Even with farmland selling for higher prices than ever before and with jumps in prices of 25 percent an acre in some areas, capital value growth is still anticipated to be between 4 percent and 6 percent annually.
That strong capital value growth report comes from Howard Halderman, AFM, Halderman Farm Management Services. “It is interesting that when you go across the whole United States, it ranges from 4 to 6 percent. It doesn’t matter if it is Indiana, California or Florida,” he said.
“If they (investors) are looking over a 35-year time period, which takes into account up to a 60 percent decline in values during the 1980s and the big rise in the last four or five years into account, this is still a good number to use,” Halderman said.
Investment in farmland for the long term compared to other investments are a wise move in general as seen by Halderman. “They get strong capital value growth, steady case dividend of 3, 4, 5 percent cash ROI, and the other thing that is a little bit different than other real estate types. It has a zero vacancy rate (investor-grade property).”
Halderman receives quite a few investor inquiries for them to diversity their investment portfolio. He said, “They are betting that agriculture is a good place to be the next 30 or 40 years based on the democratic trends across the globe.”
Halderman made his comments during the American Society of Farm Managers and Rural Appraisers annual meeting and “AgroNomics—Vision 2012” conference.