Farmland Values - Then and Now

Transcription

1 Farmland Values - Then and w / Je r me E. Jhnsn acre fr US-48 a nd $455 in r th Dak ta. The aver ages are $682 a n acre fr the US-48 and $3 68 in r th Da kta. This si mpl e descriptin fails t spea k f the shrt, sha rp depressin fll wing Wrld Wa r I a nd the Great A merican Depressi n f 1929 t 1939 (Figure 1). T hree vi ews are ffered here f recent fa rmland values a nd rentals: land value per acre frm 191 t the present in nm inal and inflatin-adjusted (real) dllar terms, rents a nd land val ue, f r cash-rented tracts in rth Dakta in nm in al a nd real terms, and a cmment n frei gn wnerhi p f rth Da kta agricultural land. Inflatin-adj us t ing allws an examinatin f changes in land values a nd rent als ver time by c rrecting fr the changes in purchas ing pwer f the d lla r. Tw measures f the purchasing pwer f th e d llar are u ed: the implici t adjusters applied in creating es ti mates f grss natinal prduct r the ttal va lu f gds an d ervices prduced in the U nited States a nd th e cnsumer' typi al market ba ket, called the C n sumer P rice In dex. r th Dakta, with its mid-c nti nent al lca tin, cli mate, and sils, a nd distances fr m na tinal and w rl d ma rke ts, enjys fewe r cmparative ad vantages a nd mre cmparat ive di sadvantages in the prductin a nd ma rk et ing f ag ricultural cmmd it ies. Its la nd values ver the ye r' r flee t these basic rea lities. Yea rs f gd rain fall an d nrm al temperatures ften prduce bumper crp s re sulting in lwer prices, a nd yea rs f su bsta nda rd rain fall may prduce shrt crps with higher prices. Rainfall and temper tures interact t result in gd u tput a nd prices, as in 199 when the initia l sil mistu re was limited but adeq ua te and timely rai nfall and n h igh r lng perids f intense heat a ppeared, res ult ing in the secnd best wheat cr p in rt h Da kta' s hi tr y. T he first view sh ws nminal r annual (cur rent yea r dllar) estim a tes f fa rm land val ues fr the 48 cntig uus ta tes (U S-48) a nd fr rth Dakta. Figure 1 inclu des values, an d is based n data frm the U.S. Department f Agri culture (USDA) (Jnes a nd H exem, 199). The USDA is the majr prvider f annu al land value data by states in the United States. The U.S. Depa rt ment f mmerce c nd ucts a census f agriculture every fu r r five years, in which the USDA assists and in turn ties its land value estimates. Unfrtunately, th e recent cen su f agricul ture verstated land values, accrding t esti mates b tained in sme state studies (including the annual DSU studi, t be presented later). (Fr example, see Gv inda n and Raup, 199, pp ) Cngressi nally mand a ted farm sub sid y prgra ms treat sym pt ms a nd nt the ba ic pr blem f inadeq ua te de man d a nd excess supplies f many agric ultural c m m di ties. T he Eurpean Cm m unity C m m n Ma rket an d the U ni ted States use fa rm su bsidi es t li mi t prduc ti n and as exprt enhancement payment a t grea t cst t federal in cme taxpayers. The Ecnmist (199 1, page 14) stated that "Last yea r gvernments su b idi zed farmers in rich T he annu al r nmi nal (current year dll ar) valu es per ac r f the US-48 and rth Dakta farm and ranch lands in 19 1 veraged $4 fr the US-48 and $29 fr rth Da kta (Figure 1). Average values slwly rse fr the US-48 up t W rld W ar I, reaching $69 in 192, which is the same year rth Dak ta values peaked at $41. Bth values cn tinued alng similar paths until Wrld War II. The nmi nal dllar l w was $31 per acre fr the US-48 in 1934 a nd $ 13 an a re fr rth Dakta in bth 194 and The cha ng in rth Dakta average values frm the high f $41 in 192 t the $13 lw in 194 was a drp f $28 an acre r 68 percent in 2 1 years. Annual r minal values The US-48 average land values mved away frm rth Dakta a verages in 1942 wi th a grwing spread thrugh 198. A rapid increase in values is mre evident during the Ru ssian grain deals frm 1973 t in then cu rrent r nm inal dllar values. The peak was in 1982 at $823 an ; v _ M v M m M V V a v Figure 1. Estimated average farm and ranch land values per acre, United States 48 (cntinental) and rth Dakta, Annual r nminal values are f the year f sur vey. Surce: Adapted frm USDA data. Jhnsn is prfessr-retired, Department f A gricultural Ec nmics. This article updates a study published by Jhnsn

