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Location Impacts Farmland Prices, Including Bordering State

Farmland values in southwest Minnesota have increased 30-40% since 2020, yet remain roughly 10% under the previous peak observed in 2013. While values remain elevated, the market has stabilized and has potential for a slight decline during a period of tighter net farm incomes. The primary buyers in the area are still local farmers, with occasional investor interest.

This part of Compeer’s territory neighbors Sioux County, Iowa, where land values have hit landmark prices near $30,000 per acre. And while location remains a key factor in land prices, proximity to livestock facilities and their valuable manure has carried more weight on farmland values in Minnesota than sales in nearby states.

The Impact of the Pork Industry

The pork industry plays a crucial role in southwest Minnesota. The economic challenges faced in recent years have had a significant impact on farrow-to-finish operations. However, there are indications of improvement in 2024, primarily due to the decrease in corn prices, which is the biggest cost for farrowing sites.

California’s Proposition 12 requirements have caused some facilities to make changes such as increasing space for sows. As pork farmers adjust operations to evolve with consumer preferences, prices for at the grocery store have risen. This comes at a time when food costs are increasing across the board for families, a contributing factor in Californian consumers recent decrease in pork consumption. This may have unintended consequences for the long-term viability of the Proposition and its impact on the industry.



The Influence of Green Energy Projects

Green energy projects, such as solar farms and wind turbines, have started to make their mark on the farmland market in southwest Minnesota too. Like many other states, there have been sales of farmland with signed agreements with solar energy companies. However, these sales have not resulted in significant premiums for the land. Speculation is still prevalent, and the Minnesota farmland market is yet to see the full impact of these projects. 

The farmland market in southwest Minnesota is experiencing both stability and growth. As the agricultural landscape continues to evolve, it is crucial for farmers, investors and industry professionals to stay informed about the trends and challenges in the farmland market.

For more information and to sign up for our monthly newsletter about agricultural and farmland valuation, visit our Appraisal Services page.

For more insights from the Compeer Appraisal team visit our blog.

Rachel

Daberkow

 
Certified Appraiser
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