Agriculture Commissioner Roger Johnson expects the value of North Dakota farm land to continue climbing because people want it.
"It's a demand-driven market," Johnson said.
A new report from the federal Agriculture Department says the value of North Dakota farm land has risen for the eighth straight year, to an average of $650 per acre. It is up 13 percent from last year.
Higher corn prices stemming from the demand for ethanol have pushed other commodity prices, and have boosted the value of the land on which the crops are produced, Johnson said.
Other factors in the increase include urban and out-of-state residents' desire to buy land for hunting, said Johnson and Steve Tomac, a real estate appraiser with Farm Credit Services in Mandan.
"There is so much money coming in from the outside," Tomac said. "There are guys coming in and slapping down $100, 000 or $200,000 for recreation land. That's petty cash for some of those guys who are coming to North Dakota, where the land is relatively cheap for their fall getaway."
Tomac said farm land values in North Dakota are driven by many other factors, including low interest rates, reinvestments to avoid taxes on capital gains and a favorable 2002 farm bill that pays subsidies to farmers.
"Land as an investment has really come into its own since 2002," Tomac said. "Prior to that, people were a little gun shy."
The average value of North Dakota crop land this year was $670 per acre, up 10 percent from 2006 and 23 percent from 2005, USDA said. Pasture values increased 15 percent from 2006 and 35 percent from 2005, to an average of $300.
The average cash rent for crop land in North Dakota was $41 per acre, up 5 percent from 2006. Cash rent for pasture averaged $12.50, up from $11.30 in 2006 and $10.60 in 2005, the report said.
Recreational use and strong livestock prices helped drive the increase in pasture land values, the report said.
Nationally, farm real estate values rose 14 percent, to a record $2,160 per acre, USDA said. Crop land values were up 13 percent, to a record $2,700 per acre and pasture values were up 16 percent to $1,160 per acre, also a record.
Cash rents for crop land nationwide increased 7 percent, to an average of $85 per acre while cash rents for pasture land averaged $12 per acre, up $1.20 from 2006.
The 2007 farm bill is being crafted.
"If it is not as favorable as the one in 2002, I think we'll see a tapering of increases but I don't think we'll see a drop," Tomac said.Associated Press
