Farmland value up in Upper Midwest despite droughtGRAND FORKS, N.D. (AP) — Drought that devastated crops and pastures in much of the Upper Midwest last year didn't stop the price of farmland from shooting higher, especially in North Dakota.
GRAND FORKS, N.D. (AP) — Drought that devastated crops and pastures in much of the Upper Midwest last year didn't stop the price of farmland from shooting higher, especially in North Dakota.
The average price of an acre of North Dakota cropland has risen nearly 42 percent over the year, to $1,910, according to the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture.
The value rose 20 percent in Minnesota to $4,850 per acre, and 30 percent in South Dakota to $3,020 per acre. The increase nationally was 13 percent. The report is based on a survey of farmers in the first two weeks of June.
Though drought in 2012 hurt production, it also caused the price of crops such as corn to rise, encouraging farmers to pay more for land to grow the crop, North Dakota State University Extension Service farm management specialist Dwight Aakre told the Grand Forks Herald.
Low interest rates, which reduce the appeal of competing investments such as CDs, also have contributed to rising land prices, though to a lesser extent than the high crop prices, he said.
But crop prices are slumping, and buying land is becoming less attractive, according to Aakre.
"I think land prices have peaked," he said.
The Agriculture Department survey also found substantial increases in the value of pastures in the three states. High crop prices have encouraged some producers to begin raising crops on land that once was left as pasture. That reduces the supply of pasture and drives up its price.
Nationally, the average value of pasture rose 4 percent over the year to $1,200 per acre. North Dakota's average rose 29 percent to $630 per acre. In Minnesota, the average pasture value rose 17 percent to $1,750 per acre, and South Dakota's average value went up 20 percent to $710 per acre.