Wednesday, February 13, 2013

North Dakota Farm Land Surging In Value

Good morning; early start to the day. Trying to catch up.

From Don, an article in Prairie Biz Magazine,
A North Dakota farm managers and rural appraiser group published its 2012 report recently, indicating an average 46 percent annual jump in North Dakota farm values in 2012, and a 28 percent increase in values in nearby Minnesota counties.
Two counties in North Dakota — Walsh and Richland — had three sales that averaged more than $10,000 per acre — the first time publicly to Peterson’s knowledge.
“I believe it,” says Andy Swenson, North Dakota State University Extension Service farm management specialist, of the report. He says farmers are coming off of six pretty good years in crop production profitability, starting in 2007. “And 2012 will be the most profitable of all by a pretty good shake,” Swenson says. “Their ability to pay is there. There is a lot of cash out there, but a lot of wherewithal” to buy land.
Interest rates are low, which means buying land is cheaper. Crop prices are still high. “And 2012 was a dry year, but everyone up here was impressed by the yields,” he said. “And there were strong prices because of the drought in the Corn Belt.”
I believe CNBC recently had a very short segment in which a guest talked surge in value in farm land. They were doing a segment on "bubbles," such as housing bubbles, and interestingly enough, this guest did not want to go so far as to say this (surge in farm value) was a bubble. To be a "bubble" required a larger segment of the population involved in the frenzy of buying the particular "asset" under discussion. In this case, buyers and sellers of farm land are relatively small in number.

And, unlike "bubbles," it appears that farming is very profitable right now -- at least according to this article.

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