Lately, I’ve had several questions from landowners, colleagues, and media about what I’m seeing in the Minnesota ag land marketplace. After all these discussions, I thought I would put together a collection of my observations. Here are some thoughts:
- The uptick in commodity prices has created some optimism in the marketplace (the opposite was true this spring)
- Interest rates are still at historic lows
- There is a lack of inventory for sale for the number of buyers looking for land
- Quality land is holding steady from a pricing standpoint
- Kids are coming back to the farm which creates the need for expansion; In today’s marketplace, I am hearing from local farmers that it takes 2,000-2,500 acres per person for an operation (if a husband and wife are not working off the farm as well)
- There are more women who are landowners and operators, and many of them want to work with a woman to either buy or sell land (this is from comments I am receiving from women landowners/operators)
With all of this, it seems like landowners who were on the fence this spring may be considering selling this fall as sales appear to be ramping up for the season. Here are the positives about this:
- Low inventory to meet demand
- Slightly increasing commodity prices
- Historically low interest rates continue and a change in interest rates/availability of money may impact purchases, rents, and subsequently, land prices
- 1031 exchange activity is up (as the purchase of development land continues, sellers of that land are looking to exchange into land to defer taxes and this has created a slight increase in the number of 1031 exchange buyers in the marketplace)
- Uncertainty in the stock market is causing some investors to invest in ag land vs. stocks or other investments.
On the other side of the coin, here are some things to consider:
- Uncertainties in trade/tariffs
- Uncertainties in immigration policies/reform
- Still a high surplus of corn/beans
- Tight operating capital for some farmers
- Lower yields in some areas given late spring planting, heavy rains, hail and wind damage
So, who is buying land? Expansion farmers still appear to be the predominant buyers of Minnesota ag land in this area (an estimated 65-75% of land sold is by expansion farmers). 1031 exchange buyers and investors make up 20-25% of ag land buyers.
Who is selling? As our farmers age, estates and trusts are selling; there are some “quiet” sales by farmers who are trying to generate some operating capital; and farmers desiring to do leasebacks.
Every area in Minnesota and each farm has unique qualities and will see the positives and negatives for their farm dependent on location and their own farm’s qualities. Please feel free to call, text or email me if you have an interest in listing your land or if you are looking to purchase additional land for your operation. I will do my best to answer your questions or to assist you in meeting your goals for your particular situation!