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Farmland sees some 'astronomical' sales results

Nelson, Weston and Eric Skolness of Farmers National were discussing land values during one of the seminars at the opening day of the Big Iron farm show in West Fargo.

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Kyle Nelson, left, and Dale Weston of Farmers National Company speak Tuesday, Sept. 13, 2022, at the Big Iron farm show in West Fargo, North Dakota, discussing farmland values.
Jeff Beach / Agweek
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WEST FARGO, N.D.— When premium farmland is coming up for sale, Kyle Nelson says the bids these days can be “astronomical.”

Nelson of Farmers National Company said he underestimated the momentum that was building in farmland sales in 2021 that has continued to roll in 2022.

“Farmland prices since the fall of 2021 have really seen a dramatic increase,” Dale Weston, also of Farmers National. “We’ve had some sales that just keep beating the highs of the previous sales throughout all the winter and even into the summer months of 2022.”

Nelson, Weston and Eric Skolness of Farmers National were discussing land values during one of the seminars at the opening day of the Big Iron farm show in West Fargo.

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Steve Dalen, right, talks with visitors to the Pifer's Auction and Realty tent at the Big Iron farm show in West Fargo, North Dakota, on Tuesday, Sept. 13, 2022.
Jeff Beach / Agweek

Elsewhere on the Big Iron grounds, Steve Dalen was chatting up visitors to the Pifer’s Auction and Realty tent.

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Dalen said Pifers has about 40 auctions scheduled in November; in 2021, when land sales were already strong, that number was about 10.

“The calls continue to keep coming,” Dalen said.

He said a bidding war recently drove a parcel near Wendell in west-central Minnesota to over $10,000 an acre — 25% to 30% above expectations.

He also points to another recent sale at Casselton, North Dakota, where land sold for $8,800 an acre, consistent with a sale of a similar parcel in the spring.

So he said he does see some “sideways” movement in the market.

“Sales will stay strong as long as commodity prices stay strong,” Dalen said.

But he also says for sellers “procrastinating probably wouldn’t be a good thing.”

Weston said he doesn’t see the market going sideways, especially for the premium parcels.

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“There’s no indication that the market has hit a plateau at this time,” Weston said.

“The high quality pieces are just going to continue to be higher and higher and higher,” he added.

The Federal Reserve has been increasing interest rates as a tool to tamp down inflation, but Weston said there is no sign that is affecting sales. The prime rate is still on 5.5%, far below the interest rates in the teens that helped bring on the 1980s farm crisis.

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Steve Dalen, real estate agent for Pifer's Auction and Realty of Moorhead, Minnesota.
Jeff Beach / Agweek

Out of all the sales he has helped facilitate this year, “I’ve had one investor mention interest rates,” Dalen said.

Dalen and Weston say the bulk of the farmland coming up for sales is from farm retirements or those that have inherited farmland but have no plans to farm it.

But Dalen said there is some shuffling of producers trying to step up to Grade A farmland and putting their Grade B farmland up for sale to help finance it.

Farmland values are up across the board but the best tracts — square, level, good soil, good drainage and good production capability, “people are going to pay up for it,” Weston said.

Strong commodity prices and good yields are helping keep buyers confident in land values but there are factors that play in.

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Crop insurance: Weston said the federal crop insurance program has helped “put a floor” under land values that should help avoid the crashes of the past.

Inflation: There are investors who see farmland as a safe haven for investing, even if they don’t plan to farm it.

Technology: The days of the in-person only auction are all but a thing of the past. This has changed farmland auctions in several ways: It has opened up the auctions to investors from all over the country; auctions don’t have to be scheduled to avoid harvest or heavy fieldwork times, instead, farmers can bid while they ride in a tractor; and perhaps most importantly, you don’t have to bid face-to-face with a neighbor.

Nelson said the online bidding process “creates more of a true result.”

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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