{"id":3067,"date":"2011-12-22T07:45:36","date_gmt":"2011-12-22T14:45:36","guid":{"rendered":"http:\/\/stateimpact.npr.org\/idaho\/?p=3067"},"modified":"2013-05-13T15:24:46","modified_gmt":"2013-05-13T21:24:46","slug":"as-farmland-prices-soar-it%e2%80%99s-not-just-farmers-buying","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/idaho\/2011\/12\/22\/as-farmland-prices-soar-it%e2%80%99s-not-just-farmers-buying\/","title":{"rendered":"As Farmland Prices Soar, It\u2019s Not Just Farmers Buying"},"content":{"rendered":"
\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

To bring one of their herds in for the winter, the Isaak family lured in the cows and calves with hay, then gathered them together in a makeshift corral.<\/p><\/div>\n

Across the U.S., the price of good quality cropland is soaring<\/a>, and it\u2019s not just farmers who are driving demand.\u00a0 In an unsteady economy, investors are looking to farm ground as a safe haven.\u00a0 Prices have been highest in the Midwest Corn Belt.\u00a0 Here in Idaho, demand is centered in the Snake River Plain, where farmland has reportedly sold for as much as $10,000 an acre.\u00a0 That\u2019s more than double average values just a few years ago.<\/p>\n

<\/param><\/param><\/embed><\/object>As Farmland Prices Soar, It\u2019s Not Just Farmers Buying<\/a>
\n
\nThe sun is setting over open pastureland not far from the southeast Idaho town of American Falls.\u00a0 Farmer LaMar Isaak, along with his wife, son, mother and brother, has corralled a small cattle herd \u2013 except for one skittish calf.\u00a0 Now, it\u2019s a waiting game. “He may win,” Isaak says.\u00a0 “Kind of looks that way right at the minute.\u00a0 He\u2019s spooky, huh, Mom?”<\/p>\n

Just then, the calf takes a few hesitant steps forward, into the corral.\u00a0 Isaak shouts to his son, “Okay, push them in, Conrad!” The Isaaks rush to close the gates.
\n<\/em><\/p>\n

\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

<\/p><\/div>\n

LaMar Isaak has spent his whole life farming in the Snake River Plain.\u00a0 In 1980, his father handed down 75 acres of farm ground.\u00a0 Since then, the Isaaks have expanded.\u00a0 They grow sugar beets, alfalfa, and wheat on more than 3,500 acres. Appreciating land values might sound like a good thing, for someone with that much ground.\u00a0 But in recent years, LaMar Isaak has watched with dismay as the price of local farmland has skyrocketed.\u00a0 “It\u2019s getting tougher.\u00a0 And tougher and tougher,” he says.\u00a0 “For a small farmer or a family farmer.”<\/p>\n

<\/em>Tougher, he says, because at current prices, land is hard to buy.\u00a0 Usually, the price of farmland is tied to how much a farmer can make on that ground.\u00a0 But right now, Isaak says, the prices don\u2019t make sense.\u00a0 “When we sit around the family table, it\u2019s virtually impossible to pencil that property out other than \u2013 it\u2019s an investment and you hope it goes up.\u00a0 If it doesn\u2019t, you\u2019ve probably got problems.”<\/p>\n

<\/em>The Isaaks would like to buy more land and build the family farm, but at current prices, they\u2019ll sit tight.\u00a0 That\u2019s not a decision that will have a measurable effect on the market.\u00a0 In a global economy that offers few stable places to invest, there are strong arguments for agriculture.<\/p>\n

\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

Appraiser and real estate broker Henri LeMoyne says he's seen many newcomers to the Idaho farmland market in recent years.<\/p><\/div>\n

“Right now, we look pretty good!” says Henri LeMoyne, an appraiser and real estate broker based in Twin Falls.\u00a0 After nearly forty years in the business, LeMoyne knows as much as anyone about demand for Idaho farmland.\u00a0 He says that as global food demand keeps crop prices high, there\u2019s a new group of investors interested in owning ground.\u00a0 “Within the last two years, we\u2019ve had quite a number of funds that are representing individual investors or groups of investors, and that\u2019s different to this area and I think agriculture in America period.\u00a0 They\u2019ve definitely added a lot of demand for farmland.”<\/p>\n

<\/em>LeMoyne describes these new investors as \u201cyield-driven.\u201d\u00a0 That\u2019s a polite way of saying they\u2019re looking for profit.\u00a0 Here\u2019s how it works: they pay cash \u2013 say $7,000 an acre \u2013 for big swaths of farmland.\u00a0 Then they turn around and rent it back to local farmers, asking maybe $350 per acre per year.\u00a0 Just like that, they\u2019ve secured a steady five percent return.\u00a0 Charlie Bryan oversees farmland acquisition in the Northwest for UBS AgriVest, a subsidiary of the Swiss global finance giant.\u00a0 “What was not attractive on farmland over the past 20 years is \u2013 boy, we had investments that are only returning five, six percent on an annual income basis,” he says.<\/p>\n

