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North Dakota land values hold steady

Below the border, North Dakota cropland values and cash rents remain flat, says Bryon Parman, North Dakota State University agricultural finance specialist.

“Despite the lower commodity prices of the last several years, the longer-term averages have been aided by low interest rates, farm programs and ad hoc payment programs designed to help farmers meet cash flow obligations,” Parman says.

Parman used data from the 2020 North Dakota Department of Trust Lands survey to determine that state average cash rents were down .5 per cent in 2020, while land values were up slightly at 1.73 per cent.

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“However, when movements that small are put into context over time, it shows North Dakota cropland values and rents are not moving,” Parman notes.

For instance, from 2017 to 2018, rents statewide were down 4.6 per cent, then from 2018 to 2019, they were up 3.6 per cent, then down slightly again in 2020 by .5 per cent.

Much of that movement likely is related to the average quality of the cropland rented or negotiated in any given year and survey measurement error. When viewed regionally, much wider swings were observed in which the northwestern region appeared to have cropland rents fall 5.2 per cent from 2017, then increase 7.38 per cent in 2019, then fall again 6.6 per cent in 2020. Similarly, the south-central region showed a drop of 12.25 per cent from 2017 to 2018, then an increase of 10.3 per cent from 2018 to 2019, then a decrease of 3.24 per cent in 2020.

This information is useful when evaluating trends in cash rents, Parman says. For instance, the statewide average cash rental rate in 2014 was US$63.17 per acre, and in 2020 it was US$63.04 per acre.

With respect to land values, the North Dakota state average was US$2,123 per acre in 2014 and US$2,111 per acre in 2015. In 2020, the state average is US$2,063 per acre.

Using the 2014 peak value, the six-year drop totals 2.8 per cent, or a decline of negative .48 per cent per year. Over the course of the past several years land values moved significantly from year to year, varying by region, but over time it has trended upwards.

“From 2015 to 2020, the northern Red River Valley region experienced changes of negative nine per cent, negative six per cent and positive 10.4 per cent, and yet the change during that time is from US$2,983 per acre to US$3,056 per acre, which is surprisingly consistent over time, given the yearly reported movements,” Parman says.

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