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Demand for Minnesota farmland hits record highs

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Demand for U.S. farmland has jumped to a five-year high, spurred on by a profitable grain market and a boost in buyer interest from both farm operators and land investors, according to Farmers National Company.

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While demand rose sharply during the last quarter of 2010, the supply of available farmland fell to historically low levels.

"There are a number of factors driving this increasing demand, which we see continuing into 2011," said Lee Vermeer, AFM, vice president of real estate operations at Farmers National Company. "Jumps in commodity prices are increasing profitability of land as an investment. Landowners are using the profits to increase land acquisitions. They are investing in their own operations as land values are stabilizing and in many cases increasing."

Vermeer said that while increasing values are boosting the interest in farmland by investors, farm operators account for 85 percent of buyers.

"Farmland purchases have also become an attractive investment for non-operators in this environment," said Vermeer. "It's definitely showing a more favorable return on investment than traditional investments like the stock market and CDs."

Farmers National Company, an employee-owned company, is the nation's leading agricultural real estate and farm and ranch management company. The company has sold more than 2,600 farms and more than $1.25 billion of real estate during the last four years.

Iowa and Minnesota

Prices for quality land are at levels that are high or higher than they have ever been in most of the North Central Region including Iowa, Missouri, Minnesota, South Dakota and North Dakota, according to Sam Kain, area sales manager for Farmers National Company in Iowa and Minnesota. In many areas of Iowa, top quality land is selling in the $8,000 to $9,000 per acre range.

"I would say in some areas of Iowa and Minnesota land values may have jumped as much as $1,000 an acre in the last 60 days, with prices at $6,200 per acre in Minnesota," said Kain. "Demand remains very strong in all areas as there is a limited supply of properties for sale."

Kain added that increased interest from investors is pushing farmland prices upward. However, he said that the majority of the sales are still going to local farmers.

"Land values in this region are likely to continue an upward trend," said Kain. "Commodity prices definitely point upward, but these trends can quickly change as world issues change."

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