# Cropland Values Increase In 2003



## Matt Jones (Mar 6, 2002)

NORTH DAKOTA: Cropland values increase in 2003
Prices up 15 percent
By Ann Bailey
Agweek Staff Writer

North Dakota land was worth an average of 15 percent more in 2003 than it was the previous year, according to a North Dakota Farm Managers and Rural Appraisers survey.

The annual survey of members included estimates from 50 of 53 North Dakota counties. The average price of an acre of cropland in 2003 was $776 compared with an average of $675 in 2002, according to the survey. The 15 percent increase is more than double the 6 percent increase in 2002 over 2001 and triple the increase in 2001 over 2000.

While low interest rates probably are the biggest factor driving the increase, competition between farmers, people with an interest in recreation and competition between investors also are reasons people are willing to pay a higher price, says Steve Tomac, past president of the North Dakota American Society of Farm Managers and Rural Appraisers.

The investors

Most of the investors have ties to North Dakota, but some do not, he says. The investors generally are two types:

• People who are purchasing land for a "1031" land exchange in which they've sold an apartment or land somewhere else and, under Internal Revenue Service rules, are allowed to reinvest in property.

• People who have money to invest and believe land, with a 4 percent to 5 percent return, is a better buy than are certificates of deposits.

Another reason land values are increasing is that people have come to the realization that "they aren't making it anymore," Tomac says. "There are people with the attitude that they want a piece of the rock somewhere."

Soaring values

North Dakota's average cropland value increase of 15 percent, though while healthy, is modest compared with increases in some pockets of the state where land values have soared.

For example, in Cavalier County, N.D., the per-acre value of cropland in one part of the county rose 85 percent to as much as $1,200, says Tim Timian, survey coordinator and the organization's 2004 president.

The increase was driven by farmers who aggressively were seeking to expand their acreage, he says. Because of the timing of the North Dakota ASFMRA survey, that 85 percent increase actually may have occurred during a two-year period, Timian notes.

Grand Forks County also saw double-digit increases in per-acre cropland value in 2003. The average per-acre cropland value rose from 13 percent in the east to 44 percent in the west, he says. Most of the investors in Grand Forks County land, while not farmers, have ties to the area, such as being former residents or being related to someone farming there, he says.

The average maximum per-acre value of cropland in 2003 in northeast North Dakota, where Cavalier and Grand Forks counties are located, was $711 per acre, compared with $550 per acre in 2002, the survey says. Meanwhile, the average minimum crop value per acre last year was $325, $32 per acre higher than last year's minimum.

Cropland prices in the northern Red River Valley, meanwhile, rose 9 percent in 2003 to $1,950 per acre. The average minimum price per acre cropland value in 2003 fell $66 per acre to $417.

Recreation

Another area of North Dakota that saw a big increase in land values in 2003 was the southwest, where outdoor enthusiasts are paying higher prices for land that's good for pheasant hunting. Some land in the Hettinger, N.D., area is drawing as much as a $200-per-acre premium, Tomac says.

The average maximum per-acre cropland value in southwest North Dakota rose to $502 per acre in 2003, a 9 percent increase from 2002, according to the ASFMRA survey. The average minimum per-acre cropland value rose to $271, a $30-per-acre increase from the previous year, the survey says.

The interest from pheasant enthusiasts won't be confined to the southwest, predicts Timian who lives in Hope in eastern North Dakota.

"It's going to work its way this way," he says.

Tomac calls the increases in land values a "two-edged sword."

"It's good news that it does tell us we have a healthy agricultural market in North Dakota." However, farmers who want to expand their acreage won't be happy paying more for land, he says.

The statewide average increases in land values, though, don't necessarily translate to an increase in land rent, Timian and Tomac say. Typically, if rent does increase, it occurs two years after land values increase and doesn't climb at the same rate as land prices. For example, in Cavalier County, rent is unlikely to climb 85 percent because land prices did.

So far, rent in North Dakota has been stable or increasing slightly, Tomac says.

Reprinted from Agweek magazine.


