Brian Mohr, area sales manager for Farmers National Co. in Garretson, S.D., says the bigger drops in land prices in the Dakotas and Minnesota may have already happened.

“I look for only a 5% to 10% decline in land prices in the Northern Plains this year,” he says.

In its semi-annual report, the Farmers National Co. noted that North Dakota, South Dakota and Minnesota prices for good-quality cropland were down as much as 20% in 2016 from peak prices. Prices for medium- and poor-quality ground were down again in 2016 by approximately 5%.

Mohr says private listings and sealed bid auctions have been the best way to sell land in North Dakota and Minnesota recently, while public auctions have been more successful in South Dakota.

Most private listings sit on the market no more than three months, and upward of 90% of all auctions result in a transaction, he says. Half of all auctions sell the day of, with the remainder coming to fruition that same week.

“All of the good land sells,” Mohr says.

The most active sellers are retiring farmers and family trusts. The majority of buyers are farmers looking to expand, he says.

Neighboring states
The following are Farmer National Co.’s reports on land prices in neighboring states:

Iowa: Top-quality land remains stable, with a possible 5% decrease. Medium-quality land is experiencing a 5% decrease and low-quality land is seeing a 10% decrease. Pasture ground remains stable.

Nebraska: High-quality farms are holding value, while medium- and low-quality farms with a low percentage of tillable acres, or problems with access, soil or water, are taking  hits of 25% to 35%, according to JD Maxson, assistant area sales manager for Farmers National Co. in North Platte, Neb.

What’s ahead
Look for smaller parcels of land to come up for sale as financially strapped farmers sell 80- and 160-acre parcels to raise cash. It’s a trend that a number of Farmers National Co. sales representatives noted in their reports.

Commodity prices and interest rates are two of the major factors that will determine the 2017 land prices, trends, says Randy Dickhut, Farmers National Co.’s senior vice president of real estate operations.

“This winter, questions abound as to the direction of commodity prices, interest rates, inflation, challenges in the world economy, weather and U.S. tax law,” Dickhut says. “Foreign trade policy and its effect on agriculture will be closely watched over the next few months. Potential changes in tax laws could affect estate taxation and capital gains rules that in turn influence buying and selling.”

For more information about farmland prices, see farmersnational.com.

Source: Farmers National Co.