2 cuntries [e.g. th rugh dire t payments, price upp rt and chea p lans] t the tune f $176 billin - 44 pe rcent f the value f t ta l far m utput." High interest rates, high il prices, an d exce s prd u ti n wrldwide with lwer re surce returns li mi ted the ability f mst Th ird W rld Cuntries t generate a surplus f incmes t p u rcha e much-need ed fd and manufacturing im p rts. In addi tin, rapidl y in reasing ppulatins place severe bu rd ns n the lesser develp d ecnmies, furth er lim iti ng their abili ty t imp rve the standards f liv ing. Inflatin-adjust ed r real land values may als be b tained by usin g the C nsumer Price Index (here the base is = ). Adjusting fr the purchasing pwer f the dllar in terms f the nsu mers' m ar ket bas ket f gds and se rvices prduces a simila r view f rea l land va lues fr the pstwar per id 1946 t 1991 (Figu re 3A). The small natina l rece sin in 1954 is apparent, wi th sl wer grwth in , a lnger declin e frm 1969 thrugh 1971 natinally and even lnger in rth Dakta, the ma rked dwnturn frm 1982 th rugh 1988, and a fur ther d r p in 1989 t 1991 na tinall y. T he p u rchas ing wer r valu e f mney itself ch anges ver time, bu t se{ral meas ures f the purchasing pwer f the dlla r are available t crre t r adj ust la nd v lues f r inflat in. T he imp lici t price deflatrs used t esta blish th e grss nat i nal prdu ct (G P-I) is ne such tl, a nd its ef f cts n th e basic d ata used in Figure 1 are presented in Figure 2 fr 1929 t The base year is 1982 when GP-J =, with these inflatin-adjusted val u called "r al" land valu es. The na tinal in crease in values measur ed in real dllars fr m th e l w in 1971 thrugh the peak in 1981 was abut 8 percent; in rth Dakta, values mre than d ubled (11 pe rcent) fr m the lw in 1972 thr ugh 198. The ttal d. llar increase per a cre wa smaller in rth Dak ta, bu t its smaller in itial number yields a larger ttal percentag e cha nge. The US-48 line f real la nd val ues in Figure 2 shw. first a sharp a nd th en a cnti nuing decline in the rea l r infl a ti n-adj usted value frm 1929 thrugh A sm all urge in real land values ccurred in , peak ed in 1949 and was fllwed by a nther small recessin. Un er tainties abut future fa rm suppr t prgrams existed during the 1952 el ctin campa ign. The in itial drp was ne-third in real dllar terms frm 1929 t The rise in ave rage land valu es frm 1955 t 1968 was 52 percent. The in reased values fr m 1971 t 1981 yield ed a ttal rise f 85 percent. The smaller increase in rth Da kta real far m land valu es cmpared t the natinal valu es reflects the lwer c mpara ti ve advantage frm rth Dakta's mid-cn ti nental setti ng even thugh substantial transfer payment frm cngressinally mandated farm subsidy prgrams pr vid ed s me aid. These effrts have frestalled the much needed capital, labr, and land resurce adjustments, s America s shrt-run agricultural prblems, sect r by sec tr, have becme lng-run ecnmic burdens t federal in cme taxpayers. When the farm equipment capita l sub. i dies were reduced via an incme tax change in 1986, far m machinery manufacturing and retail firms de lined ra pidly in an already depressed industry (frm excess capaci ty an d t her prblems). Inflati n-adj usted la nd values per acre in rth Dakta fllwed the na tin al trend t sme d egree. Real land va lue rse a ttal f 73 percent frm 1955 t a ti nal land val ues receded nearly 4 percent thrugh 1971, but the decline (8 percent) cntinued thrugh 1972 in rth Dakta. U S-48 real land val ues surged strngly starting in 1972, crested in 1981 wit h an increase f 91 per cent, an d th n d li ned harpl y (dwn 41 percent) thrugh The rth Da kta rise in real land values was higher in percentage (at 124 percent, because f the smaller initial value per acre) than in dllars with sme difference in tim ing (Figure 2). Figure 3B shws a final view f inflatin-adjusted state average farm and ranch land values f rth Dakta lan d va lue data cllected in the annual DSU land value sur veys. Bth the USDA a nd DSU mail surveys depend heavily n farm real estate brk er and similarly knw ledgeable respndents, including sme rural land a pprai ers, bankers, law yers, and cunty supervisrs f the Far mers Hme Administratin (FmHA) in the DSU mail ings. The CPI (where = ) is again u ed t inflatin-adjust the DSU-calculated rth Dakta farm land values. The US-48 real land values are the sa me USDA data in Figures 3A and 3B. IOlIaiCtl A/lJU5Iw wl1h GP I!2- IOO IlIIabtl, Mp r;i(l'j w,!ll CPI U ' H+H++H+HH+H+H+H+K+H+H Figure 2. Inflatin-adjusted es timated farm and ranch land values per acre fr United States 48 (cntiguus) and rth Dakta, , using Grss atinal Prduct l mplicit Price Deflatr where 1982 =. Based n data in Figure Figure 3A. Inflatin-adj usted estimated average values f farm and ranc h land per acre fr United States 48 and rth Dakta, , using Cnsumer Price Index =. Based n data in Figure

