Cropland, pastureland values see big jump

North Dakota pastureland values rose 17.1% from 2022 to 2023 while pastureland rents increased 7.1% during the same time, said Bryon Parman, North Dakota State University (NDSU) Extension agricultural finance specialist.

Data for land rents and values are from the North Dakota County Rents and Prices Annual Survey, found at land.nd.gov/resources, and then put into weighted averages and NDSU Extension regions. The northern Red River Valley, southern Red River Valley and northeastern regions of North Dakota are excluded from the analysis due to low numbers of pastureland sales and rents as well as low livestock numbers.

“Of the more prominent livestock regions in North Dakota, the southeastern region had the costliest pastureland at $1,910 per acre, up 23.3% from a year ago, which was the largest gain,” says Parman. “However, while the southeastern region had the largest increase, all areas were up over 13% as far as pastureland values.”

The smallest increase was the north-central region, up 13.9% from $890 per acre to $1,014 per acre. The other NDSU Extension regions saw increases between 14.9% and 17%.

Rents for pastureland were up as well.

“Pastureland rents are low in terms of dollars per acre compared to cropland values, so a $1 or $2 per acre change in the data can have a significant impact on the percentage changes, such as the northwestern region, which went from $10 per acre to $12 per acre,” explains Parman. “Therefore, the percentage changes in rental rates should be viewed with caution. However, the fact that pasture rents were up across the board and accompany a large increase in pastureland values, it is a justified conclusion that pastureland rents are increasing in North Dakota.”

The costliest rents in the state tend to be in the southeastern region at $34 per acre where stocking rates are a bit more dense, with the least costly being in the northwestern region where stocking rates tend to be lower.

The 17.1% increase in pastureland values is the largest single year increase in more than a decade. This increase is larger than that of 2014 and 2015 when feeder cattle prices hit record highs. Though cattle prices have been relatively strong over the last year or two, it has come with high feed costs as feed grain commodity prices have remained high.

Cropland

Despite high production costs to start 2022, net farm incomes remained high helping facilitate a sharp rise in land prices for 2023, Parman said.

The statewide average land price increase from 2022 to 2023 was 13.46%, which is higher than last year’s increase of 10.9%. Rents were also up considerably, rising 6.82% statewide, marking the largest increase in 10 years.

The largest increase in land values occurred in the east central and southern Red River Valley regions with both increasing over 20%. The north central and northeastern regions saw the next largest increase at 15.5% and 14.1%, respectively. The south central and southeastern regions increased between 11.5% and 13.5% for the two regions. Smaller increases occurred in the southwestern region at 9.4% and the northern Red River Valley which increased 6%.

“Overall, the statewide average cropland value moving into 2023 was $2,863 per acre,” said Parman. “The most expensive farmland in North Dakota remains in the southern Red River Valley region at an average of $5,494 per acre while the least costly is in the northwestern region at $1,399 per acre.”

Over the last five years, the southeastern region cropland values have surpassed the northern Red River Valley, with the southeastern region increasing faster. In the most recent survey, the southeastern regional land values were $3,886 per acre while the northern Red River Valley values were $3,605 per acre.

“Cropland rents were up across the board with the largest increase occurring in the east central region at 11.88%,” said Parman. “The south central and southeastern regions were both up between 8.7% and 9.7%. The north central and northern Red River Valley regions were up between 5.6% and 6.8% while the northwestern, northeastern and southern Red River Valley regions were all up slightly less than 5%.”

Article courtesy of NDSU Ag Communications