MINNEAPOLIS (AP) — Minnesota's farmland prices dropped last year as the agriculture industry continued to face low crop prices and reduced income.
Sales data for fiscal 2017 reported to the Minnesota Department of Revenue and analyzed by the University of Minnesota indicate that the median price per acre was about $4,600, a 5.4 percent decrease from 2016, The Star Tribune reported .
Land values are important to a farmer's equity, said Bruce Peterson, former president of the Minnesota Corn Growers Association.
Farmers who purchased land during record high prices five or six years ago are facing the greatest financial risk, though falling land prices may make it easier for farmers looking to rent or purchase land, said Mike Petefish, president of the Minnesota Soybean Growers Association.
The state's agricultural sector, which has been struggling for four years, is weak but stable, according to the Federal Reserve Bank of Minneapolis.
"We're in the third to fourth year of farm stress," said Ward Nefstead, University of Minnesota Extension economist. "At a certain point some people may have to sell land, but we didn't see it in 2017."
Despite indications that the industry will continue to struggle, the rate of decline for land value is slowing. Values saw double-digit percentage drops in 2014 and 2015.
"Land values haven't gone down as much as they could have," said David Bau, a University of Minnesota Extension educator who has been tracking farm economics in southern Minnesota for the past two decades. "Prices are starting to hold their own."
Record or near-record crop yields over the past three years, low interest rates for borrowers and technological improvements in planting, fertilizers and pesticides have helped many farmers stay afloat, said Adam Schmidt, regional appraisal manager for Compeer Financial.