A farmland market that started to strengthen a year ago continues to see positive movement for land values and lots of activity.
Farmers National Company reports that it marketed and sold a record amount of land during the company's fiscal year ending Sept. 30, 2021. Overall, the number of sales was up 10% over the past three years, nearing a previous record number of transactions. There was 55% increase in the total acres sold by Farmers National Company in fiscal year 2021.
Kevin Pifer, owner of Pifer's Auction & Realty, said the market may be as strong or stronger than the heydays of 2009-14.
"Interestingly, we've had multiple sales in the last 60 days come close to double the appraised value and the appraisal is only a year old," Pifer said in an interview. His Moorhead, Minnesota, based company has footprint that stretches from Madison, Wisconsin, in the east to Miles City, Montana, in the west.
Randy Dickhut, senior vice president of real estate for Farmers National, said Iowa has been noteworthy in an overall strong year.
"Iowa has been the activity leader and also the leader in land prices moving up," Dickhut said in an interview.
Dickhut and Pifer agreed that inheritors of farm property are motivated by the strong market to sell.
"Some are seeing higher prices and wanting to capture that good price now," Dickhut said.
The same is true for those with an eye on retirement or absentee owners. Dickhut said the thinking is that it's easier to divide an estate of cash rather than property.
"Selling it now just makes it simpler," he said.
Pifer estimated that 75% to 80% of all sellers are owners who are removed from the farm, mostly Baby Boomers.
For buyers, Pifer estimated 70% are farmers and ranchers, with the rest being bought by investors or for recreational land.
Farmers National Company is active in 29 states. Dickhut said eastern Nebraska, Kansas and North Dakota also have seen a lot of activity.
Farmers National reported a recent sale in Nebraska that brought $14,000 per acre for non-irrigated cropland.
Pifer said that while average quality land is still running higher in value in land than last year, he said good to excellent land is really bringing a premium.
The same is true for pasture that has good native grass, good fencing and good access.
Dickhut said factors like strong commodity prices and the drought in the Upper Midwest are often outweighed by the opportunity to add a piece of nearby land that might not be for sale again for generations.
"Land is also a long term investment," Dickhut said.
Pifer agreed that strong fundamentals trump a short-term event like the drought.
"I think the drought had very little impact had very little impact on farmland values," he said.
Land sales activity looks to be brisk for the fall and early wintertime period.
"Our agents are busy talking to landowners wanting to sell. We have more auctions booked for the next few months than we did at this time last year," Dickhut said.