South Dakota cropland values increased an average of 26% from 2007 to 2008, while cash rental rates for cropland increased by 15.2%, says Larry Janssen, SDSU ag economist.
The corresponding figures for rangeland are also up, but not as much.
The increases are the highest they've been in the 18 years that Janssen has tracked land values.
Nearly everyone in the survey agreed that the increases are directly related to booming markets for corn, soybeans, wheat and other crops, Janssen notes.
"That's got to be the big thing that's driving it," Janssen says. "It's stronger in East River than in West River, and it's stronger for cropland than for rangeland."
Janssen and his SDSU colleague, professor Burton Pflueger, have been conducting the annual survey since 1991. Their 2008 estimates are based on reports from 231 respondents who are agricultural lenders, Farm Service Agency officials, rural appraisers, assessors, realtors, professional farm managers, and Extension agricultural educators. All are familiar with farmland market trends in their local areas.
Exceeds 2004-2005 record
Janssen says the increase of 22.5% for all agricultural land values in South Dakota from 2007 to 2008 exceeds the previous record of 20.2% from 2004 to 2005.
Agricultural land values in South Dakota have increased more than 10% each year since 2001, including more than 20% in those two years. That compares to annual increases of 4 to 10% in South Dakota agricultural land values from 1991 to 2001.
Statewide, cropland, hay land, and rangeland values per acre have nearly doubled since 2004 and quadrupled since 1994, Janssen and Pflueger say. Cash rental rates have nearly doubled since 1996.
Statewide average cash rental rates increased $9.90 per acre for cropland from 2007 to 2008, $5.80 per acre for hay land, and $1.40 per acre for rangeland. In general, cash rental rate increases were strongest in the more cropland-intensive regions east of the Missouri River. Some weaknesses in cash rental rates are noted for hay and pasture/rangeland in the southwest region.
Janssen said higher prices for corn, wheat and soybeans have boosted farm sector income, both gross and net, putting pressure on ag land values and rental rates. Tight worldwide wheat supplies, growing volume of ethanol production from corn, and competition for cropland to produce corn, soybeans, or wheat are important contributing factors.
The latest SDSU study, "South Dakota Agricultural Land Market Trends, 1991-2008," is available online at this link: agbiopubs.sdstate.edu/articles/C273.pdf.
Source: SDSU AgBio Communications