|
|
The Sleepy Eye Herald Dispatch - Sleepy Eye, MN
  • Land sales remain strong, input costs keep farms profitable

  • Land sales finished strong in 2013, spurred by good farmer demand for additional land, according to Farmers National Company, reporting record real estate sales of $750 million for 2013, compared to $640 million in 2012.
    • email print
  • Land sales finished strong in 2013, spurred by good farmer demand for additional land, according to Farmers National Company, reporting record real estate sales of $750 million for 2013, compared to $640 million in 2012.
     
    Activity during the first half of 2013, slowed slightly because of a surge in sales at the end of 2012 prompted by tax law changes. However, sales levels turned upward to round out the year and finished strong, according to Randy Dickhut, AFM, vice president of real estate operations of Farmers National Company. He notes that trends indicate an active pace will continue through the first half of 2014 for most regions.
     
    While land prices have stabilized compared to the double-digit price increases seen in recent years, levels are at historical highs. Prices per acre for high quality land range nationwide from $3,500 to as high as $12,000 to $13,000 per acre in areas of Indiana, Illinois, Iowa and Nebraska. Values in the Upper Midwest are also very strong with sales reaching $10,000 per acre.
     
    Land prices moving into 2014 will likely be impacted by the looming ethanol mandate, which could drop values based on commodity prices and the demand for land to support livestock in the area which could boost values.
    “Farms remained profitable in 2013 despite lower commodity prices, in part due to reductions in fertilizer expenses of nearly 30 percent,” said Dickhut.
     
    “This is prompting farm owners to continue buying premium land to expand their operations. Interest in average to medium quality land has waned, slowing activity for such property.”
     
    A price drop of 40 percent for sugar beets has impacted land values in the Northern Region (North Dakota/South Dakota/western Minnesota). Income reduction of nearly $350 per acre in some cases is taking some land buyers out of the market. Despite this pressure, values are fairly stable in this area, Dickhut said.
     
    Farmers continue to be the primary land buyers. Dickhut reports that investor interest in land has been more guarded as many are not willing to pay high prices without a guaranteed strong return. Recent success in the stock market is generating interest in alternative investments, pushing outside investors to choices besides land.
     
    “The market for farmland overall remains strong, particularly for quality land even though buyers are getting more cautious,” said Dickhut. “The impact of changes in commodity prices, expenses, and interest rates will all play into year-end results.”
      • calendar