The average value of non-irrigated land has increased along with cash rental rates for both non-irrigated cropland and pasture, according to the latest South Dakota State University (SDSU) Extension Farm Real Estate Market Survey. The 31st annual survey examines agricultural land values and cash rental rates by land use and quality in different regions of South Dakota.
"Cash rents for state averages were up slightly. Statewide non-irrigated cropland cash rental rates were up $5 from 2020 and average cash rents increased 4.5%, from $115 in 2020 to $118 in 2021. Statewide, average cash rental rates for pasture were $28, up $4 from 2020," says Jack Davis, SDSU Extension Crop Business Management Field Specialist, who compiled the report on the survey. "Average non-irrigated land values from February 2020 to February 2021 increased approximately 5%, while average pasture values were down slightly to unchanged."
According to Davis, there are a few key elements driving changes in farmland values. These include cash rent, working capital, supply of land, interest rates, inflation and similar investments.
"First, cash rents and working capital have improved from 2020. Working capital was improved with the increase in crop prices and the influx of government aid for disaster and virus relief. There's no doubt the increase in input prices in 2021 and 2022 will put pressure on profit margins for next year's crop," says Davis. "Second, the supply of land, interest rates, inflation and investment prospective are creating positive pressure on land values."
Farmers, landowners, investors, lenders, real estate professionals and public officials provide the majority of the data compiled in the survey. While the values and rates in the report are regional, Davis says they should only be used as a guide and are not an indication of values for specific properties.
Source : sdstate.edu