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## Matt Jones (Mar 6, 2002)

A 15 percent increase in a year is a pretty big leap...it makes you wonder exactly how much of the increase is related to recreation (i.e hunting)?


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## Fetch (Mar 1, 2002)

I wonder what the state will do with the increase in revenue ???

Do any States ever have special Taxes for recreational purchases of Land ??? Or out of State purchases as investments vs an in State person who will farm it ???

Do States Tax those that Lease lands for Hunting ???

If were eventually going to lose most of what we once had - at least Schools & State Services should reap some of the windfall

So someone who owns land can sell & exchange some of the $$$ in a condo or House etc. (out of State) ??? & what save or not pay Tax ??? :roll: Talk about increasing the speed of the exodous out of ND :eyeroll:

Just give it all away & have a high percentage of absentee owners from out of State - That has to be good for ND :roll:

I almost wish the Buffalo Commons thing would come true


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## Dick Monson (Aug 12, 2002)

"NEW STUDY FURTHER VERIFIES LAND VALUES ARE SOARING"
by Russ Keen, American News Writer, Aberdean SD

South Dakota Agricultural Statistics Service released a report on rising land values. ......"It's enough to knock your socks off, said Dale Curits, Extension educator for Brown County. (up to 50% increases in the last 3 years).

......."People don't neccessarily buy good land to farm it, which might be one reason land values are soaring", Curits said. "Buying land for recreation has grown by leaps and bounds, and thats driving a lot of this. The wealthy, often from other parts of the nation, are willing and able to pay high, perhaps exorbitant, prices for acres with habitat for pheasants, ducks or other hunted animals. Land with a little bit of water on it and a few cattails brings the most money which in turn drives up the price on all surrounding land". (appraisals are set by surrounding land sales). 
"Hunting is getting to be the sport of kings, they are the only ones who will be able to afford it", he said.


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## tsodak (Sep 7, 2002)

I have seen an intersting argument several places, and though I dont agree with it, it does have some logic to it.

If those folks are buying the land with conservation as the goal, who should we as sportsmen be glad is holding the land? SOmeone who wants to drain every acre and farm border to border, or someone who will perhaps sell easements, plant grass, and implement a wildlife management plan. We likely wont have access to it now, but it is better for wildlife annd for the environment.

These numbers do not suprise me. I see a major land valuation bubble forming, as has happened in the past. It is being artificially inflated by interest rates, and tax policy, but it is still a situation built upon a number of premises that can be removed legislatively.

The damnedable part of this comes when farmers start borrowing against these land values, and borrowingmoney to purchase at these rates.

Then we have another farm crisis in the making.

Until then, this is a surrogate stock market.

You could not get me to put any money into land right now. It might last 5-6 more years, but these things are going to come down, and they will come down hard when they come.


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## mallard (Mar 27, 2002)

I think that any land puchased for recreation should be put into a separate tax bracket (much higher than for people that make their living farming and ranching)with tax revinues going back to the counties for roads,schools,etc.


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## CheapHunter (Sep 24, 2003)

That is a very good idea! But I feel already the loopholes would be tremendous. For one example, say a "recreationalist/investor" purchases a section of land from a farmer in the southwest part of the state. Then takes that section and signs a 10 year CRP contract with the CCC through the FSA. Now this land is undeterminable for use considering its technical use is to prevent land erosion, and improve water and air quality. Sure, it will be used for recreation along with other sections of CRP, but what is there to regulate its use when its primary use is already in writing. Could this possibly work for nonresident investors? :huh: Im not exactly sure.


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## headhunter (Oct 10, 2002)

I know if I had gobs of money, I would beyond a doubt, buy as much prime hunting ground as I could possibly afford for personal management and hunting. I'm sick of competing with the roadhunters when deer season comes around. .......Seems like hunting deer in ND is pretty much open to the public where I hunt. (private my ***) Doesn't matter if you own a chunk here or a chunk there, the roadhunters get everything Riled up and it doesn't matter if you post your best ground, people just chase them off your land.......To have quality hunting you need 1000 acre chunk totally shut down from the public, with no stupid section lines running through the middle. There, done venting....for now that is.


