The average cost-per-acre of Washington farmland dipped
slightly this year compared to last year, according to a recent land values
report from Farmers National Co.
The employee-owned, Omaha-based company is an ag landowner
services company managing more than 5,000 farms and ranches in 28 states
comprising more than 2 million acres.
The average sale price per acre in Washington was $13,000 in
January, down from $13,500-per-acre in January 2018. In January 2017, the
average sale price per acre is $12,500.
The major issues for Northwest growers continue to be
immigration and labor, trade and tariffs, and the Farm Bill. Most of 2018 was
plagued by shortages of labor for the labor-intensive crops — asparagus, tree
fruits, vineyards and livestock operations, according to Farmers National Co.
The region is experiencing major reconfigurations of
orchards to get higher production from the same acres. Higher density planting,
re-grafting and total removal of some varieties is taking place, said Flo
Sayre, Farmers National Co. real estate broker based in Pasco, in a news
Lenders are tightening financing requirements more than in
the past and many growers are experiencing a drop in equity as a result,
according to Farmers National Co.
While there appears to be adequate small properties (less
than 20 acres in size) to satisfy the market, larger acreages are scarce and
the values to the grower are far less than the sellers and land owners would
like for returns, Sayre said. Properties in the Basin have ranged from a high
of $18,000-per-acre to other areas that have seen a decline in prices to near
the $10,000-per-acre value. For the most part, prices are at a plateau, she
“Interest rates appear to be holding for at least the next
few months. This is a good sign that stability in the market is at hand. While
not a lot of farmland is changing hands, there is a lot of interest in where
trade issues will head in the future. The land market is leveling off and may
decline a bit more over the next year or two,” Sayre said.
Farm and ranch land makes up 82 percent of total assets for
the industry nationally, according to Farmers National Co.
The company reports an uptick in land sales as more families
and inheritors want to sell, said Randy Dickhut, senior vice president of real
estate operations in a news release.
“Within our 28-state service area, we are also seeing more
landowners coming to us to market and sell their land as evidenced by our
volume of land for sale increasing 21 percent. These landowners are just
deciding now is the time to sell and capture today’s price,” he said.
Overall, agricultural land values have held up surprisingly
well over the past few years despite lower commodity prices and much lower farm
incomes compared to five years ago.
There are a number of reasons for this, including the low
supply of land for sale, cash rental rates remaining stronger than expected and
interest rates that have been historically low, the company said.
But there are some important questions looming about the
land market that are causing many to figuratively hold their breath in
anticipation of what comes next.
though the rate of bankruptcies and forced land sales is low, there is the
expectation that numbers will increase somewhat in the year ahead as farmers’
cash flows are stressed. There also is an increase of quiet sales to neighbors
or investors where the land is never exposed to the market to see what the true
price is. The ultimate question here is how many more properties for sale can
the market handle before the volume overwhelms the number of buyers and puts
downward pressure on land prices,” Dickhut said in a news release.
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