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Jan. 13, 2012 Source: Farmers National Co. news release The U.S. farmland market continues to be hot, with values reaching a two-year high, according to Farmers National Company, the nation's leading agricultural services company. Availability of quality land is tight, bringing fast sales and top dollar for properties. "What surprises us is the rate of increase over the last 12 months," said Lee Vermeer, AFM, vice president of real estate operations at Farmers National Company. "Values are up 20 to 25 percent, compared to rises of five to 10 percent in 2010. We are looking for 2012 to be another profitable year for those selling land." Farmers National Company has seen record auction activity during the last six months as more properties are being sold at auction to maximize profits. Tight supply of quality land has also prompted buyers to look at less productive land that can be upgraded, according to Vermeer. Strong grain prices are boosting profits for farmers, prompting them to pursue land in order to expand operations. In addition, cash rents in top production areas have increased 25 to 40 percent during 2011. "Farmers make up 75 percent of the buyers in the market, despite continued strong interest from investors," said Vermeer. "Land continues to be a tangible investment that has performed well, thus the demand." While Farmers National Company projects brisk activity to continue, there are market factors that could impact the future of farm values. "Overall the upcoming year looks positive," said Vermeer. "However, poor performance in the commodity market over the next year could bring downward pressure on land values. Good weather world-wide could result in a crop surplus, dropping prices. In addition, inflation would boost interest rates, negatively affecting land values." Kansas, Oklahoma and Texas Panhandle The land market across the Kansas and Texas Panhandle farm belt continues to be strong for all classes of land. Values and activity are up over 2010. "Even areas of the plains that were hit by extreme drought in 2011 are seeing strong price increases," said Monty Meusch, area sales manager for Farmers National Company in Kansas, Oklahoma and Texas. Strong activity over the past three years is shrinking availability of property based on the sheer number of transactions that have taken place. "A record level of farms and ranches has changed hands in recent years," said Meusch. "This is leading to a reduction of properties being offered. Demand is robust for any quality land that makes it into the marketplace." Investors are still in the game, but the bulk of purchases are going to growing farm operations within 20 miles of an available property. Sales prices in Kansas of top quality cropland are selling for up to $4,500 per acre depending on location, while prices for irrigated cropland with good water in the Texas Panhandle have reached $3,000 per acre. Iowa and Minnesota Demand for quality land continues to be very strong in the North Central Region including Iowa, Missouri, Minnesota, South Dakota and North Dakota, according to Sam Kain, area sales manager for Farmers National Company in Iowa and Minnesota. Auction numbers in this region are up over 2010, leading to top sales prices for sellers. "Farmers National Company has had over 130 land auctions during 2011 in my area," said Kain. "Iowa values are up 32 percent from a year ago. An Iowa State University survey shows we are at an all-time high level here." In Iowa, top quality land is selling at over $9,500 per acre, with Minnesota values bringing in $7,500 plus per acre. The combination of high commodity prices and low interest rates has provided farmers with surplus cash. These profits are being used to purchase additional land and expand operations. "The bulk of buyers in our area are the farmers," said Kain. "While land is still a good investment for investors, farmers have been very aggressive in picking up additional acres to increase profits." Colorado, Kansas, South Dakota, Central/Western Nebraska and Wyoming Land prices in the western region of the farm belt are up 15 to 25 percent across the board in the past six months, according to JD Maxson, area sales manager for Farmers National Company in Colorado, Kansas, South Dakota, central/western Nebraska and Wyoming. A shortage of irrigated land is pushing up demand for dry land acres. Price in this region is ranging from $5,500 to $9,500 per acre for high quality tillable acres, with location, soils and topography dictating price. "Not only is demand for top land still rising, the availability of property for sale remains limited," said Maxson. "Buyers are looking for land with high productivity levels, which is a challenge." According to Maxson, a lack of investment alternatives and the volatility of the stock market are driving even more non-traditional buyers into the market. However, 75 percent of buyers in this region are still farmer owner-operators. "A year ago investors were buying more," said Maxson. "Farmers have been much more competitive in the market today, adding land to their own personal portfolios and operations." In addition to farmer and investor activity, inherited farmland is being sold. According to Maxson these owners are taking advantage of the current market dynamics to generate cash. Illinois, Indiana and Ohio Illinois is leading farmland sales trends in the East Central region, according to Roger Hayworth, area sales manager for Farmers National Company in Illinois, Indiana, Ohio, Michigan, eastern Kentucky, and eastern Missouri. Land values, as well as sales prices, are highest in Illinois, followed by Indiana and Ohio. Prices in Illinois are bringing in $9,500 per acre on average for high quality land. Values in Indiana are up to $8,000 per acre, while those in Ohio have reached $6,500 per acre. According to Hayworth, the number of land buyers in the market continues to increase as large farm owners, combined with investors, are looking to increase land holdings. Values continue to move upward and farmers and investors are paying cash for land. "More land transactions are taking place today as compared to a year ago," said Hayworth. "There has been a definite continued uptick in the number of listings and auctions within this area, as availability of land has loosened a little because of more active sellers." Arkansas, Mississippi and Tennessee Activity in the Mid South remains strong, as farmers are buying up land in cash transactions. Low supply and demand for quality land continues to drive prices up and is increasing sales of lower quality properties, as well. Activity is brisk, leading to fast sales. "We have seen prices increase up to 30 percent on top land in some areas with no sign of a slow-down," said Keith Morris, area sales manager for Farmers National Company in Tennessee, Mississippi, Arkansas, Alabama, western Kentucky, Louisiana, and southern Missouri. "Product is getting harder to find, driving some buyers to look at poorer quality farms, with plans of upgrading them." Prices for top farmland are averaging $3,800 per acre in Arkansas, $3,500 per acre in Tennessee and $3,800 per acre in Mississippi. "The market in the Mid South is hot," said Morris. "Buyers have less time to make up their mind on purchases. When they find land they want, they need to act quickly." About Farmers National Farmers National Company, an employee-owned company, is the nation's leading agricultural real estate and farm and ranch management company. The company has sold over 3,000 farms and more than $1.7 billion of real estate during the last five years. Farmers National Company currently manages more than 5,300 farms in 24 states. Additional services provided by the company include auctions, appraisals, insurance, consultation services, oil and gas management, lake management and a national hunting lease program. For more information on land listings in your region, visit the Farmers National Company website at www.FarmersNational.com Tweet |
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