Lyon, Redwood and Cottonwood counties with high or relatively high percentages tillable sold for $9,900, $8,175, $8,000, $7,900, $7,500 and $6,700 per acre. Farms with lower percentages tillable and mixed utilizations sold at lower price levels.

A couple of large parcels in northwest Iowa with mixtures of crop and non-cropland acres sold for $12,200 and $10,400 per acre.

In 2016 the majority of the farms with relatively high or very high percentages of tillable acres sold in the $6,000- to $10,000-per-acre price range. In the current market it takes a tract of land of extremely high caliber to bring upward of $10,000 per acre.

“Good pasture” with quality grass, good fences and a decent water supply was and is a highly sought after commodity, especially for the cow-calf operator.

Values of poor quality, marginal and recreational land remained somewhat soft, but rebounded slightly as landowners, investors and lenders are somewhat disinterested in parcels of land that won’t generate a cash flow sufficient to sustain itself.

Commercial and development land values rebounded slightly, partially due to the strength of agricultural land firming up a base level for development land capable of producing some crop income that might be sufficient to sustain the holding costs for a period of years, along with a realization and belief that there may be some long-term potential for upside improvements in commercial land values in the future.

Cropland in many cases is still yielding a 3% to 4% return on investment, outperforming certificates of deposits and other investments. Land as an investment affords a high degree of security. It is a tangible investment that won’t yield a negative or zero return because there are ample farm operators who are ready, willing and able to rent land.

As for 2017, if there are no major adverse economic influences, if crop production remains average to above average and if commodity prices don’t erode further, there is no evidence on the horizon for drastic downturns or increases in land values. Expect land values in 2017 to remain constant and pretty status quo.

Sutton is president and CEO of Chuck Sutton Land Broker and Auctioneer, Sioux Falls, S.D.