Cash sales Farmers remain the predominant land buyers, accounting for three-quarters of the purchases
Farmland values in the U.S. Plains states jumped more than 20 per cent in the fourth quarter from a year earlier as farms sold at record-high prices, the Federal Reserve Bank of Kansas City said Feb. 15.
Irrigated cropland attracted the most interest, given the worst drought in 50 years in the world’s top food producer, the Kansas City Fed said.
This was the seventh consecutive quarter irrigated and non-irrigated cropland values posted year-over-year gains of more than 20 per cent as record crop prices kept demand for farmland hot, according to a quarterly survey of bankers by the Kansas City Fed.
“Persistent drought sparked a rush in irrigated farmland sales during the fourth quarter of 2012. Stronger sales vaulted irrigated cropland values in the district 30 per cent above year-ago levels, with a 13 per cent jump in the fourth quarter alone,” the Fed said of its survey, which draws on comments from 232 district bankers.
Non-irrigated cropland and ranchland also posted strong annual gains between 20 and 25 per cent.
The KC Fed district stretches across major wheat, corn and cattle states of Colorado, Kansas, Nebraska, Oklahoma and Wyoming along with parts of New Mexico and Missouri.
The Kansas City district survey follows the Chicago and St. Louis Fed quarterly updates covering the northern Corn Belt and central Delta states, with both reporting similar results.
Farmers remain the predominant land buyers, accounting for three-fourths of the sales in the Plains in the fourth quarter. Bankers said farmers used more cash to finance purchases compared to a year ago. Non-farmers continued to buy land for investment purposes.
“Almost all recent auctions were sold to the largest farmers in the area wanting to get bigger. The buyers are strong and most are cash sales,” said one banker from northwest Missouri.