Compared to stock market returns in the double digits, that wasn\u2019t much.\u00a0 But these days, a predictable five to six percent is hard to come by.\u00a0 “When everything collapsed or declined in the last couple of years, we were really the heroes because not only did we not have declines, but we just stayed very steady.”<\/p>\n

\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

Charlie Bryan oversees farmland acquisition in the Northwest for UBS AgriVest.<\/p><\/div>\n

Charlie Bryan manages about $100 million worth of ag land investments out of his tidy office in a downtown Nampa strip mall.\u00a0 He\u2019s old-school, in the world of farmland investing.\u00a0 AgriVest began buying up high quality farmland decades ago, working on behalf of pension funds.\u00a0 Like Henri LeMoyne, Bryan has noticed the market\u2019s newcomers.\u00a0 In his view, some of them might not know what they\u2019re getting into.\u00a0 “What I\u2019m seeing is a lot of people \u2013 institutional investors that may not have experience in this \u2013 are getting a little too excited about the whole thing.” he says.\u00a0 “And some are buying farms that I\u2019ve already passed on.”<\/p>\n

High prices, exuberant interest, questionable buys \u2013 these sound like the makings of an investor-fueled farmland bubble.\u00a0 But the picture is a bit more complex.\u00a0 LaMar Isaak may not be buying at current prices, but some farmers are.\u00a0 With his brother, Kenneth, Klaren Koompin runs Koompin Farms, a 17,000-acre operation in the Snake River Plain.\u00a0 They\u2019re not buying, either.\u00a0 But Koompin says, lately, the highest prices have come out of farmer-to-farmer sales.\u00a0 “The private individual is outbidding, now, the institution, because they\u2019re looking at two different values,” he says.\u00a0 “The institutional investor or even the private investor that doesn\u2019t farm it himself \u2013 he\u2019s looking at a return on his money.\u00a0 Where the farmer not only is looking at that but he\u2019s also looking at it that \u2013 ‘This may never come up for sale again.’\u201d<\/em><\/p>\n

\"\"<\/a>

Molly Messick \/ StateImpact Idaho<\/p>

Snake River Plain farmer Klaren Koompin shows off Koompin Farms' main crop: potatoes. The pile behind him is massive, 6.5 million pounds.<\/p><\/div>\n

Koompin says that what investors have done is set a floor, guaranteeing that local farmers will have to pay top dollar.\u00a0 But he refuses to see investor interest as a bad thing, and he doesn\u2019t believe the farm economy is headed for a crash.\u00a0 “Am I concerned for what\u2019s going to happen in the future?\u00a0 No.\u00a0 There\u2019ll be lots of opportunity.\u00a0 And if you\u2019re smart enough to figure out where that opportunity is, then you\u2019re going to be just fine.”<\/p>\n

<\/em>Koompin isn\u2019t alone in his optimism.\u00a0 Analysts who keep a close eye on farmland prices nationwide point out that the market for farm ground doesn\u2019t rely heavily on credit, the way the housing market did during the boom.\u00a0 Plus, they say, there\u2019s a basic and unyielding demand for food.\u00a0 Nevertheless, the Federal Reserve did send a memo<\/a> to lenders this fall, reminding them of risks including falling crop prices and land values.<\/p>\n

The air is cold and it\u2019s long past nightfall by the time LaMar Isaak and his family return from the pasture.\u00a0 Isaak says he isn\u2019t only concerned about whether investor interest is pushing land prices too high.\u00a0 He\u2019s concerned about something that\u2019s even harder to size up: what it means for a farmer to farm if he doesn\u2019t own his land.\u00a0 “I wouldn\u2019t want to do it,” he says.\u00a0 “Pretty simple.”<\/p>\n

For Isaak, farming isn\u2019t only about labor and output.\u00a0 It\u2019s about generations working together, linked by collective care for family land.\u00a0 The idea of tenant farmers renting from far-flung investors is hard to accept.\u00a0 “It just \u2013 it takes my whole value system and shoves the box upside down.\u00a0 I have to rethink everything I do.\u00a0 And that\u2019s not comfortable.”<\/p>\n

The Snake River Plain has seen its share of consolidation.\u00a0 The ground the Isaaks farm used to be owned by fourteen different farm families.\u00a0 But investor ownership — that’s one more step away from the tradition LaMar Isaak holds dear.<\/p>\n","protected":false},"excerpt":{"rendered":"

Across the U.S., the price of good quality cropland is soaring, and it\u2019s not just farmers who are driving demand.\u00a0 In an unsteady economy, investors are looking to farm ground as a safe haven.\u00a0 Prices have been highest in the Midwest Corn Belt.\u00a0 Here in Idaho, demand is centered in the Snake River Plain, where […]<\/p>\n","protected":false},"author":46,"featured_media":3094,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[13],"tags":[49,68,46,47],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts\/3067"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/users\/46"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/comments?post=3067"}],"version-history":[{"count":0,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/posts\/3067\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/media\/3094"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/media?parent=3067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/categories?post=3067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/idaho\/wp-json\/wp\/v2\/tags?post=3067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}