Sell Land to Build Up Savings?

Farmers are typically in search of farmland to buy, but Farm Journal Economist Bob Utterback thinks maybe farmers should also consider selling.

It’s hard to find any area of the country that isn’t seeing increases in farmland values. Mike Walsten, editor of Pro Farmer’s LandOwner newsletter, keeps close tabs land values with his blog, Your Precious Land.

Here’s an overview of some recent land surveys:

Central Corn Belt Farmland Up 15% Annually, 4% for Quarter: The value of “good” Central Corn Belt farmland rose 4% on a quarterly basis during the first quarter of 2013, according to the Federal Reserve Bank of Chicago.

Great Plains Farmland Jumps 19% – 21.5%, Ranchland up 14% Q1: The value of farm and ranchland across the Great Plains rose by double-digits on an annual basis through the first quarter of 2013, according to the Federal Reserve Bank of Kansas City.

Mid-South Sees Slight Decline in Farmland Values Q1: Farmland values slipped 2.3% and ranchland fell 5.1% across the Mid-South, according to the Federal Reserve Bank of St. Louis.

Southeast Farmland Value Rises 6% in 2012: The value of good southeastern farmland rose 6.2% for calendar year 2012, according to the quarterly survey of agricultural bankers served by the Federal Reserve Bank of Richmond.

Texas Rural Land Market Sees Growth in 2012: The Texas rural land market saw a “modest expansion” in both the number of sales and total acreage transferred in 2012, reports Dr. Charles E. Gilliland, Real Estate Center, Texas A&M University.

A basic rule of investing that you do not want to sell on the way down. So if farmland is reaching record-high prices, should you be on the bidding or selling end of the transactions?

Bob Utterback, Farm Journal Economist, says an overall trend he sees coming for farmers is constantly increasing cost of production. With that figure increasing and the average price of corn trending down, Utterback believes land values will slip.

So, he asks: If you are an aggressive farmer and can tolerate it, should you let go of land right now?

“I am in the camp,” he says. “It’s probably a good time let go of land that doesn’t really fit into your operation, to build up your war chest so you can take advantage of dips in values to come back and buy the market.”

For More Information
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