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," says Lee Vermeer, AFM, vice president of real estate operations at Farmers National Company. "Values are up 20% to 25%, compared to rises of 5% to 10% in 2010. We are looking for 2012 to be another profitable year for those people who are 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% during 2011.
Farmers comprise 75% of the buyers of farmland in the market today
Who is buying land? "Farmers make up 75% of the buyers in the market, despite continued strong interest from investors," says 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 2012 year looks positive," says 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."
Iowa farmland values continue to skyrocket, bringing record prices
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," says Kain. "Iowa values are up 32% from a year ago. An Iowa State University survey shows we are at an all-time high level here in terms of land values."
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," says Kain. "While land is still a good investment for investors, farmers have been very aggressive in picking up additional acres to increase profits."
Regional information on land values in other states are on website
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.