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David Sparks Ph.d Corporate Farms
by David Sparks Ph.d, click here for bio

Program: Line on Agriculture
Date: February 18, 2019

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While talking with Randy Dickhut, senior vice president of real estate operations at Farmers National Company, I had a question about corporate farming. When you see the totals of corporate farms, the biggest share of those are family owned. Here's an example. In Illinois, 6% of the land is being purchased by institutional which are pension funds, venture capital groups, investment capital and so forth. It's a very small percentage. A number you might find interesting. Institutional has about 24 billion or so of ag land. That's a out of 2.7 trillion. Questions abound in the current land market. Will the negative farm financial situation finally overcome other factors to drive land prices the final leg lower? Will outside influences put more stress on land values or actually support prices? Will regional pockets of stress spill over into the overall land market?

 

Farm and ranch land is the key financial bedrock for American agriculture as land makes up 82 percent of total assets for the industry. With today’s uncertainties in agriculture, everyone involved with owning, buying or selling ag land is holding their breath to see what will happen next with the market and prices.

 

“At Farmers National Company, we are seeing an uptick in our land sales as more families and inheritors want to sell now,” said Randy Dickhut, senior vice president of real estate operations. “Within our 28-state service area, we are also seeing more landowners coming to us to market and sell their land as evidenced by our volume of land for sale increasing 21 percent. These landowners are just deciding now is the time to sell and capture today’s price.”

 

Overall, agricultural land values have held up surprisingly well over the past few years despite lower commodity prices and much lower farm incomes compared to five years ago. There are a number of reasons for this, including the low supply of land for sale, cash rental rates remaining stronger than expected and interest rates that have been historically low.

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