Farmers are the primary buyers of farmland at the today's high prices. Recent land sales in Illinois topped $11,000 per acre. Local farmers outbid investors for the farmland, according to Murray Wise Associates, which handeled the auction.
Local Illinois farmers purchased $11,000+ per acre farmland recently sold in an auction at Mason City, IL. Murray Wise Associates handled the auction, and chairman Murray Wise answered questions for Farm Industry News about it.
“There were some investors in the room who were active in the property at about $8,000 to $9,000/acre,” Wise said. “But from $9,000 on, it was nothing but local farmers going head to head against each other.”
The largest block of land sold to the farm tenant and an investor friend. The property was purchased exclusively for farmland, Wise said. The parcels of land are located outside of Havana, IL, in the middle of cropland.
“It’s a situation where people are trying to read something into this, like it had to be development land or for a secondary purpose,” he said. “That’s not the case at all.”
The auction drew many spectators and more than 50 registered bidders who were interested in the 444 acres of farmland sold in seven tracts. Total price was $4.46 million. The most productive 364 acres sold for $4.01 million or $11,016/acre.
“It was class 2 soil, not the prime Illinois soil,” Wise added. “There were a significant number of farmers who all wanted to own the property. We’ve seen this in other sales in Champaign County on high-quality land. A couple weeks ago, farmland sold for $13,500 to the tenant. Another went for $11,900 and $11,700 an acre. These were all farmer purchasers, not investors.”
The amount of farmland purchased by investors has dropped significantly. Wise said, in 2004, half of the farmland in Illinois was purchased by investors. Today, investors purchase only 15%.
“On the bulk of the purchases we see very little leverage involved,” Wise added. “Farmers are not jumping into debt to accumulate these parcels. So for some people it does make sense [to make the land investment]. Most don’t have to buy new machinery to add on 100 to 300 acres.”