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FARMLAND BUCKING REAL ESTATE TRENDS
Friday, March 5th, 2010 -- 2:29 pm
Posted by Riley Hebert-News Director
Looking for a good investment? You might want to consider farmland.
A new analysis from the University of Wisconsin Center for Dairy Profitability shows the price for farmland increased steadily from 2001 through 2008, before backing off just a bit in 2009.
The decline in 2009 of only $55 per acre was surprisingly small, considering the extremely difficult economic conditions.
Arlin Brannstrom, a farm management specialist, says the figures show farmland isn’t completely recession-proof, but fares much better than residential and commercial property.
"It's certainly more resilient than other types of assets," he notes. "We're seeing a questioning of investors in other types of real estate."
Why has farmland fared so well?
Brannstrom says it will virtually always generate revenue. Plus, there’s a shrinking amount.
"We're not making any more farmland. When a parcel in a reasonable distance from an existing operation comes up for sale, there are several people competing for that land," explains Brannstrom.
This could lead to more non-farm investors purchasing land as an investment. While a fairly new phenomena here in Wisconsin, absentee farmland ownership is common in surrounding states, and isn’t necessarily a bad thing for farmers.
"The amount of absentee owned land in Wisconsin is relatively small. I don't think it's a bad thing for the farm community. Often, the rental rates are less than...loan payments," he says.
According to the analysis, the price of farmland in Clark County has jumped from $1,600 per acre in 2006 to about $2,000 per acre in 2009.
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