Buyers Snap Up Farm Land With Prices Low

Prices for farms have continued to decline year after year but the land, when it goes to market, is quickly purchased by buyers. Most of the buyers of this farm land are local residents as opposed to speculators or those who buy and rent out farms to smaller tenants. Many feel that this is an overall more positive trend for a community and is helping to positively develop areas better than it might otherwise do so with more large scale commercial farms. In some cases these small farmers are even outbidding investors and hedge fund managers.


Many people are instead holding onto their farms and not putting it on the market in anticipation of improving future prices.


This trend is particularly true in the Midwest where low prices for the three products primarily grown here, wheat, corn, and soybeans, are only a third of their prior value and farmers are experiencing real challenges in making ends meet. Many are hoping for a rebound from these low prices which are mainly the result of production improvements in farming due to the heavy use of nitrogen to improve soil quality.


In Iowa, the Mecca of American farmland, prices are approximating $8,000 per acre of land. These prices represent a nine percent drop from earlier years and specifically from 2014. This is down from a peak of about $8,700 per acre in 2013. Iowa is the largest producer of corn and soybeans in the country.


Many owners of farmland will try to hold onto their land through thick and thin and pass it on to their heirs. Some do so for tax reasons and try to avoid the estate and gift tax. Others simply want to keep the farmland in their family line and pass down the property and way of life on to the next generation.


However, more so than anything else it is the unattractive nature of farmland to investors that is keeping the land out of the hands of speculators and in farmers hands. It would take a significant uptick in the cost of the underlying foods before speculators start to trade in farmland again. Tears of decline in prices have left them uninterested in investing in farmland though everyone realizes that farmland prices are cyclical.


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