About a month ago, the US Department of Agriculture published its annual report on the value of agricultural land in the United States. As you might expect, values were up nearly everywhere, but especially in the Midwest.
High prices on commodities such as corn, soybeans and wheat drove prices higher in the Northern Plains region, 
which encompasses states such as Kansas, the Dakotas, and Nebraska. Average farmland values increased 15.5 percent in that region, the highest increase on a percentage basis in the country.
On a per-acre basis, the most expensive farmland in the US was in Massachusetts - $12,200 per acre on average. Whew! Rhode Island and Connecticut were close behind. On the opposite end of the spectrum, an acre of farmland in New Mexico can be yours for an average of only $630.
According to the report, wheat increased 77 percent during 2007 on the Chicago Board of Trade. Soybeans soared 78 percent and corn rose 17 percent. These jumps are the primary reason for the increased values in farmland.
All of this took place and continues to take place in the face of stagnant or declining values in the broader real estate market. It is an interesting time, to say the least.
Please feel free to ask us any questions on this topic as well as any other exchange-related topics.
Ken Tharp
Providing Qualified Intermediary services for Section 1031 tax deferred exchanges all over the United States. Headquartered in Iowa, our services are available in Missouri, Kansas, Nebraska, Colorado, North Dakota, South Dakota, Minnesota, Wisconsin, Illinois, and all other states.
INTEGRITY. PRECISION. SECURITY.
Copyright © 2008 By Ken Tharp, All Rights Reserved. * Quick Update on National Farmland Prices *
Ken, I think farmland represents an excellent place to store your cash as a hedge against inflation.
if anybody believes food prices are destined to come down they don't have a good grasp on reality.
Bill Roberts
Other than 1031 Exchanges and cash sales, what is the most common financing method for tracts under 200 acres?
Bill - Nice to hear from you again. How are things?
I agree with you; farmland prices seem to be continuing their rise, albeit at a somewhat slower pace than the previous year or two. I'm anxious to see the reports as they come available.
- Ken
Mike - Thanks for stopping by and leaving a comment. I'm not the best person to ask that question to, though. Exchanges by themselves are not a financing method. They provide funds for someone to invest in farmland (if they so choose), but the investor can buy for cash with those funds or use them as a down payment and add bank or owner financing to those funds to leverage themselves into more land than their cash could buy. From personal experience, most of our clients use bank financing.
You should ask that question to Jason Smith. He'd be the guy with the answer. Thanks again for stopping by.
- Ken
Even Jim Rogers is buying up farmland in these hard times. In this article: http://farmlandforecast.colvin-co.com/2009/03/04/jim-rogers-is-buying-farmland.aspx Jim explains why farmland is such a great investment during these rough times. Above, Ken Tharp dose a great job explaining why farmland could be a great investment as well. Bill could be right as well, farmland could become a new savings account.