November 2010 Farmland Price Report #2Note that this is the second in my series of November 2010 farmland price reports. Over the next few days I will be adding reports on international farmland prices, U.S. farmland cash rents, institutional investors in farmland, much on the subject of land acquisition globally by foreign ownership, and a lengthy commentary concerning the current upside and downside risks of investing in farmland in 2010.
by big picture agriculture
by big picture agriculture
My first November report also includes much on farmland valuations by individual states: Third Quarter Federal Reserve District Bank Reports on Farmland Prices. This second report is an amalgamation of random news articles on the subject gathered over the past three months and does not include every state.
Land values shoot upward with commodity prices (Iowa) — On Nov. 1, 2009, ISU's annual farmland value survey said the statewide average was $4,371 per acre. Black Hawk County was $5,434....The Iowa Farm and Land Chapter #2 Realtors Land Institute recently reported high-quality farmland in Northeast Iowa average $6,219 per acre in September, up nearly $240 since March....In a recent sale, two farmers fought over 80 acres of farmland in Northwest Iowa with no development prospects, Duffy said. It sold for $13,950 per acre....Roach Farms, a rural real estate company in Plainfield, recently sold marginal farm ground with a corn suitability rating in the low 60s for $5,600 per acre. President Ed Roach said there's a lot of interest in land, especially from investors.
Iowa farm values climb 13 percent in last year — The Chicago Fed doesn’t put a dollar amount on land values. In September the Iowa Realtors Land Institute said values of Iowa farms had risen 8.5 percent from the previous September to a new statewide average of $4,518....Iowa’s record land price is an inflation-adjusted average of $5,711 in 1979. That average price fell by more than two-thirds in the following decade, contributing to Iowa’s worst farm depression since the 1930s.....“I’m getting calls all the time from investors, many out of state, wanting the opportunity to buy Iowa farm land and there just isn’t much available on the market,” Bruere said. He noted that a 160-acre tract of land in Madison County appraised at 3,800 per acre sold for $5,200 an acre at an auction earlier this month. Similarly Randy Hertz of Hertz Farm Management of Nevada reports “very heavy demand” for farm land. The Hertz company has already recorded two sales of land, in Dallas, Guthrie and Linn Counties, that brought more than $8,000 per acre this fall. Several other sales generated prices in excess of $7,000 per acre, Hertz said.
Supervisors sell farmland near Laurel at public auction — Recent figures suggest that the average value for an acre of Iowa farmland is $4,518 per acre, making the $450,000 bid on par with the statewide average, considering the number of acres available.
How High Will Farmland Prices Go? — In Plymouth County in northwest Iowa, 80 acres of bare farmland recently sold at auction for $7,500 per acre. That farm has 74 crop acres and a 54.8 CSR. In Hancock County in north central Iowa, 98 acres sold at auction for $6,442 per acre. It has a weighted average CSR of 74.9 and 95.8 tillable acres. In Mills county in southwest Iowa, a 371 acre farm sold for $2.3 million. It has 340 crop acres with an 82.6 CSR. Sale price equates to $6,260 per gross acre or $6,832 per crop acre and $82.71 per CSR point per tillable acre...."We are seeing a big expansion in the number of acres being farmed by individual farmers and farm families. They are trying to farm to make a living and we're seeing a lot of rented base. This is adding a lot of risk and a new dimension of risk we haven't seen before."
Are farm payments still necessary with prices now high? — 74 percent of Iowa farmland is paid for, and 54 percent of Iowa's farmland is rented or farmed by non-owners.
Land's back in the picture — The frenzied activity, interest from nonfarm buyers and accelerating prices are reminiscent of behavior that contributed to the 1980s farm crisis.... Examples of some recent per-acre cropland sales: $8,100 near Shelby, Neb.; $8,525 in York County, Neb.; $7,875 in Harden County, Iowa.... from rangeland in the west, valued at a few hundred dollars an acre; to irrigated cropland, approaching $5,000 in some areas; to dryland cropland, about $4,000. Irrigated farmland in eastern Nebraska, perhaps the most comparable to Iowa, had an average value of $4,890, according to the latest survey. “We're much more heterogeneous,” said Bruce Johnson, an agricultural economics professor at the University of Nebraska-Lincoln and author of the Farm Real Estate Market survey. “We're in such a transitional area of the country,” he said, from less than 900 feet above sea level in Richardson County in the southeast to more than 5,400 feet in Kimball County in the southwest.
