By Shannon Sand
Nearly 40% of all agricultural land acres are in cash, share, or other lease arrangements (U.S. Census of Agriculture, 2012). This means that many farmers and ranchers have to rent land in order to stay in business. The cash rental rates for pasture/ rangeland in South Dakota last year saw some fairly large increases across the state. Despite a downward change in feed and live cattle prices in 2015, cash rental rates still increased. The state average for pasture/ rangeland rental was $31.40 per acre in 2015 and $28.40 in 2014. That was a 10.5% increase in rental rates in just one year. However, with the drop in cattle prices and the volatility in the market it appears unlikely that this increase will be able to continue in the coming years. Preliminary data from the Land Value Survey conducted by SDSU suggests an increase in pasture/ range rental rates did occur in 20161. However, the full land value report will not be available until June 2016.
Looking Forward
While there appears to be an increase in pasture rental rates for 20162 it is unlikely to continue into 2017 based on commodity prices, continued decreases in farm and ranch income, and the volatility in the market. Given the volatility in the market and the decrease in market prices it will be extremely important for producers to know their breakeven prices and to be very conscientious of the price they can afford to pay for lease ground in 2017.
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