Report: Why South Dakota, Kansas, and Nebraska Could Have Advantages Over Neighbors Because of Livestock

When Terrain Ag Agricultural Economist Matt Erickson examined more than three decades of farmland returns in a comprehensive study, one group of states stood out. While Illinois, Indiana, and much of the Eastern Corn Belt generated much of their wealth through steady land appreciation, states like South Dakota, Kansas, and Nebraska followed a different path.

Their strength wasn't simply rising land values; it was their ability to generate income.

So, what makes those states different? Erickson said it comes down to one simple phrase.

"I've heard this saying before," he said. "It comes down to plows versus pastures."

That's especially true in today's agricultural economy. Row-crop producers across much of the Midwest continue to battle shrinking profit margins as corn and soybean prices remain well below the highs seen just a few years ago. At the same time, many western areas are also dealing with drought.

RELATED: This early look in 2024 gave a flat outlook for farmland values in this Midwest state.

Drought monitor warning

"On the row crop side of things, yeah, significant margin compression without a doubt," Erickson said. "And... if you look at the drought monitor, there's some significant drought pressures out west."

Despite those challenges, South Dakota, Kansas, and Nebraska have an advantage that many eastern states don't enjoy: a larger livestock sector.

"I do think you have a couple things with regard to... cattle prices are still remaining strong," Erickson said.

That strength has helped support both ranch income and pasture values.

"If you look at the difference... crop ground versus pasture ground, pasture ground... is really being supported by a healthy cattle market, cattle prices, things of that nature," he explained.

Strong market for cattle

In other words, while corn and soybean producers may be facing tighter margins, cattle producers have enjoyed one of the strongest markets in years. That diversification helps stabilize overall farm income in states where crops and livestock often operate side by side.

"I do think when you look at the farm income side of things, yes, margin compression is occurring on the row crop side. But the livestock side of things looks relatively healthy with regard to where those folks stand," Erickson said.

That balance is one reason Erickson's research found stronger income returns in much of the Western Corn Belt, even if those returns come with greater year-to-year volatility than many Eastern Corn Belt states.

"I think you've got kind of a mix or a split between crops versus livestock in those states," Erickson said.

For landowners, that's an important reminder. While volatility may be greater in South Dakota, Kansas, and Nebraska, those states also benefit from diversified agricultural economies.

When one sector struggles, another may help carry the load—creating resilience that isn't always reflected by land values alone.

RELATED: This report looked at the decision American cattle ranchers had to make in 2025.