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Farmland prices continue to climb in SW, SC Minn.

Schoper says corn, bean prices create thin margin year

Journal file photo According to a University of Minnesota Extension survey, farm land in Southwest Minnesota and South Central Minnesota continue to rise.

NEW ULM — South Central and Southwest Minnesota farm land prices continued to rise in 2023, according to a University of Minnesota Extension survey of farmland sales.

The 2022 Brown County average farmland sale price was $8,259 per acre, according to Minnesota Department of Revenue Certificates of Real Estate Value compiled by University of Minnesota Extension Economic William Lazarus.

Brown County’s 2022 average farmland sale price was 16% more than 2021 and 24% more than 2020.

Average farmland sale prices also rose in 2020, 2021 and 2022 in Nicollet, Blue Earth, Sibley, Watonwan and Renville Counties.

Statewide, 2022 average farmland sale prices were 26.79% higher than in 2021.

South Central College Farm Business Management Instructor Wayne Schoper said high land prices are an issue particularly when corn prices are more flat.

“We saw this before. Land prices went above $11,500 in 2012 and corn was $7, then prices bottomed out in 2013,” Schoper said.

“Then corn bumped along at $4 for several years. In 2021, 22 and 23, prices came back and land values went up. Will it go down again? It’s hard to say,” added Schoper.

“Land is a good investment, but land prices now are prohibitive especially for young producers. I work with lots of younger farmers paying $11,000 to $13,000 an acre,” he added.

Schoper said the production cost will be over new crop corn prices that are a little over $4.

“We made pretty good money in 2022 and 2023, but 2024 looks like a tight margin year with current corn and bean prices,” Schoper said.

“Everybody is feeling the crunch,” said Sleepy Eye farmer Mark Portner. “We’ll see what the spring market have in store. What happens in China and South America is significant for us too.”

A survey across Chippewa, Cottonwood, Jackson, Lac qui Parle, Lincoln, Lyon, Martin, Murray, Nobles, Pipestone, Redwood, Rock, Watonwan and Yellow Medicine counties averaged a 14.7% farmland value increase in 2023. In 2022, the average county increase was 27.9%.

Jackson County had the highest average sale price of $12,656 per acre. Lac qui Parle County had the lowest at $6,348 per acre.

The average Crop Equivalency Rating (CER) was 67. The highest price per CER was Redwood County at $103.06. The lowest was Lincoln County at $68.65 per CER.

Redwood County had a 2022 average land price at $10,534 per acre. Nobles County was tops at $11,025.

University of Minnesota Extension Educator Dave Bau of the Worthington regional office said farm income, grain prices, interest rates, return on other investments and 1031 exchanges are often mentioned as reasons for farmland value increases.

Bau said 1031 exchanges allow farmers or property owners who have land in an area of increased value due to location to city or development. Rather than pay taxes on large gains from the sale of land, they purchase like property or other farmland at a more reasonable price elsewhere, which increases rural farmland demand.

Bau said supply and demand will determine future farmland values.

“Land rent is more of an issue than land values, looking into 2024,” said Bau.

“Land rents are slow to go up in good times and slow to go down in poorer times. As rents go lower, so will land prices,” he added.

For more information, visit www.extension.umn.edu/news and www.landeconomics.umn.edu/

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