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March 12, 2015
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March 26, 2015
Food Chain Radio Show #1,007
Michael Olson, Author & Urban Farming Agriculturalist
Some Good Earth – Farmland For Sale
What factors give farmland value?
Guests: Chuck Allen, Realtor, Keller Williams & Randy Dickhut, Vice President of Real Estate Operations, Farmers National Company
This Poll is closed!!
“It is the end of a family – when they begin to sell their land. Out of the land we came and into we must go – and if you will hold your land you can live – no one can rob you of land.”
― Pearl S. Buck, The Good Earth
Michael Olson Food Chain Radio: What factors give farmland its value?
A seller of farmland may claim its value to be X + 10. A buyer may say the value of the farmland is X -10. Seller and buyer talk things over and agree to consummate their transaction at X. When their transaction has been completed, the value of that farmland can therefore be said to be X.
Not all farmland, of course, is worth X. There are many factors that mitigate the value of each parcel. These factors include:
Supply and Demand: Should the demand for farmland exceed its supply, prices will likely be high. Conversely, should the supply exceed the demand, prices will be low.
Location. The primary rule in all real estate is “Location, location, and location.” Considerations important to farmland valuations include the parcel’s proximity to processing facilities and markets.
Quality: The quality of farmland is judged by its capacity to support the growth and development of crops, and include the condition of its soils and the benevolence of its environment.
Market Conditions: Economic conditions of the times, as well as prospects for future conditions, always affect price. When times are good, for example, buyers might bid against each other in a “feeding frenzy” that sends prices to unrealistic heights. Conversely, when times are bad, sellers might compete to dump their properties, sending prices to the bottom.
Government: While dwellers in caves may have enjoyed free markets, those markets have long such gone the way of the dinosaur. Today’s market for farmland is now impacted by a multitude of government subsidies, allotments, marketing orders and control which, if only for a short while, can obliterate the normal effects of supply and demand on farmland prices.
Given the number of different factors that determine farmland prices, and their impact on other factors, we simply must ask:
