The Federal Reserve Bank of Minneapolis reports that the price of farmland in South Dakota is up 11.5% from last year—and that’s adjusted for inflation. Minnesota’s cropland values rose 10.4% beyond inflation. Nationally, cropland values rose 7.2% after inflation.
Adjusted for inflation, cropland values declined nationally and in Minnesota from 2014 through 2020 before bouncing upward again in 2021 and 2022. South Dakota’s cropland value slump began in 2015, then rebounded over the last two years with the rest of the nation.
In 2021 dollars, South Dakota’s cropland values are still 8.0% below their 2015 peak. North Dakota and Montana cropland values also remain below their 2015 peaks, while Minnesota and Wisconsin have fully recovered from their declines.
While cropland prices have grown faster than inflation in the last couple years, cropland rents have not kept up with inflation. In 2021 dollars, it’s cheaper to rent farmland now, throughout the Ninth District and on average nationwide, than it was during the mid-decade cropland price peak:
The USDA estimates that the highest cropland values are on the coasts, in New Jersey and California, where an acre of cropland costs over $15,000. No other state has a five-figure average cropland cost.
New Jersey also leads the nation in pasture value at $14,400 per acre, followed by New England states at $7,140 per acre.
For the whole kit and kaboodle, land and buildings, a farmer can get 5.9 times as much farm for the money in South Dakota as in New Jersey. Production expenses also appear to be 5.9 times higher per acre in New jersey than in South Dakota, but if you divide total state farm income by total farm acreage for each state, you will find that New Jersey farmers produce 6.6 times more income per acre than South Dakota farmers do. New Jersey farmers might thus want to keep operating in their more expensive but more profitable market and save their money to buy a nice little hobby farm for retirement along the Big Sioux.