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Ag real estate prices steady, but still mostly high

Because of high demand and low supply, the price of farmland in Colorado and surrounding states has gone up.

“In general, this year and the last five years, (with) agriculture land, whether dry or irrigated, we’re seeing good, strong prices,” said Tom Haren, owner of AGPROfessionals, 3050 67th Ave., No. 200, in Greeley.

Haren said he has seen an increase in demand for farming and ranching land, but the availability hasn’t changed.

“Colorado’s got a lot of attention,” said AgPro Managing Broker Ryan Hostetler.

AGPROfessionals normally sticks to reselling already existing farmland, but sometimes, for dairy, beef and poultry operations, they will help develop land.

While many think development takes away from agriculture land, Haren said he thinks there are other, bigger factors driving farm and ranch sales.

“Development always has an impact, but it’s not the sole cause of the prices on agriculture,” he said. “We just have really strong demand.”

Jordan Hungenberg of Hungenberg Produce was part of the purchase last year of a 553-acre plot of farmland in north Greeley.

This is the first year they will be planting the land. Hungenberg said the land had everything they needed, making the buy an easy decision. The sandy-loam soil type was a big factor, as was the availability of water on the plot and the proximity to their existing production.

“You should always buy what’s close to you, and our headquarters is less than a mile (from the plot),” he said. “It worked out on all levels.”

The purchase was a large one; they want to take time to pay off the debt they had to take on to buy the land. Hungenberg said they plan to plant and harvest from this land for a while before making any other large investments.

In related news, Colorado Springs unemployment, jobs numbers best in more than five years.

But he’s excited to see what the land yields, and he said he feels good about what’s coming.

Hungenberg’s three qualifiers for making the land a good purchase are important to a lot of farmers and ranchers, said John Stratman, an associate broker at Mason Morse Farm and Ranch Company in Denver.

“Water is probably the number one factor,” Stratman said, “right along with soil quality, commodity prices and cost of production.”

Mason Morse deals with the sale of farm and ranch lands in many states, including Colorado, Nebraska and Wyoming.

Stratman said he has seen some trends in recent years.

“(Prices) went up from 2009 to 2012, and then kind of leveled off,” he said. “The better farms were holding their value and the marginal farms have probably lost some value.”

The low price of corn last year has made some people shy away from purchasing grain lands, but people are still buying.

“I’ve been selling more of the ranch properties versus the farm properties in the last year because the prices of corn have gone down and the demand has softened,” he said.

“Now, cattle prices are very high and so there’s a lot of demand for grass, and the ranches are the properties that are increasing in value more than the farm properties.”

Due to taxation in Colorado and Nebraska, however, Wyoming is siphoning a lot of ag land sales.

“Wyoming has a very beneficial tax structure, both real estate taxes and income taxes,” Stratman said. “So that’s certainly driving it — at least for out-of-state people looking for somewhere to go.”

The demand remains in Colorado, though.

Marc Reck of Reck Agri Realty & Auction in Sterling said he’s seen unprecedented value increases since 2010.

But with corn prices dropping in the past 18 months to a fraction of what they were, there has been a slowdown in purchases.

Reck said he is seeing a lot of sales of the family farm, which is very desirable land.

“If it’s property that’s been in the same family for 50 to 100 years, you don’t see it trade hands very often,” he said. “If it only comes up every 50 years,” people will jump on the opportunity.

The majority of land they’ve been selling at Reck Agri is either from older ranchers and farmers looking to retire, or it is the heirs to farms selling it off.

“I think you’re going to see the largest transfer in wealth over the next 10 years,” he said.

 

This article was written by Bridgett Weaver from Greeley Tribune, Colo. and was legally licensed through the NewsCred publisher network.

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