3 RETS AD VALU ES PER ACRE A D TH EIR RATIOS FOR CASH-RET ED LADS Dll ars per acre hllll!'" A<,,' ""11, CPI -U 8? Renting fa rmland is the traditinal way far m peratrs make maj r adju tme nts in the sizes f th eir fa rm busi ne ses fr m yea r t year. T he typical farm bu ine slife y cle includes perid s f tra ini ng a nd ga ining experience be fre entr y, increasi ng the size f farm business perated, ma t uring, redu cing th e size f fa rm bu iness perated, a nd exiting fr m fa rmi ng. The farmla nd rental market plus thse induced by new agr icultu ral t ch n lgi s facilit ate these life cycle change. Ma ny cst-sharin g ren t I practices are lcal cmmunity-s p cific, ften prv idi ng incenti ves f r imprved farm ing practi es r new varieti es gr wn, whi ch can becme unecnmi c if nt reevaluated perid icall y Figure 38. Inflatin adj usted estimated average values f farm and ranch land values per acre fr United States 48 and rth Dakta, , using the Cnsumer Price In dex where =. Ad apted frm USDA data fr US 48, DSU studies fr rth Dakta state average values. Leasing cnti nu es as an imp rta nce part f the rth Dak ta farm inputs scene. Many la nd lrd inherit their lands. Sme have little interest in wning and managing farm tracts, but mar ket bservers generally agree that the tw best ways t handle inflatin in th lng run is b y wn ing stcks r land. Of interest is h w fa rm land ren ts and values per acre and the rati f rents t value change ve r time. Tw surces f data available f r a lim ited num ber f years are used. The Cnsumer Price Index adjusts fr the changing purchasing pwer f the d llar. The USDA estimates cash rents er acre and the rat i f rents t value fr rth Dakta fr ren ted wh le far ms, whle tracts f rented crpland, and rented past urela nd trac ts. The rati f rents t valu e req uires knwi ng bth per acre figures, and knwing tw f the three allw cal culatin f the unpublished fig ur. The average (n minal) value per acre fr each kind f ren ted land has been calcu lated and graphed (Figure 4). The C PI adjusts ren ts a nd nminal values per acre fr inflati n, wh ich a re gra phed t shw hw these real values have respnded ver tim e. The rth Dakta respndents indicated that real r in fl a ti n-adjusted farmland values had risen earlier and fa ster than ther data shwed. The Russian grain deal had a quicker and larger impact in grain-exprt-dependent rth Dakta. The ttal inflatin-adjusted jump in real la nd values was very rapid, climbing 141 percent frm the lw in 1971 t a peak in 1976 and again in The rise f 141 percent in five years meant an average climb f 28 per ce nt a yea r. A sec nd finding is that inflatin-adjusted farmland a verage va lues in rth Dakta were falling several years befre the natinal average values turned dwn. A number f fact rs, including sme ptimism always present in real es tate brkers, may invlve rth Dakta's mid-cntinen tal lcatin that affected wheat csts and returns, mre crp diversity in the rest f the natin, and especially the strnger infrastructure supprting agriculture in the nn Grea t P lai ns States (see McSweeney, 1989). Annual estimates f cash rents and the rati f rents t value per acre fr rented whle fa rm s are availab le fr rth Dakta frm 196 t These (pi us the need d market values f rented whle farms, which were a lc ula ted) are presented in Figure 4. A third bservatin is that inflatin-adjusted farmland val ues in rth Dakta had declined as much in real terms as they ha d increased, plummeting frm the 1979 peak d wn t nl y 62 percent f the high. The lss in value in real terms was 1.65 times greater than the average value f $215 in 199. Esmated lxl A furth cnclusin is that the fall in rth Dakta average farmland values was slwer r extended ver mre years than the rise (in inflatin-adjusted terms), with the rapid decline stretching frm the peak in 1979 t the recent lw in 199. The fall in real dllar terms frm 1979 t 1987 averaged 14.8 percent a year. The natinal farmland values pea ked in real terms in 1981 and initially bttmed in 1987 with an average fall f 7 percent a year. The cntrasts in the rth Dakta and natinal perids and the extent f value changes reflect different cmparative advantages and supprting infrastructures (see Epp, 1989), ffset in part by the strng cngressinally mandated subsidies t the m nculture f wheat in the Great Plains. Cash Rents / Cl:re RatiO = Percentage Whle Farm Values/acre in Clumns dx) SJ 5.. $ R Figure 4. Estimated average value per acre f whle fa rms rented fr cash in rth Dakta, Ada pted frm USDA data. 12

