Harvest came and went in quick fashion due to consistent warm and dry weather in September and October. Many have reported average to above-average yields, with the caveat of the top end of corn yields being suppressed due to late-season disease pressure. At this point in mid-November, the only holdup to getting the remaining corn harvested is the availability of storage.
A consistent observation we share with many buyers in the farmland marketplace is the stark increase in land availability this year compared with the same time last year. The biggest question on everyone’s mind is whether land prices will continue to remain stable despite continued low commodity prices and this increase in the supply of land.
So far, buyer demand for A-grade, quality land has shown incredible resilience. In the past month, there have been numerous sales in the $12,000 to $15,000-plus-per-tillable-acre price range for choice tracts. There is still a lower demand for the less-than-perfect farms, many of them bringing $9,000 to $10,000 per tillable acre at best.
One recent sale in south central Minnesota that surprised many people was a 600-plus-acre multiparcel auction that brought between $9,600 and $10,600 per acre that many people expected to go higher. My understanding is that those farms were not sold at those high bid prices, and I am not sure whether they have been sold. While seller expectations may have been higher, the “coffee shop” opinion was that those farms were considered wetter ground and thus less desirable.
In Minnesota, farm drainage plays a significant role in value. The state has many wetlands, plenty of rainfall, and prior converted sloughs and old lakebeds that were drained 100 years ago.
Buyers, especially local farmers, tend to be very sensitive to farms on the market with a history of drowning out or with a poor outlet. The second- through fifth-generation farmers who already have a strong stable of acres tend to be more concerned with buying quality land that is close to home, and they have higher standards for what they spend their money on.
The question for them is, “Why buy a project farm when it only costs a little more for a perfect farm?”
This thought process is hidden a little bit when times are good and everyone has money but has been amplified in the past year when farm budgets are tight. For now, here is a range of recent sales:
Brown County. South of Sleepy Eye, approximately 64.97 acres sold for $11,700 per acre, or $12,238 per tillable acre. The farm consists of 62.11 tillable acres with a Crop Productivity Index of 92.
Nobles County. West of Worthington, approximately 65.27 acres sold for $13,435 per acre, or $14,185 per tillable acre. The farm consists of 61.82 tillable acres with a CPI of 94.1
Jackson County. Southeast of Round Lake, approximately 113.17 acres sold for $10,500 per acre, or $10,733 per tillable acre. The farm consists of 110.71 tillable acres with a CPI of 86.5.
Watonwan County. Southeast of Lewisville, approximately 151.1 acres sold for $10,013 per acre, or $10,401 per tillable acre. The farm consists of 145.47 tillable acres with a CPI of 91.6.
Brown County. Two parcels sold west of Hanska. The first parcel, approximately 70.4 acres, sold for $11,118 per acre, or $11,687 per tillable acre. The farm consists of 66.97 tillable acres with a CPI of 92.6.
The second parcel, approximately 79.5 acres, sold for $10,506 per acre, or $10,978 per tillable acre. This parcel consists of 76.08 tillable acres with a CPI of 89.
Renville County. North of Franklin, approximately 160 acres sold for $12,889 per acre, or $13,523 per tillable acre. The farm consists of 152.5 tillable acres with a CPI of 92.9.
Hertz Farm Management compiled this list but did not handle all sales. Call Hertz at 507-345-5263 or visit hertz.ag.