Last week Jeffrey Hignight and I were in Phoenix, AZ for the 82nd annual meeting of the American Society of Farm Managers and Rural Appraisers (ASFMRA) which coincided with Agronomics Vision 2012. This conference provided an opportunity for investors to meet rural land professionals of ASFMRA. The following are my thoughts from the meeting.
1) With the world hitting 7 billion people this week, demand for food will continue to rise. In addition the world is becoming wealthier and diets are changing to include more protein which increases the demand for grain and oilseed commodities.
2) Agricultural land is an excellent investment but due diligence is a must to make a wise investment decision. Pension funds and prudent investors will work with a professional land specialist to ensure all criteria for the investment are met. Selling land will become more complex as institutional investors require higher degrees of information to consider an agricultural investment.
3) Capital land improvements can increase the return on an agricultural land investment. In the Delta Region, capital improvement items are generally drainage, precision leveling, and irrigation. These capital improvements along with fertility increase productivity and efficiency which lead to higher rent and monetary asset worth.
4) Land prices continue to trend upwards in the Delta Region but also around the US according to other rural land professionals of ASFMRA. Most agricultural land sales are approximately 10-20% above last year. The majority of sales are to local agricultural producers. A Midwest farm manager indicated approximately 75% of all sales in his region were to local producers.
5) The future of new agricultural technologies will be very interesting. Dr. Robert T. Farley of Monsanto discussed progress of plant breeding and the use of GMO’s. Dr. Farley developed glyphosate resistant soybeans. He indicates we are only at the “tip of the iceberg” with development of GMO’s in plant breeding. One major concern of mine is most research and development (R&D) is geared towards breeding. Very little research is going into new chemistry. With the weed resistance issues we face today, I think the lack of R&D into new chemistries may create a challenge for agricultural production in the future.
Overall, the future of agriculture looks bright. There will be major challenges in providing adequate food for the growing world population, but I am certain agriculture will continue to meet all future challenges. Agricultural land will continue to be an excellent investment. The challenge for landowners will be to adopt and improve land to keep up with present and future agricultural innovations.
By Ted L. Glaub, Accredited Farm Manager, Accredited Land Consultant, Real Estate Broker, and Auctioneer at Glaub Farm Management. Serving Landowners in Arkansas, Mississippi, Missouri, and Tennessee.