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Recreational pressure raises land value
Farmland values rise, even for marginal land

BEMIDJI, Minn. (AP) - Walker area real estate agent Norm Stubbs recalled that locals were shocked a few years ago when he sold a piece of Cass County farmland for $1,000 an acre.

Today, Stubbs said, that same piece of land would fetch more than twice as much. "A 40-acre parcel these days brings roughly around $100,000," he said. "I've seen some go as high as around $130,000. For around here, the more wooded, the better." Stubbs was talking about land that's considered agricultural land, but it isn't prime acreage. It's a mix of forest and farmland, well-suited for wildlife.

While some of the acres are being bought by farmers who want to cash in on record high commodity prices, Stubbs said deer hunting and recreation is the main driving force. "People want to have hunting land," Stubbs said. "Even though there's so much public hunting land in the area, there's a certain group of people, some of which already have lake homes up in the area, they want to have their own. Most of the people that are buying it are from the Twin Cities market."

The land grab is happening in a handful of other counties, too, from Detroit Lakes in Becker County, eastward to Cass, Crow Wing and Aitkin counties north of Lake Mille Lacs. Lands that were once used for small-scale crop production or livestock pasture are being converted to recreational lands, used for hunting or as weekend playgrounds for ATVs. Will Yliniemi, an extension educator for Becker and Hubbard counties, said the recreational pressure is slowly changing the character of the landscape. Large farms are being divided into 20 or 40 acre parcels, where the new owners often build homes or cabins. "You start breaking apart farms by selling off chunks here and chunks there, and then those probably will never have the capacity of going back into ag production," Yliniemi said. "I think that fragmentation is the biggest issue that I see."

Yliniemi said it's having an affect on local ag economies. "As that acreage comes out, well, it changes the dynamics," he said. "The equipment dealers leave and the local elevators and feed stores, and the communities lose their identity a little bit."

Land speculators are also buying property in north-central Minnesota. Roger Tinjum, president of an appraisal service in Detroit Lakes, said that with double- and triple-digit increases in land values, people see even marginal farmland as a good investment. But he's not sure how long it can last. "There's always cycles," Tinjum said. "If you go back to the 70s and 80s and we had strong value, we had strong commodity prices, then in the mid-80s, the late 80s, you had the bust. I'm not going to be a doomsdayer, but I anticipate that someday there's going to be a downturn again."

Demand for housing is likely to put added pressure on marginal farmland prices. The population is growing in north-central Minnesota, and that trend is expected to continue. Farm Service Agency state director Perry Aasness said that means farmland prices are likely to stay high for now. "Into the future, more and more competing pressure in some of the transition areas in the state, maybe perhaps north-central Minnesota, some of the areas surrounding urban areas where there's competing uses, that land may be used for something other than agriculture," Aasness said. "We may continue to see a lot of increases in the farmland values in some of those areas."
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