Farmland value trends in Wisconsin
Arlin Brannstrom, Center for Dairy Profitability
UW-Madison College of Agricultural and Life Sciences
Phone (608) 265-3030
3:00 – Total Time
0:15 – Steady increase in farm land value
0:25 – Larger increases in nearby states
0:41 – Influences in land market
1:01 – Removing development from farm market
1:29 – What goes up may come down
2:01 – Caution in the land market
2:50 – Lead out
Tracking Wisconsin farm land values, we’re visiting today with Arlin Brannstrom, Center for Dairy Profitability, University of Wisconsin in the College of Agricultural and Life Sciences, Madison, Wisconsin and I’m Sevie Kenyon.
Sevie Kenyon: Arlin, what can you tell us about Wisconsin farm land values?
Arlin Brannstrom: The last few years we’ve seen agricultural land prices increasing by 3 to 4 percent a year.
Sevie Kenyon: How is Wisconsin different in this than some of our neighboring states?
Arlin Brannstrom: Usually you hear about the very highest agricultural land auctions, typically they are 30 or 40 percent above last year’s numbers; we’re not seeing that here in Wisconsin. Sevie Kenyon: And Arlin, what goes into the value of farmland?
Arlin Brannstrom: Ultimately it comes back to economics; if the commodities have high values and if the land is viewed as a potential investment with a good return, there’s going to be strong demand for that resource.
Sevie Kenyon: Arlin, how do you separate say development land or recreation land?
Arlin Brannstrom: We’ve seen in a number of cases here in Wisconsin, land that was being pulled away from agriculture for development is now being bought back by farmers who are taking it away from developers. The bloom is off the rose so to speak for a lot of land that was viewed as being potentially developed for strip malls and residential development a few years ago.
Sevie Kenyon: And Arlin, look into your crystal ball a little bit, where do these trends take us?
Arlin Brannstrom: I’m a little bit of a pessimist, I’m afraid that we’ve seen land values continue to increase for more than a decade now here in Wisconsin. I’ve been around long enough to remember that things that do go up can go down again. I would be very cautious if I were bidding on land these days. Especially if you’re assuming that commodity prices are going to continue to stay in that six to seven dollar range. Sharpen your pencil and be sure that you can justify the price you’re bidding.
Sevie Kenyon: Got any advice for people that may be in the land market?
Arlin Brannstrom: Land is one of those resources that they’re not making any more of it, there’s going to be continued demand for food and agriculture will be a strong competitor with development here in Wisconsin. One of the other drivers of the land market is your alternative investments and right now with the interest rates being so low in treasury bills and deposits it does look like a good option for many people that are in this for the long run. One of the other reasons that I think we’ve seen some interest in land markets was the uncertainty about the estate tax situation was going to be going into 2013. Congress finally clarified the rules in terms of the estate taxes and maybe there’ll be a little less land changing hands in 2013.
Sevie Kenyon: We have been visiting with Arlin Brannstrom, Center for Dairy Profitability, University of Wisconsin in the College of Agricultural and Life Sciences, Madison, Wisconsin and I’m Sevie Kenyon.