By DOUG GRAVES
Ohio Correspondent

COLUMBUS, Ohio — Fifteen years ago most people had no interest in owning land in the rural community, finding better ways to invest their hard-earned money and preferring to remain close to their employer.

How things have changed.

In the past four years, for example, most real estate values have plummeted in these tough economic times. But over that same period, experts in the agricultural community have seen a steady rise in farmland interest and sales. Amid record-breaking grain prices, cropland values last year soared 11 percent in Ohio, 15 percent in Michigan and 13 percent nationally, according to the USDA.

At $3,920 an acre, Ohio bested the Michigan average of $3,450 and the U.S. average of $2,700.

In the fertile areas of northwest Ohio, for example, values are even higher. In a survey last spring, the lender Ag Credit, of Forstoria, found that top land was fetching $4,500 in several places in the region. The data is for land kept for farming and none converted to housing tracts.

“Values have definitely gone up,” said Bill Eirich, chief appraiser for Ag Credit, who attributes the gains to price increases for corn, soybean and wheat, along with land purchases as income-tax strategies.

“I can’t speak for the entire state of Ohio, but things should stay high for several more years due to grain prices and good exports,” Eirich said. “Things could change and the price per acre could go down in five to 10 years, but our last check showed that farmers are willing to purchase more acreage in their area.”

While most of the nation is feeling the crunch of tough economic times, farmland prices have headed the other direction.

“We’ve continued to see farmland value increases, even when the overall economy was in a recession and when real estate values in housing and the commercial markets fell off,” said Michael Boehlje, Purdue University professor in the department of agriculture economics.

“According to a survey by the Chicago Federal Reserve Bank, farmland in Iowa increased in value by 13 percent between the fall of 2009 and the fall of 2010. Our survey for Indiana shows that farmland values since 1985 have gone up about 270 percent, or about 5.5 percent per year.”

Boehlje and his associates believe that forces driving those land values up or down also include farming incomes, interest rates, development potential and inflation.

Stephen Koontz, an associate professor in the department of agricultural and resource economics at Colorado State University, said farmers and ranchers “shouldn’t go outside and buy new iron (farm equipment),” but should take that money to build equity in order to bring the next generation back to the farm and ranch.

“We are going to see some real good success stories in the next few years,” he predicted.

Joe Newlove, a Wauseon auctioneer from northwest Ohio who specializes in agricultural property, definitely sees an increased interest in farmland.
“Farmland prices are the only things that are good right now,” Newlove said. “Anything red or green (referring to International Harvester or John Deere) is selling high right now and farmers are buying a lot of new pickup trucks. Too bad farmers are only three percent of the economy.”

Newlove said that he’s seen farmland fetch as much as $6,700 per acre, though he adds the average per acre is between $4,500 and $5,200.

“I’ve seen more and more people interested in purchasing farmland,” he said. “It seems to be slowing down some, perhaps because of the tougher zoning laws, and there’s no more one-acre lots. They’re now selling in five-acre increments.”