The average value of U.S. pastureland rose 4.3% through the start of this year to $1,200/acre, according to USDA. That’s another new nominal high, but one-third the pace of the booming cropland market, where values inflated another 13% to an average of $4,000/acre.

Low interest rates, low returns from other types of investments and high livestock prices continue to support pasture values. Pasture prices continue to climb — despite the ongoing decline in the country’s cattle herd — as producers scramble for grazing land as a less costly alternative to grain-based rations.

Kansas feedlots are paying an estimated $1.19/lb. to finish steers, and losing $112/head, according to August projections by Kansas State University. That’s more than double the 42¢/lb. of gain that Flint Hills pasture owners charged for summer leases based on weight gain. Little wonder that 97% of available Flint Hills pasture was contracted by mid-April.

Northern Plains spike

Regionally, pasture-value changes continue to vary widely. Price inflation remains steepest in the Northern Plains, where values jumped 18%. That’s down from last year’s 22% spike, but more than four times the national average. Elsewhere, prices rose in the single digits, from 8% to 9% across the Lake States and Corn Belt, to 4% in the Delta and Appalachian states and 1% to 2% across the Pacific, Mountain and Southern Plains regions.

2013 Pasture values and lease ratesPasture prices in the Southeast finally appear to be stabilizing, slipping just 1.5%, for the 12 months through Jan. 1, vs. last year’s 7% drop. For the 12 months through this year’s second quarter, pasture prices in Alabama, Florida and Georgia are up an average of 1.7%, according to Mid-South/Southeast Farmland Market Trends, a quarterly survey.

Pasture-price increases are strongest in the western Corn Belt, where last year’s high grain prices and lease, and royalty profits from shale oil and gas development continue to propel the value of all tillable land. In North Dakota, epicenter of the Bakken shale oil fracking frenzy, pasture values spiked nearly 29% to an average of $630/acre. This leap still trails the 41% rise in North Dakota cropland values, and suggests buyers may be bidding up pasture tracts that have the potential to be converted to row-crop production.

In South Dakota, native rangeland values inflated 23% to $909/acre for the year through Feb. 1 period, according to South Dakota State University (SDSU). Tame pasture values climbed 27% to $1,542/acre.

A new study published in March by SDSU estimates that 1.3 million acres of grassland were converted to crops in the Dakotas, Minnesota and Nebraska between 2006 and 2011. Such sod-busting for corn and soybean cropping has been concentrated in the Dakotas, east of the Missouri River. The magnitude of this conversion is similar to the peak rates documented during the 1920s and ’30s, when tractors and other mechanized equipment came into widespread use, say study authors Christopher Wright and Michael Wimberly.

Surveys of market conditions through this year’s first half indicate that pasture values continue to inflate at a double-digit pace across the West Central Plains (Kansas, western Missouri and Nebraska), and by single digits elsewhere, according to the Federal Reserve. Pasture values are up an average of 15.7% through June compared to a year ago across those states.