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Farmland Prices Rising in MI and Nationwide
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Michigan cropland rose in value by 6.1 percent in 2011 over 2010 to an average of $3,500 per acre, according to Jay Johnson, director of the Michigan field office for the U.S. Department of Agriculture's statistics division.


Source: Lansing State Journal

Contact: Louise Knkott Ahern at lknott@lsj.com

 

Farmland Prices Rising in Michigan and Nationwide


Michigan's agricultural business leaders will gather in Lansing today for an annual conference on the latest in farm technology and innovations.

But amid the talk of seed genetics and computerized combines, any projections about the ag industry in 2012 might boil down to something a lot more old-fashioned.

What's the going rate for good dirt?

Michigan farmland prices are expected to rise in value this year, the fifth year in a row that croplands have bucked property trends during an otherwise depressed real estate market.

Michigan cropland rose in value by 6.1 percent in 2011 over 2010 to an average of $3,500 per acre, according to Jay Johnson, director of the Michigan field office for the U.S. Department of Agriculture's statistics division.

He said all expectations are that the rise will continue this year.

"As long as crop and livestock prices hold on at high levels, the anticipation is the land will follow," Johnson said.

Land values will be among many topics discussed during the three-day Michigan Agri-Business Association winter conference at the Lansing Center. The event begins today and ends Wednesday.

Experts say the rise in farmland values has been and will continue to be driven by a profitable combination of factors — low interest rates, global demand for U.S. agricultural products, record-high prices for crops and new technologies that allow farmers to produce greater yields per acre than ever before.

Corn is fetching as much as $5 per bushel, said Jim Hilker, an ag economist at Michigan State University. Soybeans could top $9 or $10 per bushel in 2012, he said, with wheat earning somewhere between $5 and $7.

"That should keep land prices in the ballpark of where they've been," he said. "Right now, grain prices are quite good. We expect them to stay, maybe not at last year's levels, but at good levels. I would expect farm income to come down a little but still be very positive, which ought to keep prices where they are."

And while a small portion of cropland being sold in the past few years has been slated for commercial or housing developments, the vast majority of land transfers has been for farming expansions — a sign that Michigan farmers have faith in the future, said Paul Anderson, senior vice president and chief credit officer for GreenStone Farm Credit Services in East Lansing.

Michigan's rising farmland values mirror increases in other parts of the country. The Great Lakes region as a whole saw an increase of 9.3 percent in 2011 to an average price per acre of $3,650.

The trend has gotten national attention lately because of the Jan. 3 Iowa caucus for the Republican presidential contest.

With the nation's eyes focused on that state, media zeroed in on the jaw-dropping rise in Iowa's farmland prices.

Some land has sold there for as high as $20,000 an acre — sparking some concerns of a housing market-style bubble that could eventually burst.

But farm economists say slow-and-steady increases like Michigan's are closer to the norm and unlikely to produce a catastrophic fall.

"The good news for us in Michigan is while we've seen an increase there has not been a pressure on prices that might not be sustainable as we've seen in the rest of the Midwest," said Anderson. "It's been a good time to be in agriculture."