Results 1 to 14 of 14

Thread: Farmland values to the moon

  1. #1
    Join Date
    Sep 2001
    Location
    Wateree, South Carolina
    Posts
    46,590

    Default Farmland values to the moon

    Farmland Values Hit Record Highs, Pricing Out Farmers
    Small farmers are now going up against deep-pocketed investors, including private equity firms and real estate developers.

    In South Dakota, farmland values surged by 18.7 percent from 2021 to 2022, one of the largest increases in the country, according to the Agriculture Department.Credit...Tim Gruber for The New York Times

    Linda Qiu

    Nov. 13, 2022

    Joel Gindo thought he could finally own and operate the farm of his dreams when a neighbor put up 160 acres of cropland for sale in Brookings County, S.D., two years ago. Five thousand or six thousand dollars an acre should do the trick, Mr. Gindo estimated.

    But at auction, Mr. Gindo watched helplessly as the price continued to climb until it hit $11,000 an acre, double what he had budgeted for.

    “I just couldn’t compete with how much people are paying, with people paying 10 grand,” he said. “And for someone like me who doesn’t have an inheritance somewhere sitting around, a lump sum of money sitting around, everything has to be financed.”

    What is happening in South Dakota is playing out in farming communities across the nation as the value of farmland soars, hitting record highs this year and often pricing out small or beginning farmers. In the state, farmland values surged by 18.7 percent from 2021 to 2022, one of the highest increases in the country, according to the most recent figures from the Agriculture Department. Nationwide, values increased by 12.4 percent and reached $3,800 an acre, the highest on record since 1970, with cropland at $5,050 an acre and pastureland at $1,650 an acre.

    A series of economic forces — high prices for commodity crops like corn, soybeans and wheat; a robust housing market; low interest rates until recently; and a slew of government subsidies — have converged to create a “perfect storm” for farmland values, said Jason Henderson, a dean at the College of Agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City.

    As a result, small farmers like Mr. Gindo are now going up against deep-pocketed investors, including private equity firms and real estate developers, prompting some experts to warn of far-reaching consequences for the farming sector.

    Young farmers named finding affordable land for purchase the top challenge in 2022 in a September survey by the National Young Farmers Coalition, a nonprofit group.

    Already, the supply of land is limited. About 40 percent of farmland in the United States is rented, most of it owned by landlords who are not actively involved in farming. And the amount of land available for purchase is extremely scant, with less than 1 percent of farmland sold on the open market annually.

    The booming housing market, among a number of factors, has bolstered the value of farmland, particularly in areas close to growing city centers.

    “What we have seen over the past year or two was, when housing starts to go up with new building construction, that puts pressure on farmland, especially on those urban fringes,” Professor Henderson explained. “And that leads to a cascading ripple effect into land values even farther and farther away.”

    Government subsidies to farmers have also soared in recent years, amounting to nearly 39 percent of net farm income in 2020. On top of traditional programs like crop insurance payments, the Agriculture Department distributed $23 billion to farmers hurt by President Donald J. Trump’s trade war from 2018 to 2020 and $45.3 billion in pandemic-related assistance in 2020 and 2021. (The government’s contribution to farm income decreased to 20 percent in 2021 and is forecast to be about 8 percent in 2022.)

    Those payments, or even the very promise of additional assistance, increase farmland values as they create a safety net and signal that agricultural land is a safe bet, research shows.

    “There’s an expectation in the market that the government’s going to play a role when farm incomes drop, so that definitely affects investment behavior,” said Jennifer Ifft, a professor of agricultural economics at Kansas State University.

    Eager investors are increasingly turning to farmland in the face of volatility in the stock and real estate markets. Bill Gates, the Microsoft co-founder and billionaire, is the biggest private farmland owner in the country and recently won approval to buy 2,100 acres in North Dakota for $13.5 million.

    The number of private equity funds seeking to buy stakes in farmland has ticked higher, said Tim Koch, a vice president at an agricultural financial cooperative in the Midwest, Farm Credit Services of America. Pension funds also consider farmland a stable investment, Professor Ifft said.

    A series of economic forces, including high prices for commodity crops, a robust housing market, low interest rates and a slew of government subsidies, have converged, pushing the price of farmland sky-high.Credit...Tim Gruber for The New York Times

    Farmers, too, have witnessed an influx of outside interest. Nathaniel Bankhead, who runs a farm and garden consulting business in Chattanooga, Tenn., has banded with a group of other agricultural workers to save up to $500,000 to buy about 60 acres of land. For months, the collective has been repeatedly outbid by real estate developers, investors looking to diversify their portfolios and urban transplants with “delusional agrarian dreams,” he said.

