SDSU Extension has issued its annual report on agricultural land values in South Dakota. As expected, lower crop prices checked the increase of land values in East River, while higher cattle prices contributed to a remarkable increase of land value West River.
In general, ag land between Brookings and Sioux Falls still draws seven times the sale price of ag land between Buffalo and Belle Fourche. The highest cropland values are in Minnehaha and Moody counties, where values ranged from $6,045 to $9,977 per acre. The more southerly portion of the I-29 corridor—Lincoln, Turner, Clay, and Union counties—were a close second, with cropland values ranging from $5,912 to $9,823 per acre.
To put that in perspective, a South Dakota farm family that hung onto great-great-grandpa’s 160-acre homestead would be holding onto land worth a bit more than $400,000 on the statewide average. Such a homestead around Chester or Canton would be worth just about $830,000. The owner of an average-sized farm (1,352 acres, a bit more than two full sections) near Flandreau could be sitting on $8.2 million to $13.5 million in land value.
Rental values present an interesting trend:
As interest rates have gone down, so has return on rental land. Through the 1990s, landlords were making and average of 7.4% of their land’s value in rent. Last year the return on renting ag land dropped to 2.9%. Put another way, at 1990s rents and land values, owners could recoup the full value of their land through rent in 14 years. At today’s rates, full recoup would take 35 years.