FARMLAND BUCKING REAL ESTATE TRENDS
Friday, March 5th, 2010 -- 2:29 PM
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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