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Farmland prices expected to keep rising in 2013

  • The Wichita Eagle
  • Published Wednesday, Jan. 23, 2013, at 10:28 a.m.
  • Updated Wednesday, Jan. 23, 2013, at 10:07 p.m.

Kansas farmland, like agricultural ground across the nation, is expected to continue to rise in value in 2013, according to a new report by farmland brokerage and land management firm Farmers National Co.

Even as residential property markets faltered, prices paid for farmland have continued to rise, driven at least in part by high grain and livestock prices, as well as low interest rates and relatively poor returns on alternative investments.

In looking back at 2012, the company said there also was more land for sale this past year because worries about rising capital gains taxes spurred landowners to complete sales before the end of the year.

The result, said the company, is that the supply of land for sale will be down in 2013, while the demand for land remains strong, pushing up prices.

Terry Rupp, a broker with J.P. Weigand, agreed that he expects a lull in the first half of 2013 after the “unprecedented” activity late last year.

But he certainly doesn’t see price increases anywhere close to the 15 percent gains of recent years.

The tax changes that came down weren’t that punitive, raising the capital gains rate from 15 to 20 percent on those with incomes of more than $400,000 as individuals or $450,000 as couples.

“I’ve got quite a few people talking about selling, but they haven’t rushed into it because there’s no tax urgency,” he said.

Bill Eberhardt, an Augusta-based broker with United Country National Realty & Auction, said 2012 was incredibly busy, as exemplified by a recent deal in Rice County.

“The time between when it was listed to when we delivered the check to the owner was four days,” he said.

Despite the drought cutting into farm profitability and the surplus land on the market, prices did not fall.

Farmers National estimates the price of top-quality Kansas farm ground is now up to $4,000 to $6,000 per acre.

Eberhardt said that price might be for irrigated land, but unirrigated cropland in central and southern Kansas runs between $2,500 and $3,500 an acre.

Another factor continuing to push land prices higher is the rising impact of mineral rights, he said.

Oil companies have accelerated their drilling activity across Kansas, especially in south central and central western Kansas, and are paying more than $1,000 per acre signup bonus and 3/16ths of the value of production for the most productive land.

“Even when there isn’t much potential for minerals, it’s having an impact,” Eberhardt said.

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