Official Newspaper of Eddy County since 1883
Official Newspaper of Eddy County since 1883
Despite high production costs to start 2022, net farm incomes remained high, helping facilitate a sharp rise in land prices for 2023, says Bryon Parman, North Dakota State University (NDSU) Extension agricultural finance specialist.
The statewide average land price increase from 2022 to 2023 was 13.46 percent, which is higher than last year’s increase of 10.9 percent. Rents were also up considerably, rising 6.82 percent statewide, marking the largest increase in 10 years.
The east-central region, which encompasses both Foster and Eddy counties, saw the largest increase in land values, along with the southern Red River Valley. Both increased over 20 percent.
“Overall, the statewide average cropland value moving into 2023 was $2,863 per acre,” says Parman. “The most expensive farmland in North Dakota remains in the southern Red River Valley region at an average of $5,494 per acre while the least costly is in the northwestern region at $1,399 per acre.”
The east-central region was over $3,000 per acre for the first time, coming in at $3,029.
The upward trend extended to cropland rent values as well. Cropland rents were up across the board, with the largest increase occurring in the east-central region at 11.88 percent.
The smallest increase in cropland rent, 3.25 percent, occurred in the southwestern region. The statewide average cash rent on cropland was $79.90 per acre.
“Overall, 2023 marks the second largest increase in land prices in North Dakota in a row,” says Parman. “However, despite the increase in rents accompanying land price increases, the disparity between cash rents and land prices continues to grow wider. The capitalization rates (cap rate) with respect to farmland in North Dakota has been declining for decades.”
Parman explained that the cap rate in North Dakota, which is the cash rent divided by the market value of farm land, is around 2.65 percent, the lowest it has been in more than 40 years.
