2016 Agricultural Land Values
From 1991 to 2015, agricultural land values in South Dakota, and in most other major agricultural production states, appreciated each year. In 2016 on average all agricultural use land decreased in South Dakota except rangeland, which will be discussed in a future article. This is the first annual decline in the average value of agricultural ground compared to yearly increases of 1.4 to 33.6 percent during 2011-2015 (Table 1). This indicates a change from the previous cycle of increases in agricultural land values.
Table 1. Average reported value and annual percentage change in value of South Dakota agricultural land by region, February 2011-2016.*
|SE||E. Cent.||NE||N. Cent.||Cent.||S. Cent.||SW||NW||STATE|
|*All Ag Land (nonirrigated)
Agricultural Land Demand
The amount of land devoted to production agriculture in South Dakota is fixed and has changed little during the last 26-years. Figure 1 shows that regionally, the change in value varied from a 13.4 percent increase in the Northwest, to a 14.2 percent decrease in the Southwest. Many factors influence the demand for agricultural land in states such as South Dakota, such as interest rates, price expectations, and demand for commodities just to name a few.
Figure 1. Percent change in value by South Dakota agricultural land by region 2016-2015.
There have been sharp declines in crop prices and returns in the past year. The drop in commodity prices from 2014 to 2016 may be a reason all South Dakota agricultural land values on average decreased 2.4% compared to a year ago (Table 1).
The changes in South Dakota’s agricultural land indicate land values are beginning to come in line with commodity market changes taking place over the last couple of years. Given the current market situation and the expectation of lower commodity and livestock prices in the coming year there is an expectation for agricultural land values to continue decreasing in the next year.
For additional information view South Dakota Agricultural Land Market Trends, 1991 – 2016 on iGrow.
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