4 E timated market values per acre f whle farms rented fr ca h in r th Dakta appea r as clumns in Figure 4 and are measured n the left axis. Their cash rents frm the lid line and are pltted n the right axis in dllars per a r. The ratis f c sh rent t va lues appear in the dia mnd-marked line and are al a pltted n the right axis as a percentage. Cash rents rse when callie price were gd and num bers due t drught -impacted pastures were reduced. The Cnservatin Reserve Prgram (CRP) enrllment in recent years intrduced a cash -flw fr a lo-year term, almst riskles. since the U.S. gvernment guaranteed payments at rates p r acre substantially abve that f market-estab lished cash rents. The CRP prgram pulled bth highly erdible crpland and much pastureland ut f prdu lin, thus reducing land available fr farming, renting, r purchasing. Reducing land available fr farming left many farm peratrs with excess machinery and labr and re duced incmes. Sme bid up rents and ther sught t pur chase replacement acres. The interactins f these ecnm ic frces and the drught prduced many reactins which respndents reprted in the annual DSU surveys. Ca h rents and land values per acre n ca h-rented whle farm rse dramatically in the late 197s after many earlier years f small increases. But th e rati in cash rents t market valueynly ' adj usts slwly ver time and is an imprtant measure t land purchasers and investrs. The ra ti in 196 was 8.9, dip ped, a nd then climbed t a peak f 9. 3 in It gradually declined t a lw f 5.8 in 1982, was 8.8 in 199, and was 8.3 in early The rati r cah rents t value per acre shw the vla tility f the. e frc es in the rented pastureland markets. Frm 1974 t 1986, estimated values per acre rse faste r than cash rents per acre did fr pastureland driving dwn the annual ratis f rents t vallie acrss that 1-year per id. PA UIELAD: ESTI MATED M A RKET VA L UES A D CASH RE TS PER ACRE AD T HEIR RATIO Much pas tureland is rented thrughut the Unit ed States and in the we tern six farming areas f rth Da kta. Average cash rents per acre a nd the rati f cash rents t market val ues f cash rented pastureland tracts are frm USDA publicatins, and a calculated marke t value has been pltted in Figure 5. C RO P LAD: VALUES A D CASH RETS P ER ACRE AD THEIR RATIOS Bth USDA and DSU data n cash-remed crpland values, rents, and the ratis f rents t value per acre, plus inflatin -adjusted values and rents, are availab le using the CPl with the = ba 'e. The USDA data n cash -rented crpland trac ts are presented in annllal nmi nal terms in Figure 6A and as in natin-adjusted rents and values in Figure 6B. The calculated market values f cash rented crpland tr acts are measured in the clumns as dl lars per acre n the left axis. Cash r nt per acre are the slid line and presented as dllars per acre n the right axis. The rati f cash r nts t value per acre appears a the diamnd -marked line with its percentage value n the right axis. Es tima ted ave rage cash rents fr pa turelands in rth Dakta are gra phed as the slid line and are measured n the right axis in dlla rs p r acre. The rat i f rents t value is seen as the diamnd -ma r ked line a nd appears n the right axi as a percentage. The cal ulated annual market values are shwn in clumns and measured jn dllars per acre n the left axis. Past urelands in rth Dakta are les prd uctive than cr pland due t lcatin, sils, rai nfall a munts and distri butins, and fewer alternative uses. The strng effects f the drughts f the 1983 t 1989 perid are evide nt. Esti mated values per acre rse slwly Frm 196 t 197 and frm 1973 t The uncertain retu rns due t drught are cnspicuus since The estimated annual average values f cash-rented crpland tracts rse slwly frm 1967 t 1973, but climbed spectacula rly frm 1973 thrugh 1982 in nminal dllars. The Russian grain deal with rising grain prices plus admin ist rative an d 'ngressinal exhrtatins t plant fence rw t fence rw temprarily led t increased prfitability per acre and a rapid bid up f land values. The bidcling/pur chasing frenzy gt t the pint where sme buyers bught land in spi te f ttal annual principal interest, and tax payments greatly abve expected annual net returns per acre. Cnsequent ttal c t t Federal incme taxpayers, lending agencie, and thers have been tremendus. Cash Rellts per re RallO Percen1!lge Estimated Pastureland Values/acre in Clumns 225 T1. Cash Rents 2lJ 9. Cash rents fllwed a path f little change similar t that f estimated mar ket values frm 1967 t 1973, rse rapidly t a peak in 1982 (except fr the small decline frm 1975 t (978), and have tended dwnward until the recent] 991 re bund A-.""" 