Is it time to sell farmland?LISLE, Ill. — If you or someone you know is considering selling farmland, please read this carefully.
By: Todd Dyer,
LISLE, Ill. — If you or someone you know is considering selling farmland, please read this carefully.
Grain farmers looking for a way to unlock the equity built up in their farming operations need not sell out, borrow or rent their farms, nor do they have to lose possession of their farm to gain access to that equity.
I want to take a moment to introduce myself. My name is Todd Dyer, I am president of the Farmland Marketing Group.
I grew up in Wisconsin, where my mother’s side of the family were dairy farmers going back 100 years. My father spent his career at Transamerica Life Insurance Co., a company that has invested hundreds of millions of dollars in farmland.
In the last several years, I have been hard at work assisting Nicholas C. Hindman Sr. and his team in putting together a farmer owned, farmer-controlled fund that would give farmers the liquidity they need and want without them having to give up their farms.
As you are aware, countless agricultural real estate investment funds already manage billions of dollars of farmland.
Additionally, new funds are being started, whether they are structured and restructured by foreign governments, hedge funds, insurance companies and others, they all are looking to make acquisitions of farmland.
Buy and rent
All of these would-be purchasers operate with a simple business model: buy farmland and rent it back to farmers.
At the same time, a generation of farmers is approaching retirement age. The average age of farmers is 55. More than 40 percent of farmers are older than 65.
In the next several decades, there will be significant pressure on farmers to sell. Whether it be forced sales to satisfy estate taxes or estate settlement issues (already the No. 1 factor driving farmland sales), or simply farmers wanting to retire and/or not having children that want to carry on the family tradition.
Regardless of the reason, these forthcoming farmland sales create the strong possibility that control of production could shift away from independent family farmers and America’s Heartland could end up in the hands of foreign governments, insurance companies and big agricultural real estate investment funds.
For anyone considering selling their farm, Hindman’s new funds create an alternative not previously available to farmers.
Farmers who become part of American Farmland Partners can get the liquidity they need without having to give up their farms and without giving up the future income or appreciation generated by their farms. Farmers also have the ability to continue occupying and operating their farms and can pass that right on to their heirs.
As you also may know, seed companies, grain companies, retail grocery chains and other businesses that use farm commodities have merged and consolidated, increasing their market share and eliminated their competition.
This has resulted in these businesses becoming more powerful and profitable.
They have accomplished this, in part, by exerting price pressures on farmers and the commodities they produce.
Many farmers end up being squeezed from both sides, paying a high price for inputs such as seed and fertilizer and not being paid a fair price for the commodities they produce, or, in the alternative, have to deal with a great deal of volatility.
Editor’s Note: Dyer is president of the Farmland Marketing Group.