Stearns County farmland price per acre

Wow - it's hard to believe that January is coming to an end already! It feels like I just celebrated the New Year, but I've been busy with events and meetings for the Minnesota Corn Growers Association and my family's farming operation so the month has really flown by.
 
Earlier this week I came across an interesting article about farmland prices a little closer to home, in Stearns County. In fact, we farm some land in Colfax township, which is right along western Stearns County. Some highlights from the article, written by Kirsti Marohn of the St. Cloud Times, are as follows:
 

• The price of farmland in western Stearns County is reaching record levels. Sales for more than $5,000 per acre are becoming more common.
• In fact, in Raymond Township, the price per acre went up almost $5,000 just in the last 5 years - from an average of $2,241 in 2007 to a sale of 75 acres for $7,224 in 2012.
• Interestingly, "for the first time in almost two decades, land in western Stearns County is worth more than land on the fringe of the St. Cloud metro" according to Stearns County Assessor Gary Grossinger.
• According to a local appraiser, recent sales prices have been in the $5,500 and $6,500 range.
• Many farmers are looking to expand, pushing prices higher and making it harder to find available farmland. And farmers are buying the land - not outside investors. "It’s mainly large corn or sugar beet farmers taking the opportunity to buy adjacent land to expand," according to Mark Koehn, an appraiser for Stearns County who specializes in farmland.
• Much like the larger economy, there is always an element of uncertainty that casts a shadow on what has been a bright spot in the economy. Agriculture has been very strong for the last couple of years, but everyone knows that could change quickly if prices drop or if supplies outpace demand.

To read the full article, you can go to: http://www.sctimes.com/apps/pbcs.dll/article?AID=/201301280245/NEWS01/301280018 

If you think now would be a good time to sell your farmland, or even just have it appraised to see what the market value looks like right now, please give me a call at 320-894-7528 or e-mail me at noah@farmlandman.com and I will help you out!

Sincerely,
Noah Hultgren
noah@farmlandman.com 
320-894-7528

Minnesota Land Economics

An interesting source for information on recent sales of farm land is the University of Minnesota's "Minnesota Land Economics" site, which is available here:

http://landeconomics.umn.edu/MLE/landdata/FarmLandSale/RunReport.aspx?RI=3155

From the base page, you can select the jurisdiction you're interested in - in most cases it's most helpful to look at counties, but you might also be interested in watersheds, major river basins, or NASS districts - the specific county (or other geography) you want, and a set of other attributes. This can include years, acres, price per acre, or total sales price. From there, just click on "Generate Report" and you'll get the data you're looking for.

For this blog entry, I looked at Kandiyohi County's farm land sales from 2009, 2010, and 2011, and found a total of 60 sales, with average per acre prices ranging between $2,000 an acre and $6,135 an acre. The maximum price was $7,869 per acre, from a sale in Willmar township in 2011.

If you wanted any help in exploring the Minnesota Land Economics site, give me a call at 320-894-7528 or send me an e-mail at noah@farmlandman.com.

Sincerely,

Noah Hultgren
noah@farmlandman.com
320-894-7528

The cure for high prices is high prices

I just came across another very interesting article written by Dan Piller in the Des Moines Register, titled "Iowa farmland prices hit new record, but boom won't last". The article shows that although farmland prices have soared in the last couple years, farm input costs have risen even faster, commodity prices will eventually come down, and interest rates will also eventually go up. Some combination of these events should lead to a slowdown in the market, or even a slow decline in farmland prices.

The article includes quotes from Mike Duffy of Iowa State University Extension, who recently published an "annual land price survey that showed a 24 percent rise to an average of $8,296 per acre in Iowa" in 2012. Check out the map below for more details - and note that the biggest increases in land prices were all in Northern Iowa, which means similar trends are likely spreading into Southern Minnesota.

Perhaps the most telling quotes in the article are from Bill Davis, chief credit officer with Farm Credit Services of America. Davis "said the increases in farmland values have been driven by three factors: strong domestic and export demand for commodities, historically low interest rates, and strong farm income."

"We believe at least two of these three factors will reverse over the next three to five years,” Davis explains. “The most likely event is a significant reduction in net farm profit levels as we see supplies respond to higher demand levels for commodities. Interest rates also are likely to increase eventually, making alternative investments more attractive than they have been recently.”

Many people remember the farm crisis of the early 80's, but not many believe that it will happen again. As the article states: "Iowa farm values soared in the 1970s in a commodity and land boom similar to today, only to crash spectacularly in the first half of the 1980s. Not until 2010 did Iowa land values return to an inflation-adjusted level of $5,770 per acre."

"Duffy said that because farmers are in better cash positions today than three decades ago, he didn’t think Iowa farmland values were vulnerable to a steep dive. “High land prices kept going higher in the 1970s, even when farm profits narrowed,” Duffy said. “That won’t happen this time.”

If you are interested in selling your farm land at high prices, please contact me. I can perform an appraisal on your land or help you list and sell your property quickly for a fair price. 

Have a great week!

Sincerely,

Noah Hultgren

noah@farmlandman.com

320-894-7528