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Southwestern Minnesota farmland values increase 27.9 percent in 2022

Worthington, Minn. (1-12-23)— The annual survey has been conducted of farmland sales in 14
southwestern Minnesota counties. The survey collects bare farmland sales to non-related parties
for the first six months of each year. Land values had been steadily increasing until 2014. After
reaching record high prices in 2013, the upward trend was broken as prices declined in 2014 and
continued down through 2017. The summary report for this survey is available at the county
Extension offices in Chippewa, Cottonwood, Jackson, Lac qui Parle, Lincoln, Lyon, Martin,
Murray, Nobles, Pipestone, Redwood, Rock, Watonwan and Yellow Medicine counties. This
year the increase across the 14 counties averaged 27.9 percent after a 6.4 percent increase in

Southwest Minnesota land prices peaked at $8,466 per acre then declined in through 2017 to
$6,340 until increasing in 2018 to $6,589 and declined slightly to $6,576 in 2019 and to $6,371
in 2020 until increasing in 2021 to $6,780 and reaching a new high of $6,873 in 2022. The
largest increase year to year was in 2013 with an increase of 35.6 percent. Farmland prices
decreased in two counties, Chippewa and Pipestone, but increased in twelve counties from 2021
to 2022. There was a lot of variability in the numbers from 2021 to 2022. The largest increase
was in Cottonwood County with an increase of 86.77 percent while Pipestone County

experienced the largest decrease of 8.1 percent for the sales that met the bare farmland to non-
related party transaction requirements.

Nobles County had the highest average sale price of $11,025 per acre and Chippewa County had
the lowest at $6,333 per acre. The average Crop Equivalency Rating (CER) for the 14 counties
was 68 with the highest price per CER in Redwood County at $149.68 and the lowest in Lac qui
Parle County at $86.58 per CER. The assessed values were lower than actual sale price with the
assessed value at 79.9 percent of the sale price. Historically, the assessed value would be 75 to
80 percent of the sales value. Only one county experienced average sale prices that were lower
than the assessed values in 2022. While 13 counties experienced average sale prices that were
more than the average assessed values, the lowest percentage was 69.85 in Redwood County.
Each year sales vary. Within a county, land location could have an effect on these average values
from year to year. The quality of the land sold within a county may be a factor in the wide swing
in the prices from year to year in individual counties. The number of sales in each county varies
greatly from year to year. The 27.9 percent increase is above historical increases of 1 to 2
percent. There are several factors that have an effect on land values. Farm incomes, grain
prices, interest rates, return on other investments and 1031 exchanges are often mentioned as
reasons for the increase. Farm average incomes improved in 2019, 2020 and 2021, and are
projected higher in 2022.

The 1031 exchange is for farmers or property owners who have land in an area of increased
value due to location to city or development and rather then pay taxes on large gains from the
sale of land they purchase like property or other farmland at a more reasonable price elsewhere,
which increases rural farmland demand. The reason for increases or decreases in farmland sale
prices is a combination of all of these factors. If you would like a copy of the two page
document on the trends in farmland sale prices, contact the local county Extension office at any
of the 14 counties listed above.
Which direction will farmland values go depends on several factors. Supply and demand will
determine this. The simple return on investment which is determined by rental rates will
determine how competitive farmland is compared to other investments and this will determine a
value for farmland. Corn and soybean prices were high in 2022 and remain high starting 2023.
This should have an impact on profits, farm rental rates and eventually farmland values. The
government program payments decreased in 2021 and 2022. The table below indicates average
land prices from 2017 to 2022.

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Communications at extdigest@umn.edu. University of Minnesota Extension is an equal
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