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Buyers still 'chasing' farmland
With a lot of strong farm incomes this year despite one of the worst dry spells in decades, farmland's still a hot commodity and will likely continue to be even if the drought continues, one expert says.
The last 12 months have seen land in Ohio rise almost 14% in value, putting it, on average, around $5,000 an acre. Even if the drought stretches into the 2013 crop year, the brisk pace of farmland sales will likely continue, says Ohio State University Extension production business management leader Barry Ward.
"We’re expecting the potential for profitability (next year) with corn looking like it will be king again. We'll have farmers with strong balance sheets, which will drive land values as well," he says in a university report. "With those strong balance sheets in spite of the drought, many farmers will continue to be in the land-buying mode."
Though just over 40% of farmers responding to an Agriculture.com poll say they're "completely uncertain" about the direction of the land market, Ward says a resurgence in corn profitability and the likelihood of ample revenue protection from crop insurance will likely combine to drive an even stronger market in the next year, drought or no.
"With many dollars and buyers chasing farmland, it isn't surprising to see land values increase substantially in 2012. Crop profitability along with low interest rates have been the primary drivers in the runup in cropland values," says Ward.