“When do you think farmland prices are going to correct?” is a question posed to me recently. My answer was, “I do not know a single farmer who is trying to give back land that they have purchased recently, and most are still interested in acquiring more.”
This question was asked specifically about farmland prices in Alabama and Mississippi, states where I am a licensed broker. Our company, Southeastern Land Group (SELG), does not serve mid-western states, so the information in this article is confined to current trends we are seeing in southeastern states, specifically Georgia, Alabama, and Mississippi.
In one regard, farmers and gold prospectors are very similar: they both need good ground to make a living. They both generally are only making money when they are working in the dirt. Farmers and prospectors have a shared hunger for more dirt, and only time will tell if it will pay off.
I polled three of my colleagues with SELG who specialize in row crop, cattle farms, and poultry farms about what they are seeing from farmers in their areas. Robert King, who has a long family heritage of raising beef cattle, says that the demand that he is seeing for good pastureland is stable. Cattle farmers are showing an interest in acquiring more land that is near to their existing operations, and would like to “bolt-on” more acreage. Cattle prices have enjoyed a significant run up over the past 18 months, and long-time farmers are still enjoying the boost in prices they have recently experienced.
Russ Walters, whose family farms approximately 900 acres of row crops including peanuts and cotton, said that he is also seeing a strong demand for farmers to add to their existing row crop operations. In the markets Russ serves, he said good farmland will see strong interest in the $2200/acre to $3000/acre for dry land farms. He currently has one buyer that is willing to purchase 500 to 1000 acres of timber and convert it to row crop land. When good farmland is in short supply, sometimes buyers are willing to transition timberland to cropland. Russ says most farmers in his area have experienced 4 good harvests consecutively, and even with lower commodity prices farmers have done pretty well in the recent past.
Randall Upchurch, one of the cofounders of PoultrySouth.com, says that he is seeing firm demand among all of the segments he serves: poultry, cattle, and row crop farms. Randall says pastureland prices are slightly softer than they were 6 months ago, but the demand is still there for reasonably priced farmland tracts.
In west Alabama and east Mississippi, I am seeing pastureland and non-irrigated farmland sell for 10% to 40% per acre above timberland properties. I feel comfortable listing ag land for 25% above neighboring timberland properties. Farmers are consistently asking me what is available near them, and that is a sign that they are still willing to add good land to their existing operations if the properties are priced reasonably.
Based on the short supply of quality farmland for sale and the steady demand from prospective buyers, we feel like farmland prices in the Southeast are stable for the near term. We hope this is a trend that continues for years to come.