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## Ron Gilmore (Jan 7, 2003)

What TSodak points out is what we saw in the late 70's and early 80's on land runup and farmers borrowing against the inflated value. When the crash comes we will not have the number of young farmers to abosrb the loss thus creating a retrun to Bonaza Farms. To really look at this properly one must refer back to the last leg session whne the Corporate Farming Bill was introduced. What will happen is that large investor blocks will control vast area's and virtually eliminate willife type habitat in an attempt to max out the potential.

While a balance needs to be had action at the state level and federal level is needed. This means a reduction in land that can be drained or converted to farmland. This has to be done in provisions of the farm bill that our elected officals vote on. Swampbuster has been for all purposes gutted with definition changes and subsidy incentives that encourge new acre production.

Creating a seperate tax class would require something that would pass a constitutional challenge. From speaking with a number of different state officals this could affect current land holders that are residents and would meet stiff resistance in becoming law, while affecting our ablity to seek changes that are needed for sportmen.

The most effective way to stop this is by getting limits put in place that would discourage buying. One would be lowered G/O licence, a lottery or limitation on NR hunters, this being directed to reduce the numbers that would be able to use G/O.

Next is to require full disclosure of payments and gifts that G/O use in securing land, and seeking taxaton as income for this. The cash under the table method needs to go. Requieing a G/O to only use land that is posted as leased by them. Eliminate day leasing. With this past year and next as guidelines for a basis we will need to focus on realistic goals.


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## fishhook (Aug 29, 2002)

Well said tsodak!! The major problem I see is farmers trying to acquire more land when neccessary. Now I know this may tick some landowners off, but here it goes, you kind of dug your own hole. If land would be open to public hunting and it wouldn't be so dang hard to find somewhere to hunt I believe wealthy people would just come and hunt and not worry about it. The way it is now some have been getting charged and have, in my opinion, seen an opportunity plus easy access. They lease it out or put it in crp and charge people around the country to come and hunt it. Pretty good gig for them.

And I think if the no-trespass law is passed it will only get worse. Many locals will just quit hunting all together, while out-of-staters will purchase more land due to fear of no where to hunt. It's going to get a lot worse before (or if) it ever gets better.

And it's not just the pheasant hot spots either. It's pretty tiring to put on 2-300 miles looking for a spot to hunt some geese and the only 5 spots you can find are owned by g/o's or the owner won't let you go out there. And it doesn't even bother me if they are going to go, some just do not allow other people on their land.

So when you look at the whole picture...it's all about economics for most and simple greed for a small few. The ones doing it for the economics will make it through the land crash, while the greedy ones will probably over-extend themselves and have some problems.

After reading my post i noticed I was jumping all over the place...MY BAD!!!


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## Dick Monson (Aug 12, 2002)

While I understand the position of devils advocate that at least land purchased for hunting goes for a conservation purpose, it is the least accecptable position. Public land purchase like WPAs or public leasing like PLOTS add multiple use. Private purchase for hunting does not. Public ownership creates increased cashflow, private minimises cashflow on hunting lands. Private hunting grounds on a large scale would make wildlife management an impossible task. Witness the results of ND big game outfitters and the effect of Cannonball on pheasant management in the SW. Waterfowl outfitters with help of ND Tourism shoehorn the birds right through the state.

The legislature ignored the looming problem of "exclusivity" by bowing to commercial interests. The trend was clear, it has been growing for years. Not only do the sportsmen and farmers suffer under this policy, but the states economy as a whole is blighted by it.


