Monday, January 23rd, 2012
Mercer County farmland outsells neighbors'
Prices more than double in recent years
By Nancy Allen
Farmland prices have increased locally and across the nation mostly due to high commodity prices and low interest rates.
Auctioneers selling land in Mercer County say they can hardly believe the increase. A record $9,050 per acre paid recently for farmland near Elgin in Van Wert County is close to today's norm in Mercer County, they say.
"In 1996 it was selling for $3,500 an acre," St. Henry auctioneer Randy Evers said of farmland in Mercer County. "The average price now is probably $8,500 to $9,000."
Evers said the livestock-rich parts of southern Mercer and northern Darke counties bring the highest prices. The highest price he netted for bare cropland was $10,600 in 2009 in Marion Township. He also sold some cropland with a house and buildings near St. Henry for $11,000 an acre.
The large number of livestock farms in southern Mercer County and the relatively low number of acres that become available make prices even higher compared to other parts of the county, auctioneers said. Mercer County consistently ranks No. 1 for farm income in the state, with livestock receipts the bulk of total income.
"Back in the 1980s, land north of (state Route) 29 was about half of what land south of 29 was, but today it's probably about 30 percent higher in the southern part," Evers said.
The northern part is catching up as landlocked livestock farmers want to expand.
"Some need more land to put manure on and some of the livestock industry has moved north because we're maxed out," Fort Recovery auctioneer Larry Keller said.
Keller said he's also seen a residual upswing in farmland prices in Jay County, Ind., across the Mercer County border.
"We don't have a lot being turned over in the southern part so you have to reach out a little further, 20 miles away to have a place to spread manure," he said.
Keller said the run-up in farmland prices began about four years ago, about the same time commodity prices began increasing. At that time, he was selling Mercer County farmland for $5,000 to $6,000 an acre; today the average is about $8,500, he said. The highest price he's ever gotten was $9,800 in southern Mercer.
The auctioneers said most buyers are other farmers with land nearby, not outside, non-farming investors, a trend seen is some areas of the Midwest.
Centuries-old farm families who want the family operation to continue result in fewer acres coming up for public sale, said Chris Gibbs, executive director of the Mercer County Farm Service Agency.
"The heritage of folks that settled in Mercer County is one of raising livestock and passing land down to ensure the sons and daughters in these families get the chance to farm and in particular raise livestock," Gibbs said. "When it does (come up for public sale), that only makes it more valuable to neighbors who are trying to lay groundwork for their sons and daughters."
Farmland prices have risen 53 percent in the last five years in western Ohio. In the last year, prices have risen 5.3 to 6 percent, said Barry Ward of the OSU Extension Department of Agricultural, Environmental and Development Economics.
Ward said increased profitability from growing crops in recent years and low interest rates on loans to buy land are the two main reasons. A low supply of land and a strong demand have affected prices to a lesser degree, he said.
"Farmers' balance sheets have improved over the last four to five years of unprecedented profits due primarily to higher market prices," Ward said.
He also noted farmland is more attractive over other investments right now.
"They're not going to put it in the stock market because it's too unstable and they're not going to put it into CDs because those interest rates are too low," Evers said. "If they're making money, they're going to buy land with it."
Celina auctioneer Tom Robbins, who has been selling land for 50 years, said he never imagined prices would get this high.
"I remember it selling for $300 to $350 per acre for good farmland and some went cheaper than that if it wasn't good farmland," he said. "I sold some for almost $10,000 (his highest) within the last two years."
Robbins and other auctioneers say Mercer County farmland consistently brings the highest prices when compared to surrounding counties.
"Mercer County tops 'em all," he said. "Something here that brings $9,000 or $10,000 will bring $6,500 to $8,000 (somewhere else)."