Farmland for sale is in tight supply, according to a January land value survey just completed by Farmers National Company. The Omaha, NE, farm management and real estate firm reports that buyer demand for high-quality farmland continues to increase. Meanwhile, some farmers decided to hold land instead of selling after the September 11 World Trade Center attack because farm returns are higher than many alternative investments. This is creating a tight marketplace.
Two concerns could dampen the market, however. Continued low commodity prices and a farm bill that cuts support to U.S. producers and landowners could hurt land demand.
Here's a look at the current land market in several Midwest states:
Low borrowing costs, limited farm listings and low returns at the bank are fueling the land market, the company's Iowa sales managers report. Prices for top Iowa farmland range from $2,800 to $3,250/acre. Average-quality land sells for $2,400 to $2,500/acre.
Farmers and investors want top-quality land in Illinois for high farming returns, with prices running between $2,800 to $3,500/acre. Meanwhile, wooded land with creeks also is in high demand for hunting or building a residence.
The eastern and central parts of the state report a strong demand for farmland. Both irrigated and nonirrigated good land sells for $1,800 to $2,500/acre. Farm managers and brokers here say that interest is coming from farmers who want to grow their operations and from city buyers looking for recreational tracts.
Demand for ag land is strong in Kansas mostly because of farmer and rancher interest. Some activity from investors is showing up in sales of high-quality tracts. Cropland currently sells for $1,000/acre for flood-irrigated land to $1,500/acre for center-pivot-irrigated land. The highest price paid in the last few months was $2,010/acre.
Top-grade farmland in Ohio sells for $2,500 to $3,000/acre, and average farmland sells for $1,800 to $2,400/acre.