Northern Ag Network
posted on October 09, 2012 16:40 :: 744 Views
There's a new term land brokers are bandying about these days -- tillable pasture. It's behind some of the biggest increases ever seen in pasture prices, most notably in regions like the Northern Plains and the Corn Belt.
According to the USDA's latest land values report, pasture values in the Northern Plains, jumped 21.9% over the last year. In the Corn Belt, the increase averaged 8.6%. Within those regions some states were strong standouts, specifically South Dakota, which registered the biggest year-over-year increase at an average of 25.5%, taking per acre average pasture values to $590.
It's no coincidence that the strongest increases in price were in areas where the value for tillable land is also skyrocketing. This begs the question, just how much of this pasture land will be planted in corn, wheat and soybeans next year?
South Dakota's Ron Ensz says demand for pasture land is high and, in some areas in mostly the central and eastern portions of the state, corn and soybeans will be planted on much of this acreage next year. In the west, it's more likely wheat will be set in. But, Ensz adds, cattle producers are holding their own in this competitive environment.
"There is more demand for grass right now, and the cattle market is up. Given what has happened to the price of grains, many cattlemen and feedlots are focused on grass as a lower-cost of gain. We just had a 30,000-acre grass ranch in northwest South Dakota sell to a big Kansas feedlot. They wanted it to graze yearlings on, and then bring them back to the feedlot and put them on grain. Right now, grass is a hot commodity."
In the Southeast, despite the availability of almost year-round grazing in some areas, USDA reported a loss in pasture values of 7%. The worst decline came in Georgia, where drought hit many parts of the state hard over the last 2 years. But those negative numbers are mostly skewed by metro area sales around Atlanta, and don't reflect what's really happening on the ground, says Wally Binns, a realtor with J. Durham and Associates out of Albany.
Binns says they are seeing a lot of pasture land sell right now, much of it destined for row cropping.
"In cases where this pasture can be row cropped, we're seeing prices between $2,000 and $2,500 an acre," he says. "A lot of folks are putting in peanuts and cotton. Cattle numbers, on the other hand, have been going down. But if you've got land that can be irrigated and turned into farmland, its value is on the rise."
According to the USDA report, those states with double-digit increases in pasture land values over the last year included: South Dakota +25.5%, Nebraska +24.5%, North Dakota +19.5%, Kansas +17.3%, Iowa +13.2%, New Mexico +12.9%, Illinois +10.7% and Oklahoma +10.6%.
Posted by Northern Ag Network