SD land gains smallest since 1996

South Dakota farmland values continue to increase, but the 5.2% gain in 2009 was the smallest since 1996, according to the latest South Dakota State University Farm Real Estate Market Survey.

Here are other key findings from the report:

Cropland values increased statewide by 6.8%, compared to increases of 4.6% for hayland and 1.9% for rangeland. The strongest increases in land values (above 10% for each land use) occurred in the north-central region. Land value changes were also positive for each land use in the southeast and northwest regions.

In all other regions, land value changes were mixed, with some combination of increases, stable values and decreases in per-acre values.

From 2009 to 2010, statewide average cash rental rates per acre increased for cropland and hayland and declined slightly for rangeland. Statewide average cash rental rates increased $2.75 per acre for cropland and $1.35 per acre for hayland, but declined an average $1.20 per acre for rangeland.

Key Points

• Land values in South Dakota have posted their smallest gain since 1996.

• The average rates of return on land are the lowest in 20 years.

• Values and rental rates set a record in southeast South Dakota.

In general, cash rental rate increases for cropland and rangeland were strongest in the three eastern regions and in the north-central region, while declines or minimal changes occurred in the other central and western regions.

Cash rental rates for hayland decreased in the east-central and south-central regions, held steady in the western regions, and increased in the remaining regions.

Lowest cash return in 20 years

Current average rates of cash return on agricultural land in South Dakota are lower in 2010 than in any of the past 20 years. For 2010 the average ratio of gross cash rent to current land value for all agricultural land was 4.0%; for non-irrigated cropland, it was 4.4%; and for rangeland it was 3.6%.

During the 1990s, the same average ratios were 7.4% for all agricultural land, 8.0% for cropland, and 6.8% for rangeland.

The average value of nonirrigated agricultural land (as of February 2010) in South Dakota was $1,179 per acre. Nonirrigated agricultural land varied from $2,712 per acre in the east-central region to $329 per acre in the northwest region. Average nonirrigated cropland values vary from $3,291 per acre in the east-central region to $1,644 per acre in the central region and $474 per acre in the northwest region.

Average rangeland values vary from $1,536 per acre in the east-central region to $296 per acre in the northwest.

Within each region, differences in land productivity and land use account for substantial differences in per-acre values.

The highest cropland values and cash rental rates continue to occur in the Minnehaha-Moody county cluster, where the average value of cropland in 2010 is nearly $4,300 per acre, and the average cash rental rate for cropland is $163.20 per acre.

Cropland values exceed $3,400 and cash rental rates exceed $135 per acre in two other eastern county clusters: Clay-Lincoln-Turner-Union and Brookings-Lake-McCook. These are the highest average land values and cash rental rates reported during the past 20 years of the SDSU Farm Real Estate Market Survey.

At the regional level, average cash rental rates per acre for cropland in 2010 vary from $133.20 in the east-central region to $24.30 in the northwest region of the state.

This article published in the August, 2010 edition of DAKOTA FARMER.

All rights reserved. Copyright Farm Progress Cos. 2010.