Farm Progress

Survey shows North Dakota pastureland values and rents increasing despite last year’s drought.

July 9, 2018

4 Min Read
PASTURE TRENDS: Pastureland values and rents are up in North Dakota.Lon Tonneson

North Dakota pastureland values are up about 7%, with rents up nearly 2%, according to the 2018 County Rents and Prices Report funded by the North Dakota Department of Trust Lands.

“The survey, conducted in February and March of 2018, contains observations from 2017,” says Bryon Parman, North Dakota State University Extension ag finance specialist.

The east-central, northwestern and southeastern regions saw double-digit appreciation of 16.5% to $907 per acre, 14.5% to $609 per acre and 11% to $1,384 per acre, respectively.

The southwestern and north-central regions increased about 4%, up to $918 per acre in the southwest and $792 per acre in the north-central. The south-central district increased 4.5% to $966 per acre.

“For the most part, the east-central, north-central, south-central and southwestern regions are valued relatively close to the state average in 2018, with none being much more than $100 per acre above or below the average for the state,” Parman says. “However, pastureland values in the southeastern region are nearly $500 per acre above the state average, while the northwestern region is almost $280 per acre below.”

PASTURELAND VALUES: Estimated average per acre values of pasture in North Dakota from 2013 to 2018.

The northern Red River Valley, southern Red River Valley and northeastern counties of Nelson, Ramsey, Towner and Cavalier are not included in this report, nor are their responses included in the state average due to relatively few survey responses and pasture acres.

Cash rents
Pasture rents across North Dakota have been less persistent regionally, while statewide average rents mostly have mirrored land values.

RENTAL RATES: Estimated average cash rent per acre of pasture in North Dakota from 2013 to 2018.

The state average pasture rent for North Dakota has held steady or moved upward every year since 2013, except for 2017, when statewide average pasture rents dropped 6%. Moving into 2018, rents inched upward nearly 2% to $17.40 per acre.

The east-central and southwest were the only two regions to post declining pasture rental rates heading into 2018. The southwest declined 1.5% to $17.90 per acre, or $27.10 per animal unit month. The east-central region reported a decline in rent of about 3% to $22.40 per acre, or $31.50 per AUM. However, the last three years for these two regions have been steady, moving less than $1 per acre in any direction.

The southeastern and northwestern regions showed the largest change in rental rates, with the southeastern region increasing 11% and the northwest increasing 8%. Pasture cash rent in the southeast moved from $30.40 per acre to $33.90 per acre, or $47.70 per AUM, in 2018. The northwestern region increased from $10.70 per acre in 2017 to $11.60 per acre in 2018, which gives an approximate cost of $17.60 per AUM.

Pasture rental rates in the southcentral region increased 3.6% in 2018, after declines of about 12% and 4% in 2017 and 2016, respectively, while the north-central region mostly held steady for the fourth year in a row.

The cash rent for the south-central region is reported at $22 per acre, yielding a cost of $33.40 per AUM.

Cash pasture rents for the north-central region have remained between $18 and $18.60 per acre since 2014, with the 2018 survey showing an average cash rent in the region of $18.10 per acre, or $25.40 per AUM.

Value, rent outlooks
“It is unlikely that lower cattle prices in the summer of 2018, with market prices around $110 per hundredweight for live cattle and around $150 per cwt for feeder cattle, will impact pastureland values much as we move into 2019,” Parman says. “The trend for pastureland values has been upward. It is likely that it will continue statewide next year, albeit possibly more gradually if current market prices hold.”

Rents, on the other hand, may react more quickly to lower market prices. Drought across the state may play a bigger role.

“If regional drought forces ranchers to sell cattle, fewer grazing animals’ means lower demand for rented acres. However, modest drought may find ranchers looking for more grass to support cattle that remain, driving rental contracts higher. Moderate to severe droughts can take multiple years to recover from, affecting multiyear contracts and rancher cattle-inventory decisions. Therefore, it would make sense that regions less affected by drought will see higher pasture rents moving into 2019, while moderate to severe drought-affected areas might see average rents begin falling.”

To learn more about ways to calculate pasture rental rates, including renting by the AUM or renting by the acre, visit the NDSU Extension publication Determining Pasture Rental Rates, R1823.

Source: NDSU

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