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## Fetch (Mar 1, 2002)

Future Referances ??? :

http://www.responsiblewildlifemanagemen ... istory.htm

http://www.responsiblewildlifemanagemen ... ctrine.htm


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## zack (Oct 17, 2003)

Being an out of state owner of property in your state I really can't see what the problem is . In Minnesota we've been dealing with this situation for years. Many NRs own lake property and they are paying the going rate and if necessary a premium to get the property they want. They also pay the non-homestead rate of taxes. Yes, some people don't like the increased valuation, but I don't see anyone complaining when they sell and double their money or better. Do you really believe that all the farmers are against a higher net worth? You guys are putting such a spin on this that you would think that land is owned publicly. I feel the same way about your legislative scorecard. The landowners probably rate the non-farm area legislators F's across the board. It just depends on which side of the fence you're looking in from. Everyone has to realize in an economy such as ours, prices do go up. And it's not because a few NRs purchased some land. I think the farmers know whats best for them, and it's not what you think that's best.
zack


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## Dan Bueide (Jul 1, 2002)

Zack, ultimately, the ND hunting issues should be resolved from the mindset of what's best for the state as a whole, not any one faction or interest. For example, the model of "exclusivity" where, through buy/lease/og, less people use more land for less days, decreases rural traffic and is not good for the rural economies. Loosing quality hunting as a resident draw (for a state, frankly, that can't compete with many others on some of the other popular lifestyle factors) is not good for any part of the ND economy. Prematurely chasing birds out of state because of excessive pressure is not good for hunters of any origin that enjoy hunting in ND. And, yes, loosing the ability to fully maximize land values through unrestricted demand by hunters (primarily nonresidents) is not good for the landowners who wish to do so.

Most of us think there needs to be a happy medium where everyone gives a little, gets a little and no one interest or one group maximizes its return. If we do that, reasonable, sustainable revenue can be derived from the hunting resources from all of the economic segments indefintely and we halt the commercialization process in its tracks to preserve a quality ND outdoors for the next generations instead of the steady slide towards the Texas model where virtually no one participating on this site would have any meaningful hunting in ND. The easy part :wink: , of course, is to find that happy medium and not tear the state apart in the process.


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## Ron Gilmore (Jan 7, 2003)

Zack from my point of view the issue of nonag interests affecting land values and family farms came from the farmers who grasiouly open there land to me and others for hunting. If you go back and look this issue is not a new issue but one that was talked about last session both in Bismarck and on many different threads.

To me one only needs to look back and remember the huge write off's which where our tax dollars that many where required to seek in order to save the land they bought to stay on the farm. Would that money been better spent in protecting the enviroment or other things or was it worth it to maintain family farms that help support rural communites? I think that the next time the family farms will not recieve the same generous actions. Sympathy for this will be gone and with it the political will especailly during the times we face today with education and terrorism.


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## zack (Oct 17, 2003)

Ron and Dan
I definitely understand where you are coming from. The happy medium is probably not possible. The tax dollars keep rolling into the farmlands across the nation. How do you keep the property values down with the demand so high. This is a topic where there is no correct solution. Someone will always come out on the short end of things. As long as we have this type of economy, supply and demand rules. I wish I had an answer to this, because my taxes go up every year too. Also, our land is farmed with only 20% into conservation land, and it IS NOT in CRP. On the flip side my net worth is a little better! :lol:
zack


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## tsodak (Sep 7, 2002)

Home with a kid this PM, just got caught up on this one.

Ron, I cant disagree more strenuously about the potential for bailout. If anything, the will of ou rsystem to say "No, You did this to yourself," is much less today than it was in the 80's. Witness disaster payments, flood buyouts, and a host of others in the past 15 years.

On unpopular action back then placed Easements upon many of those acres as they went through that process. Now in ND it would not be possible to even recoup some of the value from those payments with perpetual easements.

No, I think it will be bad, but the big farmers out there will make it work to there advantage and consolidate it very effectivly when that time comes.

Tom


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## Ron Gilmore (Jan 7, 2003)

Tom my view is based more on the change to more urban representation. The difference this time instead of a nationwide problem this will be isolated to ND and SD. Current land values in other states have already seen these spikes but due in large part to there nearness to larger population levels and lack of corporate farming laws this will not become the nationwide epedemic it was in the 80's and the fact that current farm programs are allowing many to not fail even without a crop for a number of years.

Based on what I have found many farms that would have went under in IA have been bailed out with shareholder options to large farm based companies in exchange for market control of commodity sales. Basicly the principal of a COOP on in reverse.


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