Johanns gets good, bad economic news — Knudsen said a parcel of nonirrigated, marginal farmland in northeast Nebraska recently sold for $4,500 an acre. But like most recent land sales, he said, the buyer was a nearby farmer who paid cash. Farmers are not carrying large debts, he said, which means a drop in farmland prices would not be as damaging as it was in the 1980s when debts were high. And if a farmer does borrow money, he said, interest rates are low and grain prices are still healthy.
Farmland prices hit record high — An annual update from the U.S. Department of Agriculture puts the average value of Illinois farmland at $4,650 an acre for 2010, topping the previous high of $4,550 set in 2008.
Despite higher prices, farmland sales remain brisk — The land ended up selling at auction earlier this month for $8,100 an acre, a price Hannagan believes is a record for Vermilion County farmland. The land will continue to be farmed....At an auction earlier this fall, Busby sold two tracts of farmland southwest of Catlin for $7,200 and $7,175 an acre. The land will continue to be farmed.....
No Sign of a Farmland Price Bubble Yet — Sept. 14, 2010: Farmland prices in the state as of July ranged from $6,302 to $8,797 per acre for Class A ground, $4,700 to $6,500 for Class B ground, and $2,502 to $7,000 per acre for Class C ground. “Farm real estate (value) remains strong,” said Hinds, who noted Illinois farmland values from 1970 to 2010 appreciated annually by an average of 5.9 percent.
Farmland prices trend upward — During a Nov. 16 auction, farmland near the intersection of 120th and Limestone roads sold for $2,450 an acre. “To my knowledge, that’s the highest price paid in Marion County,” Bob Watson of The Citizens’ State Bank in Hillsboro said. “I would think that’s a new record.”
Mason & Morse Ranch Company Announces Areas Largest Farmland Auction in Kansas Dec. 2, 2010 — 15,500 acres of top-quality cropland in the northwest territory of Kansas. The size of the acreage being set for absolute auction sale represents one of the largest amounts of cropland acres ever offered at auction at one time in western Kansas.
Drop in Ind. farm prices makes land a tough sell — A 159-acre tract west of Zionsville that once listed for $3 million sold in late September for about a third of the original asking price. The owner of a 55-acre farm in Boone County has dropped his asking price by $300,000, to $1.3 million, the newspaper reported. "We're going through the biggest re-pricing of real estate in the history of the modern world," said broker Ross Reller of Colliers International. "That's not an overstatement, that's a fact."
August 2010: Indiana Farmland Values & Cash Rents: Renewed Strength in a Weak Economy — For the state as a whole, the 2010 survey found the average value of bare Indiana cropland ranged from $3,501 per acre for poor quality land to $5,310 per acre for top quality land. Average quality cropland had an average value of $4,419 per acre. For the 12-month period ending June 2010, there were increases in all three land qualities. The value of top, average, and poor quality land increased 6.3%, 5.5% and 4.5%, respectively.
Indiana farmland values growing — While the recently released results of Purdue University's 2010 Indiana Farmland Value and Cash Rent Survey show land values increased between 4.5 percent and 6.3 percent statewide, the region didn't fare as well. No matter the soil productivity, an indicator in land prices, Northwest Indiana land values increased by less than 1 percent.
Institutional investors eye south-central Idaho farmland — Officials at investor groups and lending institutions say farmland in south-central and eastern Idaho is being targeted by institutional investors who want to buy it and then lease it back to farmers. Pension funds, foundations and endowments want a hedge against inflation and a safe place for their money.
Northwest Ohio Farmland Sells for $2.985 Million in Schrader Auction — Approximately 410 acres near Napoleon, Ohio sold for $2.985 million Thursday, Oct. 28, in an auction conducted by Schrader Real Estate & Auction Company....One buyer purchased four tracts totaling 178 acres at an average price of $8,111 per acre. "A portion of this acreage has a history of rotating vegetable production," said Evans. The second buyer purchased four tracts totaling 232 acres for an average price of $6,645 per acre. "Out of that acreage, 70 acres had been bid by a competing buyer at $9,385 per acre, and 162 acres had bids at $5,349. The difference reflects the variation of soil types and the suitability for rotating vegetable production," said Evans.
Investors seeing farmland as safer bet than stocks - latimes.com — In California, investors from countries including Spain, Switzerland, China, Egypt and Iran collectively boosted their holdings 2.5% from February 2007 to February 2009 to 1.08 million acres — about 5% of the state's total farmland.