S.D. Land Values Boom, Rent Ratios Lag

S.D. Land Values Boom, Rent Ratios Lag

16.5% increase in 2010 was third largest jump since 1991.

A new report from the South Dakota State University economics department shows that that the state's ag land values rose 16.5% in 2010.

It's the third largest increase in land values since 1991, when SDSU began tracking farm real estate values.

Rent rates have risen as much. Rates of a cash returns on ag land were lower in 2010 and than in any of the past 21 years. For 2011, the average ratio of gross cash rent to current land value was 3.9% for all agricultural land, 4.3% for non-irrigated cropland and 3.6% for rangeland. During the 1990s, the same ratios were 7.4% for all agricultural land, 8.0% for cropland and 6.8% for rangeland.

From 2001 to 2008, agricultural land values in South Dakota increased more than 10% each year, including more than 20% in two years (2004–2005 and 2007–2008) during this period. From 1991 to 2000 and from 2008 to 2010, annual increases in South Dakota agricultural land values ranged from 4 to 9%.

Cropland values increased at a higher rate than per-acre value increases for other agricultural land uses, and there were considerable differences regionally. Cropland values increased statewide by 17.7%, compared to increases of 15.2% for hayland and 13.1% for rangeland. The strongest increases in land values (above 15% for most land uses) occurred in the east central, southeast and south central regions. The lowest rates of increase were in the northwest region.

Statewide average cash rental rates per acre increased $12.25 for cropland, $5.60 for hayland and $2.10 for rangeland. In general, cash rental rate increases for cropland and rangeland were strongest in the three eastern regions and in the north central and south central regions. Cash rental rates increased for hayland in all except the southeast region.

Complete report online

More specifics about the farm real estate trends statewide and in different parts of South Dakota are available in the full report from South Dakota State University, available online at http://pubstorage.sdstate.edu/AgBio_Publications/articles/C278.pdf.

Source: SDSU

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