We may live in a technological age, but some things hold true from this country’s founding all the way to today. Land, especially farmland, is still one of this nation’s most valuable resources.

And despite recent moderation in commodity prices, signs continue to point towards a high demand for farmland in the region and the potential for land prices to stay high or even continue to increase in 2014 and beyond.

“The trends have been for very high sales,” University of Minnesota Extension educator David Bau said. “But 2013 has been down a little bit.”

The average price paid per acre for farmland has increased in both Minnesota and Wisconsin from 2010 to 2012, the most recent year for regional data, but the rise has been much more pronounced in Minnesota. Southeast Minnesota saw the price per acre of farmland rise from the $2,000 to $4,000 range in 2010 to $5,000 to $8,000 in 2012, compared to Western Wisconsin which saw land prices start around $3,000 per acre in 2010 and top out at $3,200 over the same period.

Winona County saw some of the biggest sales over this period, with prices topping out at the Kenneth Mueller estate auction in the fall of 2012. The entire Wilson Township farm sold for $2.75 million and parcels containing only farmland sold for more than $8,500 per acre to a local farmer and more than $14,000 per acre for those acres bought for expected development.

And it’s that demand for local farmland and development that Bau said is pushing high prices in the state.

Corn and soybean prices have been high for much of the last several years, and farmers have been making a good income off cropland. With the economic recession, farmland has been a good investment, so farmers have been buying up that local land, mainly with cash in hand.

Even with commodity prices coming down recently, Bau said many farmers still have cash left over from the last five good years.

 

 

 

 

, so there is still pressure on the system for farmland. And with the recent interest in developing land for frac sand mining in the region, new market forces are coming in to keep demand up.

“Farming has been good the last several years,” Bau said. “And it has some staying power that could keep rents and prices up this year.”

While Western Wisconsin has seen its own pressures for land for use in frac sand mining, and profits have been good for farmers as well, prices haven’t risen to the same levels as Minnesota. And local appraiser Teresa Gutenberger of Badgerland Financial, said that has to do with the mixed types of land on most farms.

Southeast Minnesota has some blufflands and hilly terrain, but also has large tracts of flat land suited for tilling and growing crops. In the parts of Wisconsin Gutenberger operates, she said having a tract of land that is 60 to 70 percent tillable is a high amount.

Because the ground is less flat and more wooded, fewer crops are grown and there hasn’t been as big a crunch on the land market.

“Across the board, prices have been very conservative,” she said. “Sand has driven up some prices, but we haven’t seen a spike here.”

As to what the future may hold, both Bau and Gutenberger said land prices could go in any direction. But Bau said he is leaning for things to stay high or possibly even go higher.

Bau said there is still a lot of momentum behind land prices, and if crop prices begin to go back up, land prices could begin to climb again as well.

“We might see a small setback,” Bau said. “But the trend is for rising prices. We’ll have to wait and see.”