Eloise Ogden/MDN The statewide average price of cropland and pastureland values have decreased from 2015 to 2016, said Paige Brummund, Ward County extension agent. This photo was taken south of Minot.

Cropland and pastureland values have been on the decline along with a decline in financial performance of ag producers in North Dakota.

Paige Brummund, extension agent, agriculture and natural resources with North Dakota State University Extension Service in Ward County, said according to the National Agricultural Statistics Service, the statewide average price of cropland is down 6.5 percent from 2015 to 2016, and pastureland values have decreased 2.4 percent.

“As far as rents go, it can be hard to get significant data due to limited quantity of surveys returned, but the data we do have does shed some light on trends,” Brummund told the Minot Daily News Thursday, Feb. 16.

Not just in 2016 but ag producers have been experiencing a decline in financial performance.

Brummund said there has been a sharp decline in financial performance of ag producers since 2012 because of sharply lower grain prices.

“Median net farm income declined 62 percent in 2013, 40 percent in 2014, and 65 percent to $18,982 per farm in 2015. This sharp decline in income naturally has an effect on the ability of producers to make land purchases. Less competition over land has lowered the price of what producers are willing and able to pay,” Brummund said.

As for renting land, some farmers and ranchers are having to make decisions whether to keep renting land at higher prices, Brummund said.

“When it comes to renting land, the minimal, and sometimes negative return for most crops simply will not allow producers to continue to pay the higher rents and still remain profitable,” she said. “Land rents cannot continue to increase or remain at the higher prices paid since 2012, while profits decrease. Some producers have had to let some of those acres that were being rented for higher prices go.”

Brummund said according to the NASS survey, Ward County cropland rents average $50 an acre and pasture land averages $13 an acre. “These values are simply averages and the range of rents vary greatly. Field size, topography, soil type, location and availability of rental land affect this range. The published values in the NASS reports should never be used as the only factor to establish rental arrangements,” she said.

“At the end of the day, landowners and the producers renting the land will have to communicate and come to an agreement that will work for both parties involved. There has been some interest in flexible rents that allow for adjustments in rent to occur based on changes in revenue being generated from the land,” Brummund said.

This past fall, Andrew Swenson, farm management specialist with NDSU Extension Service in Fargo, predicted, in a news release, that 2017 might be another year of declining land values.

North Dakota had an 11-year period in which cropland values averaged an annual increase of 15 percent, according to NDSU information. That 11-year period from 2003 to 2014 was the strongest sustained run-up in cropland values in the past 100 years.

Swenson said last April that the last significant period of declining land values was from 1981 to 1987. Land values dropped a total of 40 percent. It took 24 years, until 2005, for prices to get back to the 1981 level. He said crop profitability and interest rates drive land values.

Following is a list of the average value of rented land for Ward and counties in the surrounding area. The prices are from the 2016 annual survey of farmers and ranchers survey funded by the N.D. Department of Trust Lands. It is the most recent survey available. Another survey is expected to be released in April.

Readers are reminded this is a sampling of agriculture producers and in some counties a small number of people responded to the survey. About 4,500 farmers and ranchers were sampled for the survey conducted Jan. 19-Feb. 12, 2016.