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Published January 29, 2014, 03:30 PM

Index: Land price increase slowed

An annual index of farm land values increased 17 percent in North Dakota in 2013, according to an annual report by a state land appraisers group.

By: Mikkel Pates,

FARGO, N.D. — An annual index of farm land values increased 17 percent in North Dakota in 2013, according to an annual report by a state land appraisers group.

That’s a healthy increase but only “moderate” compared with a 39 percent increase index the previous year, according to the state chapter of the American Society of Farm Managers and Rural Appraisers. The index had increased 32 percent and 45 percent in the previous two years.

“The Red River Valley indicates the lowest change at an 11 percent increase, while the northeast counties indicate the largest increase at 24 percent higher than 2012 prices,” the report says.

This year’s report is different from past years. The previous reports have also included Minnesota figures in the Red River Valley, which have been dropped this year, according to a group spokesman. The report title — Agricultural Land Price and Cash Rent Survey — has changed to drop the word land “value” because the report is simply a price index from actual sale data.

Thirty-four professionals contributed to this year’s report. The press release cautions that “any assumptions made from the report could be misleading, especially given the wide variety of physical characteristics found in each county.” The report also notes that it is an overall “snapshot” of sales during 2013 and that there was a “significant” change in commodity prices from the first to the fourth quarter.

Land price ranges

•Red River Valley — The index indicates cropland prices were up 11 percent, after annual jumps of 42 and 7 percent in the previous two years, respectively. The highest land price was $9,304 per acre in Pembina County, with an average of $5,627. Cass County showed a high price of $8,613 per acre, and topped all other counties in the region for the average at $6,034 per acre. Grand Forks County posted a $7,741 high and an average of $4,274 per acre.

•Northeast — Prices were up 24 percent, after annual increases of 32 and 16 percent in the previous two years. The highest price was $7,100 in Foster County, where the average was also the highest at $5,099 per acre. That was followed by Steele County, where prices topped at $5,500 with an average of $3,048. Pasture prices ranged from $399 to $951 per acre in the region, with an average of $597 per acre.

•Southeast — Prices increased 17 percent after annual increases of 37 and 23 percent in the two previous years. This is everything south and east of Burleigh and Emmons counties, to the western half of counties in the southern Red River Valley. Cropland prices hit a high of $7,600 in Dickey County, with an average of $5,149. That was closely followed by $7,389 in Ransom County, with an average of $3,783. Next on the list in high cropland sales were: Sargent, $6,796 ($4,414 average); LaMoure, $6,107 ($3,921); and Barnes, $5,927 ($3,853). The large Stutsman County had a high sale of $5,502 and an average of $3,421.

•Northwest/Central — Cropland prices were up 18 percent in 2013, after annual jumps of 45 and 23 percent in the previous two years. This is a big area, from Rolette and Sheridan counties and west to McKenzie and Divide counties. It posted a high of $7,163 per acre for cropland in McLean County with 25 reported sales and an average of $3,275 per acre. The next highest were Ward County, with a high of $4,481 per acre and an average of $2,996; Mountrail, with a high of $4,317 per acre and average of $1,690; and Bottineau County, at $3,337 an acre and an average of $2,276.

McLean County had the top pastureland prices at $1,550 per acre, and an average of $752, followed by Sheridan County, top price at $1,091 and the top average pastureland in the region at $846.

•Southwest — Reported sale prices increased 21 percent, after annual increases of 35 and 31 percent the previous two years. These are counties west of the Missouri River and south from Dunn and Golden Valley counties. In that region, Morton County posted the top nonirrigated cropland price per acre at $3,310, but an average of $2,299. Close behind was Stark County with a high of $3,200 and an average of $2,033. Other counties up on the list of sale highs were: Slope, $2,900 ($2,181 average); Bowman, $2,850 ($1,453); Oliver, $2,600 ($2,370).

The highest pastureland prices were $1,650 per acre in Morton County, with an average of $1,269 per acre. Stark ranked second with the top sale at $1,500 for pastureland, and an average of $1,105. Nine counties among the 13 in the region had top pastureland sales of $1,000 or more. Pastureland prices were topped out in the region by Burleigh County, $2,666 ($1,231 average), followed by Ransom County, with $2,189 ($1,346) and Stutsman, $1,750 ($1,007).

Strong rent demand

•Red River Valley — Nonirrigated cropland cash rents were reported at up to $310 an acre in Cass County, and up to $250 in all other valley counties. Pasture land rates hit $55 per acre in Pembina County, followed by $45 in Cass and $40 in east Grand Forks and Richland counties.

•Northeast — Cavalier County posted the top cash rent price of $250 in the region, outside the Red River Valley. The other top counties for high land rents reported during the year were Grand Forks, $185; Foster, $175; Griggs and western Walsh counties, $150. Top pastureland rents hit $40 per acre in Foster County and $30 or more in Benson, Ramsey, Steele, Towner and western Walsh counties.

•Northwest — McLean recorded a region-high $125 per acre, with the next-highest at $85 an acre for Bottineau, Mountrail, Pierce, Renville and Ward counties. Pastureland rents in the region were topped by Bottineau, $40 per acre, and Renville, $30.

•Southwest — Cropland rents were highest at $80 per acre in Mercer and Oliver counties, followed by Hettinger, at $70; Morton and Slope, $65; and Adams, $60. Pasture rents were topped by Sioux, $40; Billings, $35; Adams, Dunn, Hettinger, Slope and Stark, all $30.

•Southeast — Among the highest cropland rents reported were $225 in western Cass and Dickey counties, followed by $200 in LaMoure, Ransom and Sargent counties. Pasture rentals ranged up to $75 an acre in McIntosh County, followed by $65 in Dickey and LaMoure counties, and $60 in Sargent County.

Terry Longtin, a member of Farmer’s National Co. in Grand Forks, N.D., was the featured professional quoted in the report.

Longtin, says buyers in North Dakota “continue to seek out average to high-quality land for purchase. The number of land sales remains fairly steady, while land prices have leveled slightly as compared to last year at this time. Although demand remains fairly strong, there are pockets of decline from the highs a year ago.”

Corn prices are much lower than those that led to the strong surge of land prices in 2012, Longtin wrote. That’s taking “some potential buyers out of the market” but land values in most regions are “mostly stable,” Longtin says.

Meanwhile, the land rental market continues mostly unchanged into 2014, but some may need to be adjusted downward or modified with some flexible lease terms, Longtin says.

“Currently, operators want to be sure to keep the land they farm and in many cases they are trying to increase acreage, therefore sustaining strong demand for rental land.”