Local land prices steady as others skyrocket
Some agricultural land prices on the Minnesota-Iowa border have been out of sight this year, ranging as high as $14,000 an acre, but Wadena County Assessor Lee Brekke has not seen those prices locally.
Wooded and low cover acreages in Wadena County had surpassed tillable acreages before what is being called "The Great Recession" began three years ago. Wadena County had tracts that were selling for $1,200-$1,800 an acre according to Brekke. That land is now being sold for $1,000-$1,400 an acre.
Brekke sees tillable acres being sold for the highest amount per acre this year and perhaps for several years to come.
"Commodity prices are really driving the land prices in the state," Brekke said.
Brekke said some of the tillable acres sold recently in Wadena County may be going for $100 to $200 more an acre than it was previously but it is a far cry from land sales in other parts of the state.
Ag Country Farm Credit Services Vice President Myron Brusven sees several factors influencing the higher prices for land. One of them is the ability to borrow money at a lower rate of interest.
"You can probably get a 20-25 year fixed rate at 6 or 6 1/2 percent," Brusven said.
A global demand for U.S. farm products is another reason that Brusven feels commodity, and therefore land prices, are higher. Two of the largest importers of U.S. crops are China and India. The populations of the world's two most populous countries have been shifting from the country to the city.
"There's interest in more protein and in a higher standard of living in these countries," Brusven said.
What that translates into halfway around the world is higher crop prices. Brusven said land prices in Iowa have been between $6,000 and $6,100 an acre. Land prices in southern Minnesota have ranged from $6,600 to $6,700 an acre. In Otter Tail County, Brusven knows of land sales between $2,500 and $5,000 an acre.
Land prices, like commodity prices, rise and fall. Brekke saw a land boom locally in the 1980s.
"In the 80s land prices skyrocketed," Brekke said. "They went from $300 an acre to $1,800 an acre, then they dropped to $300 again."
Wadena County Commissioner Ralph Miller remembers that land rush well. He bought his parents' farm in 1979 and recalls that it was at a time when land prices were going up. A decade later they had dropped sharply.
Miller is a grain farmer. He was given a chance to buy some land recently at a reasonable price but at the age of 67 he was not real tempted.
"Even though interest rates are very low I don't think we're going to be looking at $5-7 a bushel corn much longer," Miller said.