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Pasture Land Values Reach All-Time Highs

Golden Valley News of Beach, North Dakota

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Pasture land values have reached all-time highs throughout North Dakota and South Dakota.

If you are a land owner and you plan on keeping your land it may be time to adjust these valuations on your balance sheet but don't expect these values to stay at these levels for long. If you are planning on selling your pasture land the timing is better now than at any time — ever.

Pasture land values increased 29.9 percent from 2013 to 2014 in North Dakota and 28.9 percent from 2013 to 2014 in South Dakota, according to the US department of agriculture. Pasture land values may increase slightly in 2015 but in subsequent years will likely adjust downward similar to the noticeable drop in crop land values. It s just a matter of time.

Crop land values quadruped in value from 2003-2013 in most states but have already fallen 10-30 percent since their peak in the fourth quarter of 2013 and first quarter of 2014. These fallen land values are largely driven by the collapse in corn and soybean prices. Record corn and soybean harvests nationwide in 2014 on top of record carryover stocks have driven the downward valuation of crop land. Record high crop land values are in the rear view mirror.

Everything is cyclical and land is not immune from economic cycles. The dramatic increase in pasture land values is largely driven by historic highs in beef cattle prices. While the 2015 US calf crop and the 2016 calf crop will likely experience similar values it is uncertain if these prices will be sustained.

The cattle herd in the U.S., the worlds largest beef producer, fell in 2014 to the smallest in 63 years, a Bloomberg survey showed. The same survey indicated U.S. ranchers held 87.99 million head of cattle as of Jan. 1, according to the average estimate of six analysts surveyed by Bloomberg News. That's the fewest for the date since 1951 and would mark the seventh straight year of contraction. Many analysts including Dr. Andrew Griffith from the University of Tennessee feel that much of the pressure pushing beef prices down will come from lower pork and poultry prices as production in both sectors has started gaining traction. Dr. Griffith indicated in June of 2015 that "commercial beef production through May was down 4.7 percent compared to the same time period one year ago. Alternatively, commercial pork production has increased 5.6 percent while chicken production has increased 3.8 percent the first five months of 2015 compared to the same time period a year earlier. Increased production of competing meats will result in lower prices relative to beef."

The bottom line is if you are planning to keep your pasture land you may want to make some modest adjustments in value. On the other hand, if you are thinking of selling there has never been a better time.

Kevin Pifer is a former North Dakota Deputy Commissioner of Agriculture and currently President of Pifer's Auction & Realty, the 4th largest land auction company in America according to Land Report Magazine.

This is a paid advertisement by Pifer's Auction & Realty

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Original Publication Date: July 16, 2015

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