July 3, 2018
The average value of cropland declined in North Dakota approximately 1% in 2017, based on the latest County Rents and Prices Report survey funded by the North Dakota Department of Trust Lands.
But land values rose 7% to $3,021 per acre in the southeast, 3.17% to $1,648 per acre in the south central and 3.53% to $1,373 per acre in the southwest, and 2.45% to $1,746 in the northeast.
Land values fell in the northwest, north-central, northern Red River Valley, southern Red River Valley and east-central regions.
For the first time since 2003, the northwestern region experienced a decline in farmland values. Values declined 9.81% from $1,230 to $1,110 per acre. This represents the greatest decline of any region in the state. The number is suspect, though, because a report by the North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers only shows a 3.1% decline. The figure is based on actual sales.
Land values in the northern Red River Valley region also showed a steep decline in the North Dakota Department of Trust Lanes survey. Land values in the region were off approximately 6%, falling below $3,000 per acre to $2,853 per acre. This marks the fourth year out of the last five in which a decline occurred.
Values in the southern Red River Valley declined more modestly, falling 2.18%, from $4,038 to $3,950 per acre. The north-central region experienced a land value decline of approximately 3%, to $1,631 per acre, while the east-central region's farmland values declined approximately 4% to $1,981 per acre.
Cash rents across North Dakota declined much more sharply than land values, with a statewide weighted average rental rate decline of 4.63% from $64 to $61 per acre.
Eight out of the nine regions reported declines in rental rates for farmland, with the north-central region steady at $51 per acre.
The south-central region declined 12% from $58.70 to $51.50 per acre, which was the greatest decline statewide. However, rents in the neighboring east-central region remained mostly flat, declining from $67.60 to $67 per acre.
Rents in the Red River Valley counties declined 5%, with the southern Red River Valley counties falling from $124.60 to $118.20 per acre. Northern Red River Valley counties fell 10%, from $89.60 to $80.80 per acre.
Rents in the northwestern and southeastern regions declined approximately 5%, from $36.40 to $34.50 per acre in the northwest, and from $99.80 to $95 per acre in the southeast.
Rental rates in the northeastern region declined less than the statewide average, at 2.93%, from $58.40 to $56.70 per acre.
The 1% decline in the state average farmland value continues a slow downward trend for land values statewide that first was seen in the 2015 report, says Bryon Parman, North Dakota State University Extension agricultural finance specialist.
"Should yields remain at or below average for the state and prices hold, it will likely be a tough year for farmers financially mitigating available funding for new land purchases, and pushing rents and sales values downward," he says. "Another issue facing farmland values statewide and nationally are interest rates. The Federal Reserve conducted three separate interest rate increases in 2017 and one in March of 2018. Insiders also anticipate one or two more rate increases before the end of 2018."
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