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David Sparks Ph.d Beginners Buying Farmland
by David Sparks Ph.d, click here for bio

Program: Line on Agriculture
Date: April 12, 2017

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If a farm is making tons of money for its owner, presumably that means the farm is worth a lot. Taking the assumption one step further, if the farm is not making money as in lower net farm income, it probably isn't worth as much. In the last couple of years we have seen a downturn in net farm income and I saw a report saying that ag land values are in limbo for 2017. I called Randy Dickhut who is senior vice president of real estate operations for Farmer’s National Company who had told me agricultural landowners in many regions across the country have seen a decline in profits, which also pushed land values lower. I had a question. "The number one factor that prohibits let us say non-farming people who are interested in becoming farmers or children interested in buying their parents out is the price of land. If land values are going down, does is open a door for those who want to get into agriculture? Yes. That is one of the important influencing factors on that land value because that income is capitalized into value like any rental or commercial real estate. It's backed off some but good quality land has not backed off as much as maybe people thought with the farm and ranch incomes being down like they are. You take lower quality land, it has definitely dropped a little more. So probably not the buying opportunity for a beginning farmer yet.”

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