land prices

[AG_guy]

a few years ago a farmers was offered $440,000 for his ¼ and it was turned down, he wanted more.

[SASKFARMER3]

Ill give the guy a bargain and he can have it all for cool $18,920,000.00 Ill even throw in the new dryer system and cleaning plant. Minerals I keep though. HA HA HAH.

[rockpile]

I see 2 things driving land prices: 1: Long term
return on investment aided by low interest rates. 2:
A new paradigm in that we now have 3rd, 4th and
5th generation farmers and ranchers who have
what we might term as 'old money'. They are in a
position to buy at any cost with little risk to
themselves. They also see expansion as the key to
survival over the long term. So, when a piece of
property is available nearby their core operations,
they use that inherent wealth to buy and expand if
for no other reason, to ensure that no one else gets
their hands on it. Hence price is no object. Besides,
when ever did returns on production ever set land
prices? Land is in finite supply, demand will
continue to increase. Factor in also the buying
power of Colonies and foreign buyers, nearness to
urban expansion and so you end up with ever
increasing dirt values. We are just catching up to
what has been happening south of us for decades. I
agree with Saskfarmer, owning is superior to
renting, especially over the long term. I wish I
would have had this gem of wisdom 40 years ago, I
would be a gazzillionaire now.
Rockpile

[SASKFARMER3]

Rockpile you make sense the guys who are buying in our land have always expanded. Hell we are a 3rd gen going on 4Th as we speak. But in our area only three buyers most years. Red Army and two others. One pays whatever to get other two are tight.

[Jagfarms]

I do not think that land Prices will go down to $500
acre in our area again. I do think if the commodity
prices are low for a few years the price of land will go
to or below $625 acre here. I am thinking this could
happen in the next 2 years. That is just my opinion
and I am betting on it by not buying land now at these
prices.

[freewheat]

I agree with the old money theory strongly, and or the paid for land of parents subsidizing the young ones who don't really know farming volatility like those who fight for every square inch of ground with hard work, and their OWN dime. I know several farms around that have jumped on the bandwagon on daddy's shirtails, tying up his land to buy his own. Many older guys just about to retire complain that their equity is eroded due to their greedy sons, their words, not mine. I don't get this. Guys wake up! We are our own worst enemy! Instead we blame government, prices, weather, etc. on our plight, meanwhile we have a shed full of shiny new machines worth millions that have every un-necessary feature imaginable to mankind. Then guess what? we NEED more land to pay for that iron. We do not NEED more land to survive. We NEED that land to pay for our lifestyle choices. When we start paying 40 50 or more bucks an acre to pay for this iron, how is that working for us. Oh right, we get bigger and our costs per acre go down. On Iron? Doubt it. On labour. Not if we must hire. WE as farmers must get our collective heads out of you know where if we can ever hope to thrive. Do we need a millions of dollars machinery budget? Could we farm half the land, net that extra money wasted on iron payments, and invest in an appreciable item that is not land? Iron has massive negative returns, so why do we have to have the land so the neighbor can't get it which makes us NEED that extra fancy machinery? Farmers aren't getting bigger to merely survive. The art of saving cash is gone. The art of not caring what joe neighbor has in his shed or in his land bank is gone. Farmers are getting bigger because they can, not because they must to survive. They are getting bigger to appease their bankers needs for payments, not for their own long term benefit.

I am concerned about who the hell will buy me out in the future, when there are no more farms around. The yard lights are going out in the country click click click, and yet we continue to beleive we must get ever larger to "survive". Remember the definition of stupidity. Doing the same thing over and over thinking it will net different results. SOMEBODY, and it boggles my mind, is happily buying this new plastic machinery. And the technology that goes with it, because we can't keep our hired man's eyes open during seeding to do a good job, becase we are farming a township and it must get done. Something to me at least is wrong here. I was born about 30 years to late.

I for one will stand up and take responsibility as a farmer, Will anyone else?
PS I hate the CWB, am not an nfu freak, and I farm small, even peasant like compared to what is normal anymore. I have bought land, iron, and sinned in all of the afformentioned ways, but I'm sick of the fight for what? So I can rent out 10 000 acres to a farmer who does not exist, because I and all my 10 000 acre sidekicks have pushed them out?

Sorry for the rant, I hate farming at this moment in time, and not having anyones shirttails to ride, no free father labor, etc etc, I wish in 1992 when I decided to farm, I would have been a conservation officer instead.

Time to call the farm stress line I guess.

[Ron]

Freewheat, I sure understand what you are saying. I started in 1993, worked every spare moment off-farm, took crappy/short holidays if any with 4 kids, always working or farming.

Two weeks ago I was told a neighbor was selling 140 acres, 135 cultivated, asking prices was 600,000. I thought he was dreaming and if I could get that price I would sell to. Talked with the realtor on saturday and it is sold, slightly under the asking price. In under 2 weeks.

I am trying to figure out if land ownership is really that important to me? I could sell, be debt free, keep my farmsite (already separate title) and might even choose to keep the rented land to play with. With equipment paid for and no debt farming might be fun again.

