THE FARMLAND MARKET
By Murray Wise
In the past few months we have seen a farmland marketplace which could be described no other way than “intensely aggressive.” [We] have been recommending farmland as an investment for some time, but never anticipated the intensity we have experienced in the last six months. In the quality areas of Illinois, $2,000 per acre has become commonplace. In one of my favorite areas, North Central Iowa, land that was selling for $900 – $1,100 per acre (and begging for a buyer) 18 months ago is now meeting an aggressive market at $1,400 – $1,800 per acre.
Two of the key reasons are that in the last 12 months we have seen a subtle, yet stable move reflecting a 25 – 35 percent increase in commodity prices and a 25 – 30 percent increase in grain exports from the U.S. These two major ingredients have been extremely influential in initiating the turn-around in land values we have experienced in the last 12-24 months, after almost a five-year downtrend. Can you imagine what would happen to our marketplace if inflation rekindles significantly?
As you review the farmland investment opportunities, please keep one factor in mind, quality. It is easy to confuse priorities when one tries to locate and purchase a quality farm. Don’t sacrifice quality for what you believe to be a “bargain.” In the years to come, quality will be number one. Don’t be satisfied with less!