    “Places that I have looked at as potential farmland are being bought up in cash before I can even go through the process that a working-class person has to do to access land,” he said. “And the ironic thing is, those are my clients, like I get hired by them to do as a hobby what I’m trying to do as a livelihood. So it’s tough to watch.”

    Mr. Bankhead characterized the current landscape as a form of “digital feudalism” for aspiring working farmers. Wealthy landowners drive up land prices, contract with agricultural designers like himself to enact their vision and then hire a caretaker to work the land — pricing out those very employees from becoming owners themselves.

    “They kind of lock that person to this new flavor of serfdom where it’s, you might be decently paid, you’ve got access to it, but it will never be yours,” he said.

    Unable to afford land in her native Florida, Tasha Trujillo recently moved her flower farm to South Carolina. Ms. Trujillo had grown cut flowers and kept bees on a parcel of her brother-in-law’s five-acre plant nursery in Redland, a historically agricultural region in the Miami area, about 20 miles south of downtown.

    When she sought to expand her farm and buy her own land, she quickly found that prices were out of reach, with real estate developers driving up land values and pushing out agriculture producers.

    A five-acre property in the Redlands now costs $500,000 to $700,000, Ms. Trujillo said. “So I essentially didn’t have a choice but to leave Miami and Florida as a whole.”

    “Farming is a very stressful profession,” she added. “When you throw in land insecurity, it makes it 20 times worse. So there were many, many times where I thought, oh my God, I’m not going to be able to do this. This isn’t feasible.”

    As small and beginning farmers are shut out — the latest agricultural census said that the average age of farmers inched up to 57.5 — the prohibitively high land values may have ripple effects on the sector at large.

    Brian Philpott, the chief executive of AgAmerica, an agricultural lending institution, said his firm’s average loan size had increased as farms consolidated, squeezing out family farms. This, he argued, could lead to a farm crisis.

    Tasha Trujillo places corms into the dirt-filled compartments of a seedling tray.
    “Farming is a very stressful profession,” Ms. Trujillo said. “When you throw in land insecurity, it makes it 20 times worse.” Credit...Travis Dove for The New York Times

    “Do we have the skills and the next generation of people to farm it? And two, if the answer is going to be, we’re going to have passive owners own this land and lease it out, is that very sustainable?” he said.

    Professor Henderson also warned that current farmers may face increased financial risk as they seek to leverage their high farmland values, essentially betting the farm to expand it.

    “They’ll buy more land but they’ll use debt to do it,” he said. “They’ll stretch themselves out.”

    Economists and lenders said farmland values appear to have plateaued in recent months, as the Federal Reserve raised interest rates and the cost of fertilizer and diesel soared. But with high commodity prices forecast for next year, some believe values will remain high.

    A native of Tanzania who moved to South Dakota about a decade ago, Mr. Gindo bought seven acres of land to raise livestock in 2019 and currently rents an additional 40 acres to grow corn and soybeans — all the while working full time as a comptroller to make ends meet.

    For now, he has cooled off his search for a farm of his own even as he dreams of passing on that land to his son. The more immediate concern, he said, was whether his landlord would raise his rent. So far, the landlord has refrained because Mr. Gindo helps him out around the farm.

    “He really doesn’t have to lend me his land,” Mr. Gindo said. “He can make double that with someone else.”

    In Florida, Ms. Trujillo said, the owner of the land where her brother-in-law’s nursery sits has spoken of selling the plot while prices remain high, so he too has begun looking for his own property.

    “That’s a big fear for a lot of these farmers and nursery owners who are renting land, because you just never know when the owner’s just going to say, ‘You know what, this year, I’m selling and you’ve got to go,’” she said.

    In Tennessee, Mr. Bankhead said he considered giving up on owning a farm “multiple times a day” as friends who have been longtime farmers leave the profession.

    But so far, he remains committed to staying in the field and doing “the work of trying to keep land in families’ hands and showing there’s more to do with this land than to sell it to real estate developers,” he said. “But the pain of not having my own garden and not being able to have my animals where I live, it never stings any less.”

