North Dakota cropland values increased nearly 2% in 2018, according to a January survey by the North Dakota Department of Trust Lands. That compares to an earlier report from a June 2018 U.S. Department of Agriculture survey that showed no change in North Dakota cropland values from the previous year.
"The January survey reflected the impact of very strong yields and federal aid to producers in the form of market facilitation payments to offset the impact of Chinese tariffs on U.S. farm commodities," explains Andrew Swenson, North Dakota State University Extension farm management specialist.
"In 2018, North Dakota had a record spring wheat yield, and the second and third highest corn and soybean yields, respectively, on record," he says. "Market facilitation payments for the 2018 crop should be about $400 million statewide, primarily on soybean production. There would have been downward pressure on land values in the absence of the extraordinary yields and government assistance to stabilize net farm income."
Swenson derived regional and state average cropland values and rents from the published results of the Department of Trust Lands' county-level survey.
The most recent county-level survey indicates that cropland values per acre from January 2018 to January 2019 were the strongest in the east-central region, increasing 13.5% (to $2,248), and the northwestern region, increasing 7.2% (to $1,189). The north-central and southern Red River Valley regions showed 3.7% and 2.9% increases to $1,692 and $4,064, respectively. The average increase was 1.2% in the northeastern region (to $1,766).
Per-acre cropland values decreased 3% in the southeast and the northern Red River Valley regions to $2,928 and $2,768, respectively, and decreased about 2% in the south-central and southwestern regions, to $1,610 and $1,346, respectively.
The survey indicates the average cash rent per acre for cropland increased by about 3.6% from January 2018 to January 2019, after a 4.6% decline the previous year. On average, rents remain slightly lower than two years earlier.
The greatest increases in cropland rent, around 10%, offset similar declines from the previous year in the south-central region (to $56.80) and the northern Red River Valley region (to $90.40). Increases of about 7% more than offset declines of 5% from the previous year in the northwest (to $37) and the southern Red River Valley (to $125.90). Per-acre rents were flat to 1% higher in the northeast ($56.70) and the east-central regions (to $67.60), and 2% higher in the southeast (to $96.70) and the southwestern regions (to $37.80).
Swenson believes that the land market has shown resiliency in the aftermath of an 11-year period, from 2003 through 2013, during which cropland values averaged an annual increase of 15%. So far, land values have experienced a "soft-landing." The state experienced four years (2014 to 2017) of relatively modest declines in land values, despite much lower crop prices.
"Generally strong yields and modestly lower production costs tempered the decline," Swenson says. "There were enough producers and investors who were willing and able to expand their operations and absorb the available land." Very strong yields and government support helped underpin land values during 2018 despite low crop prices, and higher production costs and interest rates.
"The 2019 crop year looks to provide a challenge to farm profit and land values," Swenson says. "The low crop price scenario is expected to continue, production costs will be higher, and another infusion of government support is not likely. "One positive is interest rates," he adds. "After increasing in 2018, the current outlook is stable rates for 2019."