Why struggle to pay debt down so that when I am 55 years old and my kids have left I can have spare cash? I will have equity in the land but how do I access it without selling it? So why not sell it now, work less off-farm, farm less and enjoy my family more?

[mustardman]

Jagfarms there were 2 separate parcels sold at that price and purchased by a colony. Mind you with a colony there will always be someone farming for generations to come to pay the land debt

[fjlip]

Question for those buying land, what is your long term goal regarding ownership? We know your NOT taking it with you. Are you going for a legacy for your children? Or will you cash in, as suggested above, and live it up in your remaining years? Maybe my son should not farm so I would not risk my equity on expansion. My current goal is to do this ten more years, if able and perhaps pass to the son, if he dares to farm. If not, cash in at these or higher values.

[Jagfarms]

Rumor has it that they are starting to cap in some
of the gas wells in our area. Lots of land is getting
purchased here with the speculation that they will
be getting gas wells in the future.

They were supposed to drill another 300 wells here
this year and they all got cancelled and I heard
today one farmer who has wells already is going to
be getting 5 of his wells plugged this year. A few
other farmers have been getting letters saying that
their wells will be abandoned.

[hobbyfrmr]

Ron, SELL.. Same age, same startup time. You can always buy land in Sask for waaaay less than that. a few semi trips, haul your stuff over to the new farm. Over time, the kids will grow up (on a farm/rural life) thinking you were were adventurous. Kids care when they are young, feed them, cloth them,keep them warm and give them support. Easier to do when you have a low debt/stress life. Those are happy times for children. In the end..if you build and sell out, or you build and die...by then kids are old enough to know they would rather have cash..Think of farming neighbors and their kids...you went to school with...in the end..they will have gone to work, bought a house in the city (invested in themselves) and still fight over/collect Mom and Dads land/cash at their demise with no real emotional investment in the farm. So, I would sell, if you really like farming, relocate buy lower cost land, which means move, but your family will be happier with less stress around them and the same, if not more cash value later in life.

[SASKFARMER3]

OK then is Alberta going to be the next basket case province. IF their is low oil low natural gas, then what else does Alberta have. HM It sure isn't grain land. So is a bust on its way for land their.

[sagewood]

An interesting topic for sure. Here in AB. we did see the dramatic price in land in the early '80's. We bought a 1/4 for $1,200 per acre and the neighbors thought we were nuts--they also thought we were nuts when we bought out home place in '75 for $325/acre. Land prices in this area are now anywhere from $5,000 an acre on up--you can take your pick. This latest 'recession' has most certainly slowed the prices for land in AB., but in the past few months, ever so slowly, more land is coming up for sale and the price is rising again. Of course the fact that we have two major cities in our province helps the land that is close to those cities, but land that is in the Olds area (between Calgary and Edmonton) is priced higher than it is near the cities. The European folks love the area and many, many sell out over there and bring their cash and their skills and come here to buy more land and set up bigger herds of dairy, beef or hogs. We also have huge numbers of Hutterite Colonies as well and they are always looking to either expand the colony they are on, or break away and make a new one. As to the folks from the cities who want a little space to raise their children--well they are finding it much smarter to buy an entire 1/4 of land, build the house they can afford (or the house of their dreams, depending on cash flow) and yes, some do rent the remaining land to the locals for hay or crop. These folks have no intention of ever farming or owning tons of expensive machinery that works 6 weeks a year and then sits in the field for the rest of the time. These kind of folks don't want to be jammed into a 2 x 4 lot in the city--like many people with families--they want room for their families to grow. So while I do agree that land prices may slip a little in the short term, I still think that land ownership is by far the best investment. If you compare what investments are giving at the banks etc., land is still out producing them in the investment department. I am still running cows, cutting hay, enjoying nature because I still enjoy it--and like others, every year I break even, I think I have had a good year. My mother told me something, that I think many generations have known and/or learned 'hang onto the land'. Back in her generation--those with land did prosper (with the exception of the '30's) and the next generation did more than prosper. Land is a finite resource and whether we like it or not that which grows on it, that which lies beneath it and that which runs through it are absolutely vital to human-kind's existence--without its bounty and our ability to extract and use it we will not exist. Food and shelter--pretty basic needs--just take a look at those areas damaged by earthquakes--they are not asking for Ipods or vehicles or designer wear--they need food first and then shelter..the land will provide all of this and will pay forward to those who own the land...I don't see land losing any great degree of value for too long a period.

[fjlip]

Sagewood, please do the math and show us how $5000/ acre returns on investment with current grain and oilseed prices. At 2% return you have a $100/ acre fixed cost. If borrowed at 4% you have $200/ acre interest cost. Perhaps irrigated veggies or dairy, but nothing we grow here. Am I missing something?

[Jagfarms]

I was talking to a farmer in our area last night who
owns about 40 quarters of farmland and 50 quarters
of pasture. He has been farming for 40 years.

He said from his experience farm land values
coincide with what the grain prices are doing but lag
about 2 years behind.