Farmland remains stable investment for those in & out of the sector
A farm real estate specialist believes direct government payments to farmers helped fuel additional land purchases last year along with improved crop prices.
Farmers National Company’s Randy Dickhut says parts of Iowa, Illinois, and Indiana saw increased farmland sales around the fall harvest closing in near 2012 to 2014 prices.
“It brings extra cash, less borrowing is needed by those farmers and so that frees up some capital to buy that farm,” he says.
He said 2020 also had a rise in outside ag investors. “They wanted a long-term safe investment and also anything to do with food and ag during COVID became more important,” he says.
Farmers National Company reports land sales volume was up 35 percent during the final quarter of 2020 compared to last year despite a normal to lower supply of land for sale and Dickhut expects that trend to continue.
Tyler Pedersen is a commercial lender for Wells Fargo in the Eastern Corn Belt. He says as COVID has sped up mergers and acquisitions in many industries, farmland remains an attractive investment for outside companies especially with low-interest rates.
“They have that excess cash to use and a lot of people will look into farmland. You might see it rise a quarter to a third within the next year or two,” he says.
Pedersen recently spoke on land and investment trends during the Michigan Agri-Business Association’s winter conference.