Strong demand grows | Farm progress

Interest in buying farmland has grown since a downturn induced by a coronavirus pandemic blanketed the land market last spring. Farmers feel more financially secure, as very high commodity prices have arrived on top of large government payments in 2020. This is causing farmers to bid more aggressively for additional land than has been the case in the past. over the past six years.

“One thing all high priced lots have in common… is that they’ve all been auctioned off! Colton Lacina, professional farm manager for the Farmers National Company in Hudson, Iowa.

Individual investors, both first-time buyers and experienced buyers, are entering the land market in search of a safe, long-term real estate investment in an environment of low interest rates. Buying investors rarely outbid farmer-buyers for a good farm unless they have 1,031 tax-deferred swap funds to spend in a short period of time. The increase in the price of agricultural land occurs in most parts of the grain belt and with most types of land.

“At the Farmers National Company auctions, we see competitive bidding pushing the prices of good crop land to levels close to 2014 values,” said Randy Dickhut, vice president of real estate. . “Mid-to-lower quality farms also experience higher selling prices, while pasture increases are more modest.”

Currently, the demand for good agricultural land exceeds the supply of farms for sale. In recent years, the number of farms for sale has been lower, but the market demand for agricultural land has remained sufficient to balance the decline in supply, resulting in stable land prices. One of the main factors driving up prices is the strong demand to own farmland right now. “In order for the seller to get the best price in today’s land market, they need to make sure there is a real competitive supply,” Dickhut said.

Higher land values ​​will attract more sellers to the market, as estates, trusts, recent heirs, and family groups will assess whether to sell the farm or ranch and capture the higher prices. An additional consideration is the uncertainty surrounding future tax policies which may trigger a sale sooner rather than later for some.

The land market will balance the increased demand for good cropland against what could be an increasing supply of farms for sale. “In a rising land market, it becomes more difficult to predict what price a farm will actually sell for on any given day, especially when there is demand from both farmers and investors driving farmland.” said Lacina.

“The best way to sell cropland in today’s market is to auction it off or in a competitive bidding form that brings together potential buyers using the real price discovery method.” David Whitaker.

Source: National Company of Farmers, who is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all of its subsidiaries are not responsible for the content of this information asset.

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