Tag Archives: values
Farm Land Values Still On The Rise
By Todd C. Elliott todd.elliott@eunicetoday.com Louisiana is following the trend up when it comes to farm land values. Mike Strain, commissioner of agriculture and forestry, said that soaring land values determined by a survey conducted by the Federal Reserve’s Eighth District of its members’ agricultural lenders should mirror Louisiana’s quality farmland value with an increase in value for the third quarter of 2013. “Louisiana land values are following the trend,” said Strain, citing a Delta Farm Press article on how farmland values rose in the second quarter of 2013. “In the next 50 years, we will need every acre available for agriculture. It will be far more economically viable as productive farmland (instead of being developed into something else). Just look at the prices of farm land today. From 6-20 thousand dollars an acre already.” According to the Agricultural Finance Monitor – which is a published report from the Federal Reserve Bank of St. Louis – quality farmland prices average $5,672 per acre in the second quarter of 2013 in that district. The latest average shows a value growth of more than 20 percent since the start of 2013. Strain said that even though Louisiana is listed in the Federal Reserve’s Eleventh District and the Federal Reserve’s Sixth District, the findings and speculations of the Eight District – which is the Midwest states including Arkansas and parts of Mississippi, Tennessee, Kentucky and Missouri – should ring true for Louisiana. “With rising farm values, both in crop value and net farm equity, further reflected in the value of land, what we now see is an ever-increasing desire to hold onto the land and increase production,” said Strain. “Furthermore, I believe land values will continue to increase relative to the value of its agricultural productivity.” Whether land is more valuable in its traditional agricultural use or in development for housing or other enterprises is a question owners will continue to wrestle with. According to recently published statistics from the Farmland Information Center website, Louisiana is seeing a rise in farms state wide. In 1997, there were 30,425 farms in the state. It dropped to 27,413 in 2002 only to rise to 30,106 farms reported in 2007. With the number of rising farm totals, there is a rise in the number of farm acreage, according to farmlandinfo.org. Much like the statistics for the number of farms, Louisiana farms saw a total of more than 8.3 million acres in 1997– which saw a dip to nearly 7.8 million acres in 2002 before rising to more than 8.1 million acres reported in 2007. The bottom line value of the land and the farms saw a significant increase in the amount of Louisiana agricultural products sold. With more than $2.1 billion in agricultural products reported sold in 1997, the 2002 numbers drop to more than $1.8 billion before climbing to more than $2.6 billion reported in 2007. Read more: EuniceToday.com – Farm land values still on the rise Continue reading
Land Owners Warned Of ‘Pitfalls’ As Values Strengthen
Farmland continues to rise in value according to the Royal Institution of Chartered Surveyors (RICS) and, with a slow upswing in the economy, greater pressure will be brought to bear on those who own farmland to release it for development. “The attraction of disposing of parcels of ground for development is bound to increase as land values continue to rise, and many farmers and farm businesses will have land covered by option agreements with developers waiting to move,” said Mike Harrison, Partner in the Landed Estates and Rural Business Group of Saffery Champness. “Our concern is with those who intend to sell not only being totally aware of exactly what they are selling and the terms of that disposal, but also who actually owns the property in the first place. “Particularly where farms have expanded over time, and comprise a number of different businesses or structures, then the owners of the land and those who operate their business over it may be different and such differences may only come to light at the time of disposal. In addition the tax treatment of the sale may vary depending on the type of structure in which it is held, for example whether the disposal will be taxed at 10 per cent or more likely 28 per cent.” While many farm businesses will have everything well thought through, properly structured and the consequences taken into account, others will not, and such a process can open the inevitable can of worms. There are many pressures on getting the ‘vehicle’ going forward right – whether joint venture, option agreement or promotion agreement for example – and an assumption made over the ownership of the land in question. It may not be until both parties are well into proceedings that the consequences of such a sale become apparent. Mike Harrison also said that with the RICS survey predicting continued future strengthening of farmland prices the same applies for farms wishing to expand and to buy neighbouring land should it become available. He says: Any purchase requires careful thought in terms of the entity that will take ownership of that asset, and the consequences particularly in the longer term, of its retention or future disposal. Agricultural land prices in the south are outstripping the national average, with non-farming investors helping push the market along and to the south of the M3 and M4 corridors. Richard Liddiard, head of farm agency for national property consultancy Carter Jonas based in Newbury, says that while the national average price per acre for arable rose to £8,193 and pasture to £6,689 the strength of the market in Berkshire and Hampshire has driven values far above that level with arable regularly achieving £10,000 per acre and pasture £8,000. The larger difference between the two land types in this region illustrates the emphasis on arable crops rather than livestock farming. The strength of commercial farmland demand is not broad-based. Indeed, surveyors note that farmers in the main are discriminating in favour of large, top quality, neighbouring plots with as small a residential component as possible. As such, there is considerable price dispersion, even in the same areas; plots that are smaller and of lower soil quality are attracting much less interest and achieving lower average per acre prices. Looking forward, surveyors are very optimistic about commercial farmland price prospects over the next 12 months. Meanwhile, price expectations in the residential arena, whilst relatively modest, have turned positive for the first time since H2 2010. This may reflect developments in the broader national housing market. “We have seen some exceptional transactions during H1 of 2013 with the larger sales being dealt with ‘off market’ showing the strength of land as a safe haven and hedge against economic ills,” Richard Liddiard from Carter Jonas. “Whilst the UK economy is showing the green shoots of recovery I am still of the opinion that we are at the peak of the market for average or less well equiped farms. This will indicate that the best in class will still rise in value and be keenly sought after by the non-farming investors who are seeking the safe haven status and IHT tax advantages that land offers. We are also seeing more farms in the market and there are some holdings that are sticking particularly if they are overpriced or do not have strong local demand to push the values higher.” Continue reading
Fed Says Some U.S. Farmland Values Surge More Than 25 Percent
Carey Gillam, Reuters | August 16, 2013 KANSAS CITY, Mo. – Farmland prices in key U.S. crop regions surged more than 25 percent over the past 12 months as demand for land remains strong despite a decline in farm income, two Federal Reserve bank reports said on Thursday. Prices paid for irrigated cropland in a central U.S. region that includes Kansas, Nebraska, Missouri, and Oklahoma jumped 25.2 percent from a year ago, according to a report by the Federal Reserve Bank of Kansas City. The jump marks the ninth consecutive quarter in which irrigated cropland values have risen more than 20 percent year-on-year. Non-irrigated cropland rose 18 percent on a year ago, while ranchland rose 14 percent, the report said. Gains were weaker for ranchland, particularly in Oklahoma and some mountain states, because persistent drought has left pastures in poor condition. In the Midwest and in some Mid-South states including Arkansas and parts of Missouri, Mississippi, Tennessee, Kentucky, Indiana and Illinois, prices paid for quality farmland rose 20.6 percent over the last year to $5,672 per acre on average, according to a report by the Federal Reserve Bank of St. Louis. However, average ranch or pastureland values for the Midwest and Mid-South district increased only about 1 percent to $2,372 per acre over the past year, the report said. The gains come even as farm income in many states is declining, in part due to reduced wheat production revenues and losses in the cattle sector, according to the Kansas City report. The reports are based on surveys of bankers, who pointed to the overall wealth of the farm sector, the current low interest rate environment and a lack of alternative investment options for the price rises. Still, there is a growing sense that values are nearing, or have reached, a peak. While most bankers expected farmland values to remain at current levels, an increasing number of bankers responding to a survey by the Federal Reserve Bank of Kansas City felt farmland values may have peaked. Compared with previous surveys, fewer bankers expected farmland values to keep rising. Among those expecting values to fall, most thought the decline would be less than 10 percent, the Kansas City report said. The Kansas City federal reserve district encompasses key wheat-producing states and largecattle and livestock production areas, while the Chicago district is dominated by corn and soybean farms, as well as large hog and dairy operations. Continue reading
