Farmland still good investment, with farms on solid footing
“The big elephant in the room as far as demand goes is these world populations and rising incomes,” said Schrader, citing figures showing that by 2050, the world population will require a 100 percent increase in the world food supply. “Growth in other countries' populations and wealth will have a big impact on the demand side for U.S. agriculture. On the supply side, it will be interesting to see how the technology keeps production growing to meet demand,” he said.
In evaluating values achieved in recent sales, Schrader said it's important to be mindful of the soils and productivity of a given farm.
“It's critical to get an apples to apples comparison. We've had a lot of cases where people compare farms in a specific county without taking into account the difference in soils,” said Schrader. To illustrate his point, he pointed to three adjacent properties sold by Schrader on the same day – Nov. 15, 2012 – in Pulaski County, Ind. The best land sold for $10,576 per acre, while the tracts with more trees or poorer soil brought $4,500 per acre and $4,083 per acre.
“This was the same auction company, with all the same buyers, with all the same money in their pockets,” said Schrader. The tract with sandy loam soil, he said, brought more than twice a neighboring tract with poorer soil.
Schrader Real Estate and Auction Company is based in Columbia City, Ind.
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