Sep 20, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin

Farmland: Time to Buy

February 29, 2012
Farmland For Sale
  
 
 

If you’ve got the cash, grab the land

Commodity prices and outside investors have driven farmland prices upward, but buying can still make sense.

Is it time to expand your opera-tion by acquiring land? The answer is yes, if you have the money and can handle cash flow, said Joel Hertz, chairman of Hertz Farm Management, Inc., at the Allen-

dale Ag Leaders Conference in late January.

"Farmland provides a secure investment, but you have to understand the risks," he added.

Hertz’s company manages more than 2,000 farms and provides appraisal and real estate services to buyers and sellers in a region that stretches from Minnesota and Indiana to Colorado.

Farm prices have been climbing since 1986, and the gains exceeded 30% in some Corn Belt states this past year. The Federal Reserve Bank of Chicago reported that farmland prices in its district as of Oct. 1 had gained 7% in three months and 25% in one year.

An Iowa State University survey of real estate brokers and others who track land values showed that the average value of the state’s farmland gained 32.5% in 2011 to reach $6,708 per acre.

Buoyed by Farm Income. Hertz puts higher net income for grain farmers at the top of his list of

forces that are driving land prices. In five of the past seven years, U.S. net farm income has beat the 10-year average of $64.8 billion, and the USDA forecast for 2011 is a record-high $101 billion.

Strong farm balance sheets also pushed land prices up. National average debt-to-equity ratios ran

as high as 30% in the mid-1980s, but now they’re down to about 10%, Hertz said.

Biofuels, low interest rates, government payments and a limited amount of high-quality land for sale have boosted price gains, he added.

Aging Farmers and Estate Sales. The aging farm population will be an important factor in land availability in the coming years. More than 40% of current landowners are older than 70, and 48% of farm acreage is owned by individuals who are 70 or older.

Iowa State University reported that 42% of Iowa farmers plan to retire in the next five years and that 44% of those have not yet identified a successor.

READ MORE
Previous 1 2 Next

See Comments

FEATURED IN: Top Producer - March 2012

 
Log In or Sign Up to comment

COMMENTS

No comments have been posted



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive the AgWeb Daily eNewsletter today!.

 
 
Enter Zip Code below to view live local results:
bayer
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions