April 2018 Wallace’s Farmer “MarketPlace Extra”
This ‘off-season’ time of year is when most farms that are offered to the market, sell. Not only are crops harvested, which practically makes seeing a parcel of land much easier; but also, the winter off-season is when most farm leases have expired, thus making the sale process less encumbered. That said, you will continue to see farmland sales on a year-round basis – just not as many during the growing season as during the off-season.
The highest quality farms from a production standpoint (e.g., highly productive soils, solid fertility and drainage, and high ‘farm-ability’) continue to sell well and out-perform those farms with poorer soils, waterways or other obstructions. Both farmers and investors are active in today’s market, although farmers are the more prevalent buyer. Low interest rates, good crop yields in both 2016 and 2017, and a meaningful grain market rally since the beginning of 2018 are helping to support the Iowa farmland market.
There are also negative influences that are pressuring farmland values. Primarily, low commodity prices throughout much of the past 3 to 4 years, combined with several consecutive years of weak on-farm profitability as a result, continue to keep a lid on land values. In addition, some locales have seen a spike in the number of sales in that area, which has drawn significant local capital out of the local market. In neighborhoods where several sales have occurred, this may be a marker for potential farmland price weakness on other upcoming sales in that area. Lastly, thin profits for some farming operations may be creating an environment where farmers need to liquidate a farm (or other assets) to secure operating capital; if this begins to occur on a wide-spread basis, the farmland market may see increasing price pressure. For landowners concerned about farmland values dropping in the future, now may be a logical time to consider selling.
115 +/- acres, located east of Varina, recently sold at public auction for $7,550 per acre. The farm consisted of 111 +/- tillable acres with a CSR2 of 86.8 on primary soil types of Webster, Clarion and Nicollet. The sale equaled $90/CSR2 point on the tillable acres.
70 +/- acres, located southeast of Northwood, sold at public auction for $8,600 per acre. The farm consisted of 67 +/- tillable acres with a CSR2 of 85.5. The farm also had a $200 per crop acre cash rent lease in place for 2018, with the rent going to the buyer of the farm; in addition, there were 13 years remaining on a wind turbine overhang easement that paid a guaranteed $27.53/gross acre in 2018 (along with an escalator clause for future years). The sale equaled $105/CSR2 point on the tillable acres.
40 +/- acres, located south of West Union, recently sold at public auction for $10,050 per acre. The farm consisted of 39.5 +/- tillable acres with a CSR2 of 87.2. The buyer was a local farmer and the sale equaled $117/CSR2 point on the tillable acres.
153 +/- acres, located west of Sac City, sold for $7,300 per acre. The parcel consisted of 150.7 +/- tillable acres, of which 25.9 acres were enrolled in CRP, with an average CSR2 of 79.1. The sale equaled $94/CSR2 point on the tillable acres.
174 +/- acres, located south of Dawson sold in two parcels. Parcel 1 consisted of 40 gross acres with 39.2 +/- tillable acres with an average CSR2 of 87.8. This parcel sold for $10,950 per acre. The sale of Parcel 1 equaled $127 per CSR2 on the tillable acres. Parcel 2 consisted of 133.57 gross acres, with 115.1 +/- tillable acres with an average CSR2 of 86.8. This parcel sold for $8,300 per acre. The sale of Parcel 2 equaled $111 per CSR2 on the tillable acres.
176 +/- acres, located north of Keystone, sold at public auction for $14,300 per acre. The farm consisted of 170.2 +/- tillable acres with an average CSR2 of 91.6. The sale equaled $161/CSR2 point on the tillable acres.
135 +/- acres, located northwest of Tabor, sold at public auction for $3,850 per acre. The farm consisted of 87 +/- tillable acres, of which 59 acres were enrolled in CRP, with an average CSR2 of 54.2. The sale equaled $110/CSR2 point on the crop acres.
80 +/- acres, located southeast of Hartford, sold for $12,100 per acre. The farm was offered in two, 40-acre auction parcels, but the land sold together to a single buyer. The parcels consisted of 72.9 +/- tillable acres with a combined CSR2 of 89.1. The sale equaled $149/CSR2 point on the tillable acres.
42 +/- acres, located south of Washington, sold for $4,850 per acre. The farm had 32.3 +/- tillable acres with an average CSR2 of 79.3, but all the tillable land was enrolled in CRP with a total annual payment of $5,842. The sale equaled $79/CSR2 point on the tillable acres.
Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag.v