    Ms. Trujillo’s flower farm in York, S.C. Before relocating, she grew cut flowers on a parcel of her brother-in-law’s five-acre plant nursery in South Florida. He, too, may have to relocate if his landlord sells the plot.Credit...Travis Dove for The New York Times

    Linda Qiu is a fact-check reporter, based in Washington. She came to The Times in 2017 from the fact-checking service PolitiFact. @ylindaqiu

    https://www.nytimes.com/2022/11/13/u...t-farmers.html

  2. #2
    Join Date
    Nov 2007
    Location
    Newberry SC
    Posts
    3,386

    Default

    Will only get worse with the large data centers of the world focused on using Hydrogenated vegetable oil(HVO) as a diesel replacement in standby generators. It’s all about lowering carbon footprint for the conglomerates.

  3. #3
    Join Date
    May 2003
    Location
    Bowman
    Posts
    6,136

    Default

    A 70ac farm in Iowa sold for $30,000/ac to a farmer this week. Land market is insane still.

    Smilee are you referring to the renewable diesel deal from soybeans?
    cut\'em

  4. #4
    Join Date
    Oct 2003
    Location
    Charleston
    Posts
    17,559

    Default

    Quote Originally Posted by Smilee View Post
    Will only get worse with the large data centers of the world focused on using Hydrogenated vegetable oil(HVO) as a diesel replacement in standby generators. It’s all about lowering carbon footprint for the conglomerates.
    If this is so, all they are doing is moving the location where the fuel is burning. That’s all any of this green bullshit does.

  5. #5
    Join Date
    Jan 2003
    Location
    TheRez
    Posts
    11,134

    Default

    price will come down when they make more of it.
    We gave you Corn,you gave us clap,bad trade.

  6. #6
    Join Date
    Dec 2005
    Location
    Ballard's Landing
    Posts
    15,070

    Default

    Quote Originally Posted by Southernduck View Post
    A 70ac farm in Iowa sold for $30,000/ac to a farmer this week. Land market is insane still.

    Smilee are you referring to the renewable diesel deal from soybeans?
    Holy hell.
    Be proactive about improving public waterfowl habitat in South Carolina. It's not going to happen by itself, and our help is needed. We have the potential to winter thousands of waterfowl on public grounds if we fight for it.

  7. #7
    Join Date
    Nov 2005
    Location
    Fort Kickass
    Posts
    49,270

    Default

    Quote Originally Posted by HARV View Post
    price will come down when they make more of it.
    .

    dirt is the highest value asset a farmer can buy, but cant depreciate.
    "Rivers and the inhabitants of the watery elements are for wise men to contemplate and for fools to pass by without consideration" -Izaak Walton

  8. #8
    Join Date
    Jan 2003
    Location
    TheRez
    Posts
    11,134

    Default

    big change in valuation from when I bought the farm in 1977 til now I tall ya!
    We gave you Corn,you gave us clap,bad trade.

  9. #9
    Join Date
    Aug 2021
    Location
    NC
    Posts
    2,252

    Default

    It is not just farm land that has doubled in value. Timberland is sky high too.

  10. #10
    Join Date
    Jan 2003
    Location
    TheRez
    Posts
    11,134

    Default

    so's groceries
    We gave you Corn,you gave us clap,bad trade.

  11. #11
    Join Date
    Aug 2021
    Location
    NC
    Posts
    2,252

    Default

    Lets go Brandon

  12. #12
    Join Date
    Nov 2007
    Location
    Newberry SC
    Posts
    3,386

    Default

    I could type pages of things.

    HVO is being used in Europe and just starting production in US. Chevron is leader right now. Much better than biodiesel for storage and not being a solvent. Equivalent power to ULSD from most engines. The trucking industry will gobble it up once the turkey gets fried considering the intiative to lower on highway emissions first.

    We’ve got engines running 25 up to 100 percent hydrogen. Green is subjective to how the hyrdrogen is obtained.

  13. #13
    Join Date
    May 2022
    Posts
    26

    Default

    It is a great asset to own and I dont think that will change for another thousand years.

  14. #14
    Join Date
    Jun 2004
    Location
    Summerton
    Posts
    315

    Default

    Quote Originally Posted by Smilee View Post
    I could type pages of things.

    HVO is being used in Europe and just starting production in US. Chevron is leader right now. Much better than biodiesel for storage and not being a solvent. Equivalent power to ULSD from most engines. The trucking industry will gobble it up once the turkey gets fried considering the intiative to lower on highway emissions first.

    We’ve got engines running 25 up to 100 percent hydrogen. Green is subjective to how the hyrdrogen is obtained.
    Got a stock play?

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •