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Good Farms ‘Being Snapped Up Like Crazy’
By Debora Van Brenk , The London Free Press Wednesday, September 11, 2013 Soybeans grow in Leamington, Ontario on Wednesday, September 11, 2013. (DEREK RUTTAN, QMI Agency) A three-year frenzy for farmland is starting to cool — but only slightly — as grain prices continue sliding from last year’s lofty heights. Even so, don’t expect land prices to drop anytime soon, says a new national real estate report. It shows acreage has been a particularly hot seller in Southwestern Ontario, where it’s not unusual to find acreage selling at twice the price of a few years ago. “Farming has been on an enormous high,” said David Brown, executive vice-president of Re/Max that produced the farm market trends report. About 40% of acreage on the market saw multiple purchase offers and there continue to be a lot more interested buyers than sellers, he said. “The very desirable farms are being snapped up like crazy.” The biggest jump came last year, coinciding with corn prices that topped $7 a bushel and soybeans at $13-plus. But this year’s dip in crop prices is making some buyers more cautious. “That may moderate the market,” Brown predicted. He said that means prices will stabilize but are unlikely to fall. “It’s hard to forecast anything but positive,” he said, as long-term trends show there’s still far more demand for land than available acreage. The biggest price jumps in Ontario during the past three years took place in parts of Middlesex and Elgin counties. “Clearly the lustre came off in February” as crop prices started dropping, said Mark Wales, head of the Ontario Federation of Agriculture. But, apart from a decline in the 1980s when interest rates rose to 20%, land prices haven’t fallen in recent memory. Increases may slow, and sometimes even plateau, but the supply of land keeps shrinking and the world population is growing. “The long-term trend has always been upward,” Wales said. But the ups and down of commodity prices also mean anyone who has bought that rapidly appreciating land will also need some fiscal depth to make payments. “Hopefully for them, they have enough cash flow to back it up,” Wales said. The increase in purchase prices is also driving up rates to rent the land, he said. Brown said most buyers are neighbours of the sellers — far more often family farmers looking for economies of scale than speculators looking for a future flip. “They’re looking long term. They’re not interested in short-term fluctuations.” The rapid rise in prices also makes it tough to be a new buyer. “It’s good if you own it because it means you’re worth more, at least on paper,” Wales said. “The problem that such a massive short-term increase brings is that it makes it tough for young farmers.” Fifteen of the 17 rural communities highlighted in the RE/MAX farm report showed land-price increases in farmer-to-farmer sales — the Annapolis Valley in Nova Scotia and the Fraser Valley in British Columbia were the two exceptions where prices changed only slightly or not at all. — — — A sampling of farmland prices per acre (market value in 2010 in brackets) Leamington $11,000+ ($7,000) Chatham-Kent $5,000-$16,000 ($4,000 – $12,000) Middlesex East $12,000 ($8,000) Middlesex West $12,000 ($5,000) Elgin County East $10,000 ($6,000) Elgin County West $8,000 ($4,500) Lambton North $11,000 ($6,000) Lambton South $7,500 ($4,000) Woodstock/Stratford $15,000 – $18,000 ($8,400 – $8,600) Kitchener-Waterloo $15,000-$18,000 ($9,000 – $9,500) Bruce County $5,000 – $9,000 ($3,000 – $5,000) Grey County $3,500 – $6,500 ($2,500 – $3,000) Northern Saskatchewan n $1,500 – $2,000 ($650 – $1,200 in 2011) Central Alberta $3,400 – $6,500 ($1,600 – $3,800 in 2011) Fraser Valley $40,000 – $60,000 $40,000 – $60,000 in 2011) Source: RE/MAX Market Trends Report: Farm Edition 2013 Continue reading
Farmland Values Notch Another Dramatic Rise
John Luke, The Times The Wietbrock family works to harvest corn last fall on their land near Lowell. Statewide farmland values have risen by as much as 19.1 percent over the last year, according to a recent Purdue University study. September 12, 2013 4:00 am • Joseph S. Pete joseph.pete@nwi.com, (219) 933-3316 Farmland values and cash rents have risen again this year, and Northwest Indiana has some of the highest prices in the state, according to a Purdue University study. Corn and soybean prices have recently started to wilt but had reached record highs after last year’s drought, causing farm incomes to shoot up. Higher prices drove up profits, and farmers also got insurance reimbursements for lost crops. The better-than-expected farm incomes, low interest rates and strong demand have helped push agricultural land values up by as much as 19.1 percent this year, compared to last year, the Purdue study found. Cash rents rose by 9.4 to 10.9 percent over the same period. “While the 2012 Indiana crop suffered from the worst drought since 1988, the increase in farmland values did not bother to slow down,” said Craig Dobbins, a Purdue Extension agricultural economist. The average price of an acre of top-quality farmland in Northern Indiana rose by 17.3 percent to $9,336 an acre in June, compared to $7,958 last June. Average and poor quality farmland increased by about 14 percent over the same period. The recent dip in corn and soybean prices may slow or stop the growth in land prices, and even cause slight declines in some areas. But the cost of farmland has been booming in recent years. Five years ago, a good tillable acre of Northwest Indiana farmland would have fetched around $5,000, said Gene Eldridge, a Porter County Realtor, who represents various types of real estate, including farmland. Today, the price has risen to an average of more than $9,300 per acre in the Northern part of the state, according to Purdue. “Crop prices are up, and the margins are there,” Eldridge said. “That drives up the price of the land, and what farmers are paying in cash rent.” Prices, however, may have peaked for now, unless corn prices hit a new plateau, said Craig Blume, regional vice president of Farm Credit Mid-America. Strong demand, bad weather and farmers who were willing to pay a premium for adjoining parcels drove up prices for the last few years. But lending caps have started to reach their upper limits, to the point where farmers would have to rely on income from land they already own free and clear to pay off purchases of more farmland, Blume said. “It’s stabilized,” he said. “It’s reached where it’s going to go for now.” Commercial development, which had been largely dormant during the downturn, accounted for part of the demand for land. “The transitional land market – that is, farmland moving out of agriculture – seems to have sprung back to life,” Dobins said. “This is a specialized market, with transitional land value strongly influenced by the planned use and location.” Cash rents grew to $310 an acre from $277 an acre last year for top-quality farmland in Northern Indiana, which is a gain of 11.9 percent. Rent prices grew more modestly for average and lower quality farmland, increasing by 7.1 to 8.1 percent over the last year. Researchers came up with the estimates after surveying more than 260 land appraisers, agricultural loan officers, farm managers, farmers and Farm Service Agency personnel. Continue reading
John Deere Lures Africa’s First-Time Buyers of Tractors
SEPTEMBER 12, 2013 Continue reading
