ECONOMY: Prices for farms climbing
By BOB BOUGHNER The Daily News
Updated 8 hours ago
Prices upwards of $13,000 an acre are being paid today for farmland in southwestern Ontario – a commodity being billed as “black gold.”
“There’s no question farm land is the single best investment today,” said veteran Chatham realtor Brian Peifer.
The reason, says Peifer, is record low interest rates and record high prices for corn, soybeans and wheat. The ethanol industry is also being credited with fuelling prices.
And the demand isn’t just limited to southwestern Ontario. Farmers across Canada and the U.S. are willing to fork out huge amounts of cash when farms come up for sale.
More than 800 farmers turned out at a recent sale in Montana where 100 acres of land sold for more than $1 million.
“There’s a huge demand for farmland and very little for sale,” Peifer said in an interview Friday. “Most farms only come up for sale once in a lifetime – if ever.”
Peifer said the demand for farmland is not only coming from local farmers but from economy-worried Europeans looking for a safe place to invest their money.
“There is only so much farmland available in North America,” said Peifer. “They don’t make any more today.”
Pain Court-based real estate salesman John Trahan, who has specialized in farm sales for the past 41 years, agrees with Peifer.
“The prices we’re seeing today are the highest I’ve seen in my four decades in the business,” he said. “And the prices keep climbing.”
Trahan said farmland in the $9,000 to $10,000 range is considered a bargain today.
But he said, despite the high price of farmland, the number of farms for sale are few and far between.
Trahan said $16,000 an acre is not out of the question for land in Chatham-Kent, especially if a farmer wants to expand and get his hands on adjoining acreages.
The Dover real estate agent said that while farmers are always willing to take risks, they do worry about the possibility of the “land bubble bursting.
“There is always the chance interest rates could skyrocket and commodity prices drop,” he said. “If and when that happens, it’s likely to be a disaster.”
Dover Centre-area farmer Brian Fox, who recently added to his land holdings, said he’s aware that sooner or later interest rates will climb.
“But when farmers make money they spend money,” he said. “It’s as simple as that.”
Fox said he was willing to invest in the additional acreage because it was close to his home farm and he has a son in the business.
bboughner@chathamdailynews.ca
Twitter: @DailynewsBB
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