IARN — Ever since the coronavirus pandemic slowed the land market down last spring, interest in purchasing agricultural land has grown. That, on top of strong commodity prices and government payments, is propelling farmers to bid more aggressively for additional land compared to the past six years.
“One thing that all the high-priced land has in common … is that they were all sold at auction!” Colton Lacina, a professional farm manager with Farmers National Company (FNC) in Hudson, Iowa, said.
Both first-time and experienced investor-buyers are entering the land market as they search for safe, long-term real estate investments in a low interest rate environment. Investor-buyers rarely outbid farmer-buyers on a good farm unless they have 1031 tax-deferred exchange funds to spend in a short timeframe. Ag land prices are also increasing in most areas of the Grain Belt with most types of land.
“At Farmers National Company auctions, we are seeing competitive bidding push prices for good cropland to levels approaching 2014 values,” Senior Vice President of Real Estate Operations Randy Dickhut said. “Average to lower quality farms are experiencing stronger sales prices, too, while pastureland increases are more modest.”
The demand for good farmland is currently outpacing the supply of farms for sale. Previously, the number of farms for sale was lower, but the demand in the farmland market matched the lower supply, which resulted in steady land prices. Now, the strong demand for farmland is one of the main factors pushing prices higher.
“In order for the seller to get top dollar in the current land market, they have to ensure there is true competitive bidding,” Dickhut said.
Higher land values bring more sellers into the market as estates, trusts, recent inheritors, and family groups evaluate whether to sell the farm or ranch to capture the higher prices. The uncertainty surrounding future tax policies may also cause sales to happen sooner rather than later.
Story courtesy of the Iowa Agribusiness Radio Network
Photo Courtesy of Agri-Pulse
