North Dakota sees very large increase in land values
For example, direct payments average about $10 per cropland acre in North Dakota. If they are eliminated, the eventual impact on average land values could be a reduction of $200 to $300 per acre.
However, Swenson does not expect an immediate sharp drop in land values, even if crop prices, yields and/or interest rates turn somewhat less favorable.
"Obviously there has been very strong interest in land," Swenson says. "Many producers and investors have the financial wherewithal to bid on land, which will tend to underpin land values. After the strong increase in land prices, any softening could be seen as a buying opportunity."
The largest increase in cropland values (January 2012 to January 2013) was about 60 percent in the east-central region (to $2,295 per acre) and the northeastern region (to $1,990), followed by increases of 56 percent (to $3,427) in the northern Red River Valley and 47 percent in the north- central region (to $1,517). There was a 30 to 40 percent increase for the northwestern region (to $867), south-central (to $1,343), southern Red River Valley (to $4,180) and southeastern region (to $2,925). The smallest increase per acre, about 23 percent, occurred in the southwestern region (to $1,001).
"The survey indicates that land rents, as typical, did not change as much in percentage as land values," Swenson says. "On average, cropland rents increased about 12 percent, which was a very strong increase from a historical perspective."
The largest increases in land rent, nearly 19 percent, occurred in the south- central region (to $56 per acre) and the northern Red River Valley region (to $90.90). The average rent increased 17 percent (to $65.50 per acre) in the east- central region. Cropland rents increased about 15 percent in the northeastern region (to $54.40) and the southeastern region (to $92.20) and increased 14 percent in the southern Red River Valley (to $114.70). The smallest increase in land rent rates, 4 to 5 percent, occurred in the northwestern region (to $34.90), north-central region (to $48.10) and southwestern region (to $36.20).
Swenson cautions that the values and rents are averages for large multicounty regions. Prices can vary considerably within a region because of soil types, drainage and location.