Written by Gregory L. Snyder, ARA
The northeast portion of the country is characterized by multiple agricultural industries from general crop farms, to timber tracts, to livestock operations including dairy, poultry hogs and horses. It also consists of widely varying areas from very rural to very developed surrounding our major cities. Farmers here are a mix of typical family-farmers tilling from 200 to several thousand acres, Plain Sect farmers operating 50-75 acres, to lifestyle farmers who own 10-30 acres.
Dairy is a major industry in the Northeast and herd sizes vary. New York ranks #4, Pennsylvania ranks #5 and Vermont ranks #17 for milk production in the US. The average Pennsylvania herd size is 80 cows with 99% of all dairy farms being family owned. The size of dairy operations varies. A typical Plain Sect farm is 40-50 cows while large operations have 1000+ cows.
The dairy industry continues to experience low profits due to the decreased milk price. Reducing cost of production is the driving force behind continued profitability. A larger than typical number of autumn public sales of dairies is occurred. Several farms were offered on public sale this fall, but were not sold because high bids were below sellers’ sale price expectations. Sales of farms without a milk market at time of sale are approximately 30% lower than sales with a milk market. There are also a number of dairy farmers that have exited the industry and have not sold their farms but have moved onto another industry. Cow prices have fallen to a low that has not been seen in some time and it is anticipated more cows will be moving towards the beef market in the next 6-12 months.
Pockets of Pennsylvania continue to see heavy competition for farm land, which has driven the price up. These areas are primarily dominated by Plain ect community members seeking additional farms on which to establish their children.
Land values in Pennsylvania are all over the board, from $1,500 per acre to $25,000 per acre depending on location. Lifestyle/part-time farm sales continue to be strong with the generally decent overall economy.
The New England farm real estate market is characterized as having stable values with lower than normal volume of sales and few active listings. This market is driven by dairy farms. The relatively few farm sales from 2018 were very high quality land and showed strong pricing with competition from several buyers. It seems unlikely that lower quality land will fare as well because dairies are short on cash and only want to spend on prime assets. Older dairy improvements are not holding value well as most remaining dairies prefer to build efficient dairy centers rather than utilize older inefficient improvements.