High Crop Prices Turn More Midwest Grassland into Cropland

By Wendy Reuer | October 18, 2013

When cattle producer Jason Zahn aims his pickup across the gravel roads of North Dakota, he doesn’t see as many native grasses dancing along the prairie. Instead, he sees more and more black.

He sees tilled dirt or burnt fields in the middle of a conversion from grasslands to cropland.

It’s a change that is being pushed by record-high crop prices, but one that can affect those inside the agriculture industry to small-town retail shops that rely on hunting as their economic backbone.

“As a rancher who makes his living on the grass, it’s tough to see it,” Zahn told The Forum. “But, if they (farmers) can make more money by breaking it up, there’s not much a guy can say.”

Some of the most notable changes in North Dakota are in biologist Renae Heinle’s south-central North Dakota Game and Fish Department district. She said 12,000 acres will be transformed from conservation lands to crop lands this year, a decrease over last year’s conversion of 22,000 acres in her district. The district includes Griggs, Steele, Traill, Stutsman, Barnes, Cass, Logan, LaMoure, Ransom, Richland, McIntosh, Dickey and Sargent counties.

Across North Dakota, 38,000 acres of Conservation Reserve Program lands will be plowed under this year.

The National Agricultural Statistics Service did not have a current number of acres turned from pasture land to crop land.

Heinle’s office helps administer the CRP and PLOTS (Private Land Open to Sportsmen) program among other conservation programs.

CRP and PLOTS are conservation programs that pay landowners to keep their land in natural grasslands. The programs have variations that allow for hunting to occur on the land, and some allow ranchers to graze cattle.

Historically, the land used for conservation is considered less-than-prime production farmland, but modern technology and methods now allow for a wider range of land uses than before.

“That’s where it is getting kind of hard, because most of this land that is getting broken up should never be broken up,” Heinle said.

Why the change?

The size of the check farmers receive from their crops at harvest time is a major reason land values and rent prices are increasing.

Commodity prices have risen tremendously since 2007 and skyrocketed to record highs in 2012, said Andy Swenson, agricultural economist at North Dakota State University.

A high profit is a hard incentive for landowners to turn down, he said. And farmers who rent know they can get a good return when handing out the rent check is more likely to pay higher premiums than those who want the land for pasture or hay.

“That’s been the carrot, so to speak, or the incentive to break out pasture land to cropland,” Swenson said.

U.S. Department of Agriculture figures show North Dakota’s land values increased more than 41 percent this year.

State Statistician Darin Jantzi with the National Agricultural Statistics Service said rent prices also increased, with pasture land rent up 28.6 percent in 2013.

According to the agricultural statistics agency, non-irrigated cropland was valued at an average of $4,219 per acre in Cass County in 2013, while pasture land was valued at an average of $1,763 per acre. The average rent per acre of cropland in Cass County was $106.60 in 2013, compared to the five-year average of $83.40. The rental rate in 2013 was $25.30 per acre.

In Stutsman County, where Heinle’s office is located, land values averaged $2,418 per acre for cropland in 2013, but $886 per acre for pasture land and $661 for hay land. The average rent charged climbed from $51 to $75 per acre in 2013 for cropland, and $17.60 to $21.10 for pasture land.

In nearby LaMoure County, the value of cropland per acre was $3,181 in 2013, compared to the five-year average of $1,705 per acre. Pasture values jumped from a five-year average price of $684 per acre to $1,458 per acre. Rental charges shifted from $24.90 per acre to $30.10 per acre. Crop rent went from the five year average of $71.80 per acre to $105.60 per acre in 2013.

Ralph Danuser farms about 1,400 acres in LaMoure County with his son. He said land prices affect how many acres farmers put into conservation, not just whether acres are used for grazing or growing.

“We’re going to lose a lot more CRP and the federal government doesn’t have the money to buy it back with the high land prices,” Danuser said. “The old contracts were $40 to $50 per acre. Now people are getting twice that or more for cash rent.”

A South Dakota State University study written in January states that 1.3 million acres were converted from grassland to crop land – specifically soybean and corn fields – in North Dakota, South Dakota, Minnesota, Iowa and Nebraska between 2006 and 2011. The study states the rate of grassland conversion equals deforestation rates in Brazil, Malaysia and Indonesia.

Ninety-nine percent of pre-settlement tall grass has been lost, the study stated.

A second study by the Environmental Working Group claimed 1.9 million acres, or 3,000 square miles, of wetlands went under the plow from 2008 to 2011.

With the increase in corn prices and the drop in grazing acres, the number of cattle in the U.S. is dropping. Although cattle numbers have bucked that trend in North Dakota by increasing, the overall supply of cattle in the U.S. is shrinking. That may eventually cause the price of beef in grocery stores to climb.

“It’s like anything in the marketplace, supply and demand, so if the supply is less, it is should increase prices,” Swenson said.

Like cattle producers who need grasslands for grazing, hunters need grassland and wetlands to provide a natural habitat for their targets.

While Danuser no longer raises cattle, hunting is an important aspect of his family’s life. Three years ago he enrolled about 140 acres of his land in CRP and PLOTS. Over the years, hunters from around the nation have traveled to his land.

Matthew Olson, regional representative for Pheasants Forever, said the loss of wetlands and natural grasslands is seen across the state in a continual downward trend of wildlife numbers.

“Our pheasant numbers are down,” Olson said. “If we don’t start preserving our land, our habitat, all of our numbers are going to go down.”

If this happens, hunting in the state will be less of a draw and rural and small towns, many of which depend on the sport to survive, will begin to feel the sting, Olson said.

He said the small-town cafes, resorts and bars that dot North Dakota’s landscape depend on hunters who boost business during the hunting seasons. Even urban retail numbers would be affected, he said.

An International Association of Fish and Wildlife Agencies study shows 2,252 jobs in North Dakota and 12,419 in Minnesota were related to hunting in 2001. The sport also brought in more than $214 million to North Dakota and generated more than $1.3 billion in Minnesota in 2001.

“You have all these hunters going into these small towns, bringing in money,” Olson said. “If there is no habitat, there is no hunting and it’s the small town that suffers.”

Swenson believes crop prices – the driving force behind the conversion to crop land – have peaked and will likely begin to dip.

“I don’t expect that incentive to continue,” Swenson said.

He said there has already been a noticeable drop in 2013, with corn prices dipping from $6.85 a bushel last year to under $4 this year.

Zahn, who is also president of the North Dakota Stockmen’s Association, raises about 500 cattle near Towner. While Zahn admits watching crop lands eat up available pasture and hay land for his own operation is unsettling, he said producers should look at the silver lining, and use this time as an opportunity to find their own innovative ways to move forward.

“It should try and entice us ranchers to come up with a better variety of grass,” Zahn said. “There are things we can do, too. We can try and utilize technology more, just like farmers have.”

Topics USA Agribusiness Minnesota North Dakota

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