SOURCE: Murray Wise Associates LLC

Murray Wise Associates LLC

December 09, 2010 16:31 ET

Investor Demand Exceeds Current Supply of Quality Farmland

DES MOINES, IA--(Marketwire - December 9, 2010) - With prices on quality farmland exceeding $7,000 per acre in some cases, farm families in Iowa and other midwestern plains states rich in agricultural land have options that never existed before, according to agriculture expert John Kirkpatrick.

"Right now, we're seeing a significant influx of investor dollars into farmland nationwide, and demand is highest for quality farmland in Iowa, Minnesota, Nebraska, Kansas and South Dakota," said Kirkpatrick. "In fact, the demand exceeds the current supply. As a result, farmers now have possibilities they have never even had the opportunity to consider. With sound advice, farm families can now lock in long-term value that will enhance the wealth of their families for generations," said Kirkpatrick, executive vice president of Murray Wise Associates, located in Clarion, Iowa. For the past three years, the Clarion, Iowa office of Murray Wise Associates, LLC, has marketed 17,960 acres privately, with 91 percent of those acres, or 16,340 acres, sold to investors. Sixty-six percent of those acres were leased back to the previous owner and/or the tenant who brought the company the offering.

"Farmers haven't always factored price appreciation into the total return on their investment, because they've always regarded their land as a permanent investment. But they've never seen values like we're seeing now. People keep asking me how long this will last, and the short answer is that nobody knows. The values are sound, so they won't disappear overnight, but the window of opportunity won't remain open forever," said Kirkpatrick. "Over the past three years, more than 90 percent of our private sales have been to investors. This opens the door for farmers to cash in on their land and lease it back."

"Some people are starting to talk about a farmland bubble, but we're nowhere near that point. You see bubbles with assets that don't ordinarily produce income, such as second homes and technology companies without earnings or dividends. Quality farmland has a built-in safeguard in that it produces products we'll always need. We're seeing a realization of the value that has been there all along," said Kirkpatrick.

Opportunities for farmers and owners of farmland include:

  • Expansion. This is a great opportunity for farmers who would like to expand their acreage base by leasing additional land. This may include land being sold by the current landlord or land expected to come up for sale in the same geographic area.
  • Succession planning. A perennial challenge for farmers has been that of dividing the assets among heirs. "Often, after a couple of generations, you'll have a dozen or more heirs, including some who enter professions other than farming. Today's strong demand for quality farmland makes it much easier for farmers to sell their land to divide the proceeds among their children and grandchildren," said Kirkpatrick.
  • Selling and leasing back the land. "In the past, many farmers sold their land to reduce their debt, then leased it back and continued farming. However, more than 75 percent of Iowa farmland is now debt free, so the motivation has changed. Now, farmers can lock in today's strong prices, then lease and continue to farm the land. They can literally have their cake and eat it too," said Kirkpatrick.
  • Considering an auction to ensure the most efficient market price. "Nothing establishes value more efficiently than a well-run auction, so this ensures that the seller doesn't leave money on the table by accepting an offer that doesn't reflect the current market," said Kirkpatrick. "However, even for land sold in private negotiations, the growth in farmland auctions creates a more efficient market by establishing market prices for comparable land."

Murray Wise Associates LLC is a national leader in selling agricultural land through auctions throughout the United States, plus private treaty sales and listings, management and consulting, with an emphasis on the midwestern plains states, such as Iowa, Minnesota, Wyoming, Montana, the Dakotas, Nebraska, Kansas, Oklahoma, and Missouri. Individuals seeking additional information may contact Kirkpatrick at 515-532-2878. More auction information.

Contact Information

  • For more information:
    Carl Carter, APR
    205-378-9290

    Lindsay Fernandes
    205-909-3705