15 flaw The relatinship f ca h rents t market value, measured as a rati r percentage, declined frm 1967 t 1982, in dicating that values we re ri ing faster than cash rents r that renters were sue essfully resisting cash rent increa es. Landlrd were nt getting previus shares f their land ear ni ngs fr everal reasns. Sme had fixed tw - t five year cntracts. Others did nt live in their frmer cm muni ties r were nt present t watch ver their land rental a rrangements, pssibly becming less aware f current cs ts and re tu rns and mre susceptible t tenant claims f hardships, and s frth. The ratis f rents t value went 3. 9) 2. 2) too $ m. Figure 5. Esti mated average value per acre f pastureland tracts rented f r ca sh in rth Dakta, Adapted frm USDA data. 13

5 Real market values f rth Dakta crpland had a high in 1968, a lw in 1972, and rse rapidly (by 12 per cent) t a peak in Anther increase f3.5 percent led t a three-yea r plateau frm 1979 t 19 1 befre entering a lng, general decli n f 6 per ent fr m the high in 198 t the lw in 199. Real lan d values rse an e tim at ed 12 per cent in real d lla r terms in Lki ng ba k frm the lw in 199, th e lng decline frm the 198 peak t the 199 lw hws tha t the ttal drp in real value was 1.55 times the 199 val ue. Cash Rp.III ; I ;w: re Rati Pr.rr:p.lllagp. Esbmated Crpl and Values/ac re In Clumns T he rati f ren t t va lu e fr cah-rented cr plands in real te rms mved fr m a high f 9.7 percent in 1969 t a lw f 6.1 in 1981 an d 1982, a nd t a new high f 9. in T he sim pl average rat i f r the 25 years f 1967 t w s 7.7, which was th e cm puted ra ti in 1976 and clse t the ra ti f 7.6 in Rati 5. m A secnd view f cr pla nd cas h r nts is available frm the ann ual DS U studies f crpland val ues and cash rents f whea t/ ba rley la nd s f r 1974 t 199, with nm inal val ues reprted in Fig ure 7 A and inflati n-adj u ted n um bers repr ted in igure 7B. H re the infla tin-adj usted number. are based n the Cn umer Price Ind ex \; here =. Figure 6A. Es timated average value f cas h-rented crp land tracts and their cash rents per acre in rth Dakta, and ratis f rents t value, Adapted frm USDA data. Estimat ed Crpland Value<.Ja:re Inltatrn-Adlusled In ClulTm mi nal estima ted average value. f crpland in rth Da kta are displayed in cl um ns measured n the left ax is in per acre values. m ina l cash rents fr wheat/barley land a re graphed in th sl id line wi th referen e t the right axis in valu e per acre. T he ra ti f rent t val ues per acre is the diam nd-mar ked line measured as percentages n the right a xis. Cash Rents I ;n e RallO = Perceflla.ge ash Rents 3. InHalin-Adl usted 25. Fig ures 6A and 7 A are similar f r 1967 t 199, but wi th less increase in crpla nd va lues and their cash rents. Bth ha ve similar rents- t-value ra tis wi th D U ra tis usually a bit m re c nse rvat i e, but bth reprting a n ident ical 6.1 in The DSU ra tis were hig her in the 1984 t 1989 interval RatiO'-=-""m1Hm8-t1I-RJFJ " 5. The DSU rental dat a were inflatin-a dju sted, using th e Cns umer P rice In dex where = (Figure 78). C hang ing t the base instead f the G P-I base f. Figure 68. Inflatin adjusted estimated average value f crpland and cash rents per acre, and the rati f rents t value, rth Dakta, ased n data in Figure 6A and Gp 1 '82 =. Crpl and Values/acre in Clumns Cash Rents / acre RatIO= Percentage 35. Cash Ren ts - frm a high f 9. 7 in 1969 t a lw f 6.1 in and rse agai n as land val ues declined t reach 9. in Adjus ting bth cash rent and e timated mar ket values per acre t match th e dec rea d p urchasing pwer f the dllar (using G P 1982 ) ca n be mst revealing if the infl uence f th e cheapeni ng f the dllar n the values in F igu re 6A are remved (Fig ure 6B). = Rati--'. Adjusti ng fr in Oa ti n presents quite anth er view f la nd values and ash rents f r crpland since While the ann ua l ratis have nt cha nged, the sizes f the real cash rents and real m a r ket values, which are nw measured in ter ms f in fla ti n-adjusted dllars, have ch anged Fig ure 7A. Estimated average va lues f crpland and cash rents per acre, with rati f ren ts t value fr rth Dakta, DSU annual studies. 14

