land prices?

[cowman]

Are land prices on the way up? Stopped at Don Laings farm sale west of Ponoka yesterday and they auctioned off 624 acres of bare farmland for $2.2 million or over $3500 an acre. Sold the house and farm yard seperate for $420,000!
With dismal crop prices there sure seems to be a lot of money still floating around? I didn't stay very long but it looked like it was top dollar being paid for just about everything.

[farmers_son]

I can only assume Don Laing did not think land prices were on the way up or he would have waited a few years to sell.

You refer to a lot of money floating around. A lot of that money is borrowed. In constant 2003 dollars, 1975 Canadian farm income was $3.3 billion (with all government payment out) on a debt load of $7.7 billion. In 2003, income from the market was (negative) -$2.3billion on a debt load of $47.7 billion. Farm debt has increased six fold within a generation while net income has dropped.

An industry can sustain itself on debt for only so long. Up to 2005 we have been keeping the wolf from the door with falling interest rates and a falling Canadian dollar. Those days are over even if many seem not to realize it yet.

Some day all that borrowed principal, all $47.7 billion of it, is going to have to be paid back. It may seem like an easy ride when you are running on borrowed money but pay back is really going to hurt.

[farmers_son]

Doubt if anyone knows if the purchaser has deep pockets or a good banker and I guess its his business. I am betting that there is some sort of development in the works. The property is prime for country residential development or highway commercial.
I am surprised that the house and acreage didn't go higher.

[Horse]

Emerald what in the hell are you smoking there is houses in ponoka well under 100, 000 and take away the frunny farm and there is no industry to suport the population and the distance to anywhere is to far with these energy prices gotto be a consertive .

[Horse]

horse, I won't dignify your question about what I am smoking, it was inappropriate . The house I refer to is a very impressive one, and the land in question is prime highway frontage. If you spend any time in Central Alberta you will see country residential development increasing at a rapid rate. The land in question is half an hour from Red Deer, which makes it well within commuting distance .
People travel for an well over an hour to commute to their jobs in Calgary, then fight the Deerfoot for another hour to get downtown, so travelling half an hour to Red Deer would not be unthinkable.

[Horse]

That reminds me of the sports reporters talking about how these athletes are worth millions as if they rrealy knew what a salary like that realy is. All I know is if I want to feed my kids campbels soup Gretzky gets a share .

[craig]

The information I got suggests this was a sale to dairy operator. While land values seem huge we have to remember that the buyer may have sold out at a price that makes this purchase seem a bargain. Interesting in an auction setting that someone else must have felt the land was valuable to bid the price to these levels.

[craig]

if it was a dairy operator from Europe it is likely they did sell out for considerably more than what the paid. They still will have to apply to the NRCB for an approval to construct a dairy at that site if that is their intention and that will involve a lot of neighbours having their say in the process.

[cowman]

With land prices in Holland around $100,000/acre this looks like a steal to the European dairy farmer! I assume the guy doing the buying is pretty certain the NRCB basically has given him a green light?
The auctioneer said the house and acreage were definitely the buy of the sale at $420,000...and I think he might have been right!
The fact is land in central Alberta is too high priced for production agriculture? Literally the land will never be able to pay for itself? This land was all grainland. It apparently was very productive grain land but barley at $1.85/bu will never pay the interest let alone the principal on this land? The sad fact is to make a go of something like this you need a factory farm, with all the problems that creates for the neighbors around you.

[cowman]

cowman the land purchaser cannot get a GREEN LIGHT regarding an AOPA permit until he applies, and provides all the necessary information including engineered plans for his barns and manure storage area plus bore hole logs for his test wells, plus depending on the size of his operation, the neighbours and the county have the opportunity for input into his completed application which includes all of the above.

[cowman]

I would assume the buyer knew the water situation as well as the other concerns before he bought the land? I would guess he ran it by the NRCB boys before he bought? That is pretty standard operating procedure these days for European farmers? They have a very good grasp on regulations and dealing with the beuracracy!
I doubt this land is slated for developement as it was all prime ag land and not all that close to Ponoka, although it was close to highway 2.
A modern dairy is a pretty clean operation? The manure is injected and they are ultra clean and don't stink up the country like a feedlot or hog barn?
I would assume they wouldn't get the opposition like the others?

[cowman]

cowman, manure is not always injected. If the operator doesn't indicate injection on his application then it is assumed he is going to spread it by other means, which could be on zero till or grass lands.
The only mechanism to run things past the NRCB is to file a Part One of the Application which is faxed to the applicable county the day it is received by the NRCB which will fix the Minimum Distance Separation between the operation and the nearest residence not owned by the applicant. Until that is done the operator hasn't even indicated his intend even if he has had a real estate agent and lawyer involved. If no application is received the county can approve a dozen subdivisions within the MDS which would in effect make gaining an approval very difficult.
In the Taiwan Sugar case with Flagstaff County an application for subdivision in effect stifled the entire process, which is why the Part One of an AOPA permit signals the intent to apply for a Confined Feeding Operation and advised the municipality of the MDS.

[cowman]

Well in my municipality injection is pretty well a requirement if you want to build a new dairy or hog barn. We don't have any new feedlots...at least of any size. Not too many of those being built lately?
By the way, while I was at that sale, the guy I was talking to told me there was another feedlot(3000 head) around Ponoka going down. He said the bank had already started the procedure to take them down.
I don't remember the names but it was a couple of brothers.
It almost seems that these mid sized lots can't cut it any more? That feeding cattle is moving towards the big lots? At one time there were a lot of smaller background type lots but a lot of them seem to have quit? I do believe these farmer/feeders were the backbone of the industry and kept the big boys honest?

[cowman]

There have been several smaller lots approved by the NRCB in the past year or so. The largest application was for 18,200 head.
Ponoka County is such a developed municipality that there likely isn't many parcels of land where a large new feedlot could locate.

[cowman]

I wonder if the trend will continue to more concentrated areas for feeding cattle(like feedlot alley) and maybe for hog production as well? If certain municipalities encourage ILOs while others discourage them, will the operators finally see the writing on the wall and move to the more friendly environment? Maybe Saskatchewan is a better place to raise hogs and fatten cattle?
Kind of tough for the farmers who live here and want to run an ILO but I guess they could move if they feel they can't survive?
I will note that the NRCB gave a large hog operation in Lacombe county the green light despite a very loud protest from some local residents? I wonder what would have happened if they had all put in applications for subdivision? Would that have been enough to hold up the hog barn developement?
In Red Deer County, just last year, a landowner was awarded a subdivision near a fairly big feedlot. The feedlot owner fought it tooth and nail because it would forever limit any expansion he might want in the future. The council went against all its own guidelines and granted the subdivision request after the subdividing landowner broke down in tears and bawled! The feedlot owner is pretty disgusted to say the least!