Is now the best time to invest in cropland? Farmers National Company the world’s largest farm Real Estate and Management Company will be holding a seminar in the evening of March 15th to address that question.
The recent decline in commodity prices has put a temporary halt to the growth in land values that had reached double digit annual appreciation. But cropland is such a resilient investment that even though commodity prices have dropped considerably, land prices had not followed that decline. As a result, this may have created some excellent investment opportunities.
As Warren Buffet put it, “The most common cause of low prices is pessimism — sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.”
Paul Pittman CEO of Farmland Partners put it this way when discussing investing in farmland. "We think it's a multi-decade trajectory of population growth and GDP per capita growth.”
So what should an investor expect when investing in cropland. If an investor were to observe return on investment over the last 60 year period they would see that farmland, on the average returns over 12.5% per year on average to investors, this includes both rental income and appreciation of the land itself.
It would also show that good cropland very rarely declines significantly in value, so that cropland can usually be counted on to increase, or at a minimum hold its value, while at the same time providing annual income through rentals. Perhaps most importantly for investors cropland also does not track with the ups and downs of the stock market, and is a great hedge against inflation.
“For the cautious investor Farmers National Company is uniquely positioned to serve as the entry point into the cropland market”, says local broker Bill Gaughan. As the world’s largest farm management company, we don’t just walk away from a client when the sale closes.
If needed we can work with a client for years into the future to assure that their investment stays lucrative, and to protect their interests. Utilizing Farmers National Company to source and manage your farmland means that we have a fiduciary responsibility to protect your investment long after the property sells.”
Not only can Farmers National Company find farmers to rent the land, determine the best agricultural practices, negotiate the best lease, and market the grain, but depending on the lease type by leveraging Farmers National Company’s immense buying power clients may be able to purchase all needed supplies at the lowest possible prices.
The biggest change seen with lower commodity prices is that farmers are less likely to commit to long term cash rent leases. This makes the services of Farmers National Company even more valuable, as Farmers National Company can guide investors through more complex lease arrangements that return satisfactory results, but require the experience and expertise of a professional farm management team.
The most efficient way for investors to determine if they are interested in cropland is to attend one of Farmers National Company’s popular series of seminars for cropland investors. The next seminar is being held in Overland Park at 7 PM on March 15th. Seating is limited, so while the seminar is free, attendees are asked to register.
For location information and registration, visit www.KCLandSeminar.com, call 913-837-4665, or email WGaughan@farmersnational.com. On the web you can visit FarmersNational.com/KC
The seminar covers the entire process of how to source, purchase, and maximize income from farmland. After the seminar investors can meet with Farmers National Company to determine their individual goals. Farmers National Company can help investors find lenders, tenant farmers, or other financial and legal professionals, for succession planning, tax impact, liability management, and more.
Farmers National Company
Farmers National Company, an employee-owned company, is the nation’s leading agricultural landowner services company. Farmers National Company has sold more than 3,800 farms and more than $2.44 billion of real estate during the last five years. The company manages more than 5,000 farms and ranches in 28 states comprising more than 2 million acres. Additional services provided by the company include auctions, appraisals, insurance, consultation, oil and gas management, lake management, a national hunting lease program, forest resource management, and FNC Ag Stock. For more information on our company and the services provided, visit the Farmers National Company website at www.FarmersNational.com.