Miss. farmland selling at higher prices

Jan. 22, 2014

The price of farmland in Mississippi has gone up $500 an acre from a year ago, putting the state ahead of Texas, Tennessee and Kentucky, according to a report from Farmers National Co., a top farm/ranch real est

Mississippi, in step with a number of other states, is selling its farmland at higher prices to start the year.

 

According to a report from Farmers National Co., a top farm/ranch real estate company, Magnolia State farmland is selling at an average of $4,500 per acre, up from $4,000 per acre in January 2013. The Omaha, Neb.-based company looked at 17 states, mostly in the South and Midwest.

 

Among Southern states, Mississippi is ahead of Texas ($3,500 per acre), Tennessee ($3,600) and Kentucky ($4,200) but trails Arkansas ($5,000).

 

Cris Wilson, owner of Greenwood’s Mississippi Delta Farmland real estate firm, says the state is enjoying continued favorable crop prices for grains like corn and soybeans and upward ticks in rice and peanut prices, in turn making the state’s farmland more valuable. He adds people are increasingly turning to farmland’s consistency as an investment, too.

 

“Farmland is a good hedge against inflation. It has a good, safe return rate, four to five percent,” he said. “Historically, it’s been a very good investment.”

 

And an improving economy means not only more people investing in agricultural land but more buying of land instead of leasing, Wilson said.

 

Of all the states in Farmers National’s study, only two — Kansas and Michigan — saw average sale prices drop from January 2013. The rest increased or remained flat from last year. The company said prices in general are at “historic highs” despite stabilizing some after more dramatic increases in recent years.

 

The company said there was a record $750 million in land sales in its service area in 2013, versus $640 million in 2012.

 

Farmers National says its network of 24 states saw strong demand, especially in the second half of 2013, leading to higher-than-normal auction activity. Lower expenses for things like fertilizer also have helped spur real estate transactions.

 

“This is prompting farm owners to continue buying premium land to expand their operations,” said Farmers National vice president of real estate operations Randy Dickhut in a news release about the report. “The market for farmland overall remains strong, particularly for quality land.”

 

But the upward trend could change on fairly short notice. The same commodity prices that have helped land sell recently could slow that activity if they drop too sharply, Wilson said. Dickhut added some buyers are holding off on big-ticket land, not yet convinced they’ll get a consistent return on investment. He said expenses and interest rates will have an influence, too, although he sees good things ahead for at least the first half of 2014.

 

While Mississippi’s average sales price was better than most Southern states, it was far below prices observed this month in Illinois ($12,500 per acre) and Iowa and Nebraska ($12,000 each).

 

To contact Jeff Ayres, call (601) 961-7050 or follow