6 Crpland Values/acre InfiallOn-AdllIst III 7 "" 4 1/ 1 Rati Inflabn-Adjusted => 199. Hwever, the mre valued lands exhibit much larger increases and declines in nminal (annual) dllar terms. Values in the western fur farming areas fllw similar patterns, with the rthwest (W) and Suthwest (SW) areas having similar per acre values. The rthwest Cen tral (WC) area had average values just abve th e f the Suthwest Central (SWC) farming area. Cash Rents I acre Rati = Percentage Clumns _ The fur eastern farming areas have displayed large changes in average quality land value since The rth ed River Valley (RRV) area initially had higher values than its suthern neighbr, the Suth Red Ri er Vall y (SRRV) area, but the SRRV has led the state in land valu es since These average reflect the relative pr ductivity and va lue f prducti n f the land wit hin the farming areas. The rtheast Central (EC) and Suth east Central (SEC) farming a r a value are between thse f the mre eas tern and we tern farming areas, with the m re east rn cu nt ies f the E C and SEC areas reprting values mre like thse f the western prtins f the tw Valley areas. Figure 7B. Inflatin adjusted estimated c rpla nd va lues and cash rents per acre using Cnsumer Price Index-Urban, with cmputed rati f rents t val ue where fr rth Dakta, Ann ual DSU studies. = T he highly prductive crplands dminate the S RV area, s mre f it suppr ts higher la nd values, which rse frm $29 in 1973, t peak at $1,135 in The current estimate f $75 an acre is fa r abve the tate average values (the bld slid lin in F igure 9B). Much f the R RV area is als rich crplands except fr sm e western twnships, and th ese val ues rse rapidly frm 1973 t 1975 and peaked in 1982 at $855 an acre befre declining t the cu rren t $546 in 199. Average EC land values led thse f the SEC area except fr m 1974 t results in higher "real" values fr the ea rli er years because f the mr recent base years. Bth the USDA a nd DSU real values fr the years 1983 t 1989 are very imi lar. T he inflatin-a dju ted r real valu es p resented in Fig ures 6B and 7B indica te that real land valu es f r th Dakta crpland have nt ri sen in recent years an d vividly shw th at cash ren ts hav e nt increased in recent year. The emphasis tu rn s t the rati f cash r nts t cr pland values per acre, which displays declining ratis frm 1974 t 1979, anther di p in 1981, r isi ng ratis th rugh 1987, and fall ing ratis in the m st recent years. The lat ter ratis have decreased agai n since the hig h f in A verage val ues f r the f ur mre-western farming areas are belw the state averages (Figure 9A). The WC area average - h ve led the western area fr th entire perid shw n an d f r m t years rene t the palte rn f the state averages. T he effects f d rughts and lw cattle prices ap pear frm 198 t 1982 and th recent years. T h estimated average valu s per acre f the prductive cr pla nd fr the eight fa rmi ng area, are presented in Fig ur es loa a nd B, again wi th the wester n and eastern grup ings f far ming areas. The state averages are the diamnd marked bld lines. Figure 7B als shws th e extent f the decli ne in rea l crpland val ues in r th Dak ta frm 1979 t the plateau f the recent yea rs. The peak real value in 1979 was abu t 2.5 times greater tha n tha t f recent real values, indica ti ng that the ttal lss in real value per an e f crpland was 1.5 times its current value. Average cr pland values per acre in Figures loa and B ar e similarly arrayed by fa rming areas like Figures 9A and B. H wever, crpland is mre prductive than average DSU STUDIES: ESTIMATED LA D VALU ES PER ACRE BY EIGHT FARMI G AREAS T he DSU annual surveys b tain estimate f land values per a cre f r the eigh t fa rming areas f the state fr all lands, crpland, and pastu rela nds (Fig ure 8), wh ich permit mre detailed examin atin f these estimates ver time. Area average values f r all average q uality land are graphed in Figures 9A and B and fr crplands in Figures loa and B in a n arbitra ry west/ east d ivisi n f far m ing area t all w a larger spread n the vertical r val ue axis. The state average is the da rkest diamnd-marked line in the charts. T he estimated average values f av erage quality farm and ranch lands fr m 1973 thrugh 199 b y fa rm ing areas are presented in Figures 9A and B. The val ues pltled in F igures 9A and B indi cate a si milar pattern f land value inc rea es and declines fr m 1973 t Figure 8. Map f the eig ht farmi ng areas. 15

