AMID A SLUMP in home sales and housing starts across northwest Ohio and southeast Michigan, farmland prices stayed strong last year. But there were signs the market was beginning to moderate.
In seven of 11 counties for which estimates were available, prices for crop acreage increased, including 21 percent in Williams County; 12 percent in Fulton and Seneca counties; and 9 percent in Sandusky County.
Still, prices were flat in two counties with strong agricultural sectors: Henry and Putnam.
Value of crop acreage slipped 17 percent in Monroe County and fell 3 percent in Ottawa and eastern Lucas County.
Real estate professionals who specialize in sales and auctions of cropland remain bullish on the market, however.
We ve seen super strong prices, said Bill Eirich, a senior appraiser with lender Ag Credit, Fostoria.
Added Wayne Wilson, of Wilson Auction and Realty Co. Ltd., Bryan: Prices in 2006 were steady to strong. Farmland in our region is one of the best buys in the country.
Top prices paid for cropland were $4,400 an acre in Wood County and $4,200 an acre in Putnam County, according to figures provided by Ag Credit. Those figures include only land retained for farm use and none sold to housing developers.
Statewide, the per-acre value of cropland rose 10 percent to $3,540 in Ohio and 9 percent to $3,000 in Michigan, according to the National Agricultural Statistics Service.
Those values were higher than the national average of $2,390 last year, although other areas of the nation gained ground on Ohio and Michigan. Values increased 13 percent nationally, which was more than in the two neighboring states.
Factors affecting values and sales prices include the availability of land and the popularity of farming.
Good ground is still going up, said Joe Newlove, of Joe Newlove Real Estate & Auctions, Wauseon.
He conceded, however, that prices for lesser-quality acreage did not increase last year.
Factors affecting price include soil type, drainage qualities, and the land s suitability for farming, such as whether it is flat, hilly, smooth, or rocky.
Farm land prices have appreciated significantly in recent years, a development that Mr. Wilson attributed to low interest rates as well as supply and demand.
As housing developers have gobbled up property in some counties, the value of remaining land has increased, he noted.
The loss of farmland to residential development is a major factor in the relatively high prices in Ohio, said Lynn Forster, professor of agricultural economics at Ohio State University. Indiana, Illinois, and other Midwest states have experienced a similar phenomenon, he said.
He predicted values will remain stable or continue to increase, especially with ethanol producers expected to push demand, and prices, for corn higher.
If that continues, people are going to be bidding up farmland prices, Mr. Forster explained.
Across Ohio, he noted, 60 percent of land used for agriculture is owned by people other than the farmers who work it.
But, he said, little farmland is owned by investment groups and large corporations. Typically, it is owned by people with links to farming, most often retired farmers and their children. Mostly it is people who are close to agriculture, the OSU expert said.
At the same time, the data show that more than half of crop acreage in Ohio is farmed by tenants.
Part of that is attributable to the high cost of getting into farming. To purchase 500 acres at $4,000 an acre, a buyer would have to pay $2 million. Experts note that 500 acres is not an especially large farm, yet it is out of the reach of many buyers.
And even when land is lined up, the buyer then has to purchase costly tractors and other machinery used in modern agriculture.
Farmers have competition for available land not only from developers but also from hunters and other recreational users.
Mr. Forster sees current trends continuing. The only potential stumbling block would be a steep increase in interest rates. That would have a big impact, he said.
Contact Gary T. Pakulski at:firstname.lastname@example.org 419-724-6082.