Land sales in your backyard provoke a range of emotions. When I learned about a farm about a mile north of ours for sale this summer, the expansion machine kicked into gear. I think this is pretty normal. Next-door acreage is a once in a lifetime opportunity, and the size of that opportunity is growing by leaps and bounds with Ag's New Sizzle. But it was more than I could get my head around.
Anyway, some promised details. (The listing info has been taken down).
- 460 acres, 5 tracts, although I saw it as two chunks of 220/240 A.
- Much but not all very good (200 bu.) ground (Although really we don't know where yields are anymore with new hybrids).
- A creek through one piece, but not a huge problem, especially if you sold off some to contiguous neighbors.
My reaction: neutral. I (for no good reason) had predicted $6K. My relief was that Forsythe Farms did not buy the land. This is an admittedly biased reaction to a wealthy landowner who has been acquiring farms in our area. His land is mostly operated, I believe, by Moody Farms, one of the largest operations in the state.
I served on the Edgar County FB board with one principal - Doc Moody - and like many other competitors around here (Walker Farms, Gingerich Brothers - heck, my own cousins, Phipps Farms) their presence in a township changes the rental market and local structure. But they are still neighbors and friends - so whattya gonna do?
I am happy my neighbors got the job done. I defend the rights of operators and landowners of all sizes. But I also admire locals who decide to pay the price necessary to own local property. It is always too expensive, but there are other ways to calculate costs.
Anyway, to put the sale in perspective, I paid about $4550 to buy out my sister this spring and that was about 10% above the appraisal for Mom's estate. I wanted to make sure she felt fairly compensated and it worked out to a nice round number. I thought the rising land market would let me recoup the premium price in a few years.
But not a few weeks.
I have predicted before that 2008 will see the largest land price increases in my lifetime. My reasoning was based on the idea that it takes some real $4 corn checks to be cashed before conservative producers will do the capitalization calculations and respond at land sales. Also because many cash rent contracts are multi-year, that factor has a delay as well. So higher prices starting in 2006 would start seeming real to show-me-the-money farmers by 2008.
After this year, I thought I might be a year too late. Mike Walsten has been detailing the red-hot market and you can use his data to reach your own conclusions. The fact that Iowa has been on a tear is directly connected to ethanol checks, basis upheavals, under-priced land (by IL standards), and cultural differences. Illinois may be about to catch up.
So I'm sticking with it. I look for something like a 20% increase in IL in 2008.
BTW, another friend of mine just told me about a Kankakee Co. sale at $9K - I think a good-sized chunk. Bob is a big operator and he was amazed, so it must be a significant boost.
Always remember, these opinions are free, and this information market is pretty efficient.
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