7 quality lands, displaying high r values per acre. The charts are. imilar but with mre irregularitie frm year t year, partly reflecting the li mited number f respnses in rne ye rs and the unique pattern f the d r ught-impacled prtin f the tate. The rich SR RV crplands led the state in average val ues amng the eight farming areas. It average values r e rapidly frm $286 per acre in 1973 t a high f $ 1,245 in 1981 declined t a lw f $661 in 1987, and rebunded during the last three year. RRV crpland av rage values r e in the mid-7 (i n fluenced by ptat and sugarbeet prices and wheat and pe ialty crps) t a high f $1,5 in 1981, fell t a lw f $586 in 1987, and have recvered si nce. The Ee and SEC area average land value have als develped similar but Ie s vlatile alue patterns. J State ---- WC SRRV --6-RRV SWC --)(- SW W EC - -- )(- --- SEC - -"-- State 5 _ Figures 9A and B. Estimated annual average values f all farm and ranch land by eight farming areas in rth Dakta, ; western farming areas n left, eastern areas n right. DSU annual studies. Dllars per acr e <;>--- State SRRV ---- WC --6- RRV SWC E C --)(- SW -- )(-- - SEC ---- W - -<:> - StaIe Figures 1A and B. Estimated annual average values per acre f crpland by eight farming areas f rth Dakta, Western farming areas n left, eastern areas n right. DSU annual studies. 16

8 Average val ues f crpland in the WC a rea are similar L the SEC farmi ng area, fll wed by the SWC area. Aver age values fr crpland in the western farming areas reflect the prducti vity f these sils, clima te, crpping pattern, gvernment prgrams, and lcal impacts f drughts mre than the higher rainfall in the ea tern a reas. FOREIG OWERSHIP OF ORTH DAKOTA FARMLAD Freign wnership f American and rth Dakta farmland seriusly cncerns sme peple. Cngress has re quired annual filing f in frmatin n freign -wned lands, which the USDA cmpiles (DbilZ and Kirby, 1989). The freign wnership prblem culd have been serius if rne trends fir t preceived in the late 196s tward rapid wrld ppulatin increase and attendant fd shrtages had actually emerged as a majr threat frm the mid - 197s n. Hwever, the "green revlutin" and the much mre ptentially pwerful bitechnlgical rev lutin have eased cncerns abut freign wnership. PASTURELA D: ESTI MATED AVERAG E VALVES P ER ACRE FO R SIX FARMI G AR,EAS, Figure 11 prlents aver age values per ac re fr pasture land f r the, ix far ming areas wi th substan tial acreages f range and past ure land in rth Da kta. The tw Va lley areas ha ve little pas ture land a reage a nd are mitted frm this chart. Just under 1 percent f all privately held agri ultural lands and n ly.6 percent f all lands in the U niled Slates 'were wned by freigners as f December 31, 199 (DeBraal, 1991). T hey wn a ttal f abut 14.4 millin acres - yet sme c ncern might be with their wnership am ng states and regins f the U ni ted States. A substan tia l percentage increase in f reign wnership was reprted fr 199, but it cnti n ues near the 1 percent level f pri vately hel d agricultural lands existing since 1981 (Ben jami n, 199). Sme f the irreg ul rities in the valu es a re attrib utable t th e li m ited numb er f res p ns s and their gegrap hi cal an d tempral dis tr ibutins, and t drught impact by lcaliti s and s asns. Past ureland val ues pe r a re in were rela tively d e, b ut val ues spread wit h the tw m re eastern far m ing a reas shwing subs tantial in creases d ur ing the Russian grain deals. Values per acre am ng the six a reas quickly na rr wed after their peaks in 198. Sme rebund in values per acre reflec t the im pact f the C nservati n Re erve Prgram as w II as gd cat tle price' in mre recent years. Fr privately held agricultural lands, abu t ne-th ird f freign wnership is in the Western states with nearly the same amunt in th e S uth,rn slates. A mng states, abut 17 percent f the f reign-wned, privately-held land is in Maine, nearly 9 pe rcent in Hawaii, 5 percent in ew H ampshire, 3 perce nt in A rizna, and 2.4 percent in Ver mn t. By type f w ners hip categry, crpratins hld abut 82 percent, partne rships 1 percent, and individuals nearl y 7 percent. A but ne-half f the freign-held agri cul tu ral la nds is timbe r r frest land and 17 percent is crpland. Pastureland values in bt h the EC a nd SEC farming areas have te nded t be abve the statewide averages. The EC pastureland average values rapid ly inc reased frm $1 11 per acre in 1973 t pea k at $29 in 198 an d ha ve decli ned a nd bu nced abut since then. SE pastureland values al wen t thru gh sim ila r but less h ig h pat ter ns and have recvered since W area a verage pasturela nd values tend ed t b th lwest du ring the ea rly yea rs f the perid charted, but SW area averages ha ve been quite simi lar in recent year. reign wnership f privately-held agricultural acre ages by cuntry f rigin shws that abut 62 percent is held by U.S. crpra ti ns with freign interest and the re mainder by f reig ners withu t any U.S. crpratin. Fr eigners fr m seven cunt ri es wn 74 percen t f freign held la nds: abu t 27 