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The Term ‘Dirt Cheap’ No Longer Applies
By Mr Ethanol | May 7, 2007
Farmland prices and demand are rising, but, so far, energy corporations aren’t buying Wyoming ground.
Wyoming News:
Farmland prices are on the rise.
The demand for ethanol is increasing land costs in Iowa as farmers increase their corn crops. Wyoming’s farmers and ranchers also are growing their properties, but not for alternative fuels, said John Childers, a broker with Agri Affiliates.
The real-estate service covers Wyoming’s eastern corner, the Nebraska panhandle and northern Colorado. Childers said buyers in these areas are predominately local agriculture producers looking to expand the businesses they already have, not energy corporations eager to move into the Rocky Mountain region.
But this doesn’t mean that price pressure in other parts of the country won’t affect the Wyoming marketplace. Childers said for the past three to four years, he has seen land parcel price tags edging a little higher each year.
Agri Affiliates hosted a land auction in Pine Bluffs on Tuesday, where eight parcels of land totaling 1,745 acres sold for more than $1 million.
This is a volatile business, though.
A piece of land is only worth as much as someone else is willing to pay. The parcel with the highest price went for $1,453 an acre. Meanwhile the larger parcel directly next door sold for $460 an acre. But both parcels still exceeded the minimum bid requirements of $669 and $317 per acre, respectively.
Childers said all of the winning bidders were ag producers in the Pine Bluffs area.
John Stratman, a real-estate broker with Mason and Morse Ranch Company, said he shows ranch and farmland in southeast Wyoming and western Nebraska to a mix of buyers.
Some customers are looking for an investment property, while other buyers want a site for recreation.
But the biggest impact is from agriculture.
He said there is more interest from investors dealing in ethanol production. This alcohol-based alternative fuel is produced when starch crops like corn are fermented and distilled into simple sugars.
The U.S. Department of Agriculture reported that the nation’s farmers intend to plant 15 percent more corn acres in 2007, an increase of 12.1 million acres over the 2006 total.
“It’s been a big impact on farmland prices,” he said. “There has been considerable demand. The market is definitely stronger this year than last year.”
Related article >> Farmland The Next Big Commodity? - Ethanol demand Makes Arable Land More Valuable
Topics: BizOp, Cheap, Ethanol, Real Estate |
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