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July 2009 Archive for Your Precious Land

RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 35 years.

NW Iowa Land Sale Tops $8,000 An Acre

Jul 31, 2009
Mike Walsten

A recent sale in northwest Iowa sure caught the eye of market observers throughout the state. It occurred July 22 at the auction of 45.5 acres located southwest of Sheldon in Sioux County. The farm carried a CSR (Corn Suitability Rating) of 70.1, which was well above the county CSR average of 64.8. It was gently sloped and square. "I'd say the only draw back was the fact it was mostly square in shape, so mostly 1/4 mile rows," states Rich Vander Werff, whose firm, Vander Werff and Associates, Inc., Sanborn, 712-729-3264, handled the auction. Sale price: $8,100 per acre.

Sure, it was "only " 45.5 acres, so the size of the check was a little more manageable for the buyer. But consider that northwest Iowa is heavily concentrated in livestock and that livestock profits have been few and far between the past few years. That price is impressive.

Selling along with the 45.5 acres were 65.7 acres with 60.8 acres tillable. That tract carried a CSR of 70.6. But it brought "only" $6,950 an acre. "Two borders followed the center of a fairly deep grass waterway so there are many point rows and the farm was quite irregularly shaped. There were grassy strips next to the waterway. These weren't enrolled in CRP. The previous owner just baled these," Vander Werff says.

These are impressive sales. It shows there is strong demand for quality ground. That's not always the case for poor quality ground. We've seen several "no sales" lately and in each case that we've checked, the farm involved was poor quality.

If interested in seeing a copy of my newsletter, LandOwner, just drop me an email at landowner@profarmer.com or call me at 800-772-0023.

 

Illinois Land Values Slip 2% to 5%

Jul 30, 2009
Mike Walsten

 The value of Illinois farmland slipped slightly during the first six months of 2009, according to the annual mid-year survey of Illinois land values conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers. The survey indicated the value of excellent quality farmland (averaging 170 bu. per acre and more) dipped $171 per acre, or 2.3%. Society members said the value of good quality farmland (averaging 150 to 170 bu. per acre) slid $190 an acre. The value of average quality farmland (averaging 130 to 150 bu. per acre) declined $276 an acre, or 5.3%. The value of fair quality farmland (averaging less than 130 bu. per acre) fell by $225 an acre, or 5.4%.

Society members said excellent quality farmland averaged $7,200 an acre as of July 1, good quality farmland averaged $6,300 an acre, average quality farmland averaged $4,900 an acre and fair quality farmland averaged $4,000 an acre.

Eighty-eight percent of respondents said the volume of sales declined during the first half of 2009 compared to the first half of 2008. Fifty-six percent said they expect the sales volume to be less during the last half of 2009 versus the last half of 2008.

Half of survey respondents expect farmland values to decline over the next twelve months and 32% expect prices will remain stable.

In addition, Society member expect cash rents to decline slightly in 2010 by $10 to $15 an acre compared to 2009 levels.

If interested in our complete report on the survey, just drop me an email at landowner@profarmer.com or call me at 800-772-0023.

 

Bearish View On Farmland Ownership

Jul 22, 2009

Mike Walsten

Here's a bearish outlook for farmland values that's worth reading. The author lists 13 agriculture "myths" and explains how these myths will result in lower land values in the years ahead. Our view: land demand will be soft for the next several years as farmers -- the no. 1 buyers of farmland -- struggle with much tighter operating margins. The economy currently faces deflationary pressures, which will also limit demand.

However, the land market avoided the high-leverage seen in the housing market. This gives owners staying power in the face of a downturn. And demand for top-quality farmland will tend to hold up over time as well-capitalized operations expand if the right piece of property (high quality and/or the farm next door) comes available. But demand for poorer quality ground will likely remain weak for several years.

Current owners and potential buyers will also look at farmland as a storehouse of relative value, retaining purchasing power and value better than paper assets. That can be true in a deflationary environment but is especially true in an inflationary environment. Some investors are very worried about potential inflation once the economy works its way out of the current recession. This is the security factor that farmland ownership offers.

Click here to read the article. Read the posted comments, too. They are illuminating, as well.

If interested in seeing a copy of the LandOwner Newsletter, just drop me an email at landowner@profarmer.com or call me at 800-772-0023.

 

6,001 Acres Brings $27.1 Million In Ohio

Jul 07, 2009

Mike Walsten

The central Ohio land market saw a major test June 30 as 6,001 acres passed under the gavel. The sale involved the historic Orleton Farm located in Madison County. The farm featured 5,324 contiguous acres and another 677 acres not far away. In all, the farm sported 5,549 tillable acres. Halderman Real Estate Services handled the sale.

The first round of bidding concentrated on the 25 individual tracts. After that bidding closed, the auction for the entire farm as one unit began. There were four competitive bidders for the farm as a single unit. In the end, Midwest Farms, LLC, an Indiana-based farmland investment group purchased the entire unit.

"The Orleton Farm sold above our original expected range," states Howard Halderman, President, Halderman Real Estate Services, Wabash, Indiana. "We had bidders from all corners of the United States: Florida, New York and the West Coast, as well as many local interested parties. We feel the price is well substantiated by the fact that we had over 73 registered bidders. The final outcome was not surprising as we had many inquiries into the farm as a single purchase. The sale price of $27.1 million and the number of interested parties indicates continued strength in agricultural land values in the Midwest, especially for prime farms such as Orleton."

If interested in seeing a copy of the LandOwner Newsletter, just drop me an email at landowner@profarmer.com or call me at 800-772-0023.

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