percent fr m Canada, 19 percent frm the Un ited Kingd m, 8 per en t each frm France and Ger man y, and a ttal f 12 percent frm wners in the ethe rl ands Antilles, Switzerland, and Japan. Dllar s per acre - ---;(--- SEC 25 FOREIG OW ERSHI P OF ORT H DAKOTA AGRICULTURAL LADS SWC EC - X- W - x- SW -Q Freign w ners held agri ultural land in 28 rth Da kta cunties in 199. T he leading 11 cuntie are pre sented in Figure 12A by acreage, and the leading 1 cun ties by va lue f frign- wned land are presented in Figure 12B. WC Sta te T tal number f parcels f rth Dakta agricultural la nd held by f reign wners was 66, cntaining 3,85 1 acres, with a rep rted value f $5,525, as f December 3 1, 199 (Bu tler a nd DeBraal, 199 1). T he largest acreage f f reign-hel d agri cultural land was in Burke Cu nty with 4, 348 ac res, fll wed by 3,5 58 acres in Bwman, and a ttal f 7,92 l cated in 17 ther cunties. The Bwman Cu nty wn ership, fr exam ple, cnsisted f ne tract f 3,5 58 acres wi th a reprted value f $367,. The l4 tracts in Bwm a n, Bu rke, C avalier, Dunn, and Ward cunties t taled acres with an average value f $ a n acre. T he tw tracts in Cass Cunty had 343 ac res with a t tal val ue f $3 39, r an average value f $988 per acre. i Fig ure 11. Estimated annual average values per acre f pastureland fr si x fa rming areas f rth Dakta, DSU annual studies. 17

9 Ramsey 3.76 % Dunn 4.32 % 11.53% Bwman 8. 89% Cavalier 3.53 % Dunn 6.14 % Ca ss 1.97 % Burke 6.9 % Ward 5.94% McKenzie Figures 12A and B. Freign wnership f rth Dakta privately held agricultural lands by cunties in rder f per cent f acreage n the left and percent f val ue n the right, 199. Surce: Butler and DeBraal, % Ward Freign wnership f agricultural la nd is nt perceived as critical fr several reasns. It has varied little in the last 1 years frm just under 1 percent t abut perc nt f all privately-held agricultural land in th United State. Mst f the e hldings are in timber u es. Little ten ency has been bserved f r freign wnership t cn entrate in critical areas. The United States has many millins f acres f land in the Cnservatin Reserve Prgra m nd ther land diversin schemes. T he green revlutin and the mre prductive bitechnlgical revlutin already have in reased agricultural prductivity. The ther majr agricultural prducer, the Eurpean Cmmunity (EC), i als facing similar prblems f excess labr, land, and capital r surces in agricultural pur uits that cst an unacceptable prtin f their annual budgets (Revzin, 1991). Shuld the Sviet Unin truly adpt and implement the smewhat free enterprise system America shar s wi th ther develped cuntries, a third ptential surplus prducer f agricul tural prducts culd emerge. REFERECES Butler, Gertrude S. and J. Peter DeBraal. Freign Ownership f V.S. Agricultural Land Thrugh December 31, 199: Cunty Level Data. E nmic Research Servi e. U.S. D partment f Agricult ure. ER Staff Reprt. AGES May DeBraal, J. Peter. Freign Ownership f V.S. Agricultural Land Thrugh De ember 31, 199. Ecnmi Research S rvice, U.S. Department f Agriculture. ERS Staff Rep rt. A G ES 912. April Benjamin, Gary L. "Freign Ownership f U.S. Agricultural Land" in Federal Reserve Bank f Chicag Agricultural Letter June 15, i99. T he Ecnmist " Farm Sub id ies" in "Ecnmic and Financial Indicalr." J une 8, Vl. 319,. 77 1, page 14. Epp, Dnald J. "Th a rm C ris is and ennsylvania" in Penn State Cp rati xt nsin Servi e Farm Ecnm ics. Ma rchi April vindan, Kumaresan and Philip M. Raup. The Minnesta R ural Real Esta te Market in Univ rsity f Minnesta. Department f Agricultural a nd App lied Ecnmi s. Ecn mic Reprt E R9-S. J uly 199. Jhnsn, J rme E. "rth Dakla Farmland Valu and Rental." rth Dakta Farm Research. Vl. 42,. 1, pp July-August 1984 and varius annual r p rt-. Jnes, J hn a nd Rger W. Hexem. Cash Rent f r Farms, Crpland, and Pasture, Ecnmic Research Service. U.S. Department f Agriculture. Statisti al Bulletin Oclber 199. Malabre J r., Alfred L. "Under P re sure - U.. Livi ng Standards Are Slipping and Wer E ve n B f re Recessin." Wall Street Jurnal. June 17, McSweeney, W illiam T. "The a rm C risi : A Clser a minatin" in Penn State perative xtensin ervi Farm Ecnmics. Marchi April Revzin, P hilip. "Hardy Weed - EC' Farm Subsidies Tha t Imp ril T rade H ave Deep R ts. " \\ all Street Jurnal. May 17, U.S. Department f Agricultur. Freign Agricultural Service. W rld Agricultural Prductin. C ir ular Series WAP May Dbitz, Cliff P. and Dnald R. Kirby. " F reign investment in U.S. and rth Dakta Agricultural Land." rth Dakta Farm Research. Vl. 47,.1. July-A ug ust pp & 2. 18