Farm values are expanding according to Mark Mommsen of the agriculture real estate and farm investment company Martin, Goodrich, and Waddell (MGW). Mommsen said the firm specializes in the farm areas of western Iowa, northern Illinois, and southern Wisconsin but has handled businesses throughout the plains, western, and southern states. They maintain offices in Sycamore and DeWitt, Iowa, and are celebrating 50 years in business. Mommsen explained the uptick in farm valuations due to the increased use of corn-dependent ethanol and the limited number of farm properties coming up for sale. He presented a chart showing an average six-thousand-dollar price per acre in 2005 growing to over $16-thousand per acre today. Mommsen also showed comparisons of farm operational returns with other financial benchmarks from 1970 to 2024. His data noted a 10.5 % return on farms versus a 7.3% return for the S&P index, a 6.5% return for the New York Stock Exchange, a 7.2% return for triple-A bonds, and a 7.5% return for Gold. He added that many investors see owning farmland as a “flight to safety” during bad economic times.
Mommsen explained the challenges of land ownership and rental plus crop plantings when trying to make a yearly profit. Mommsen gave an example of how farmer-owned land produced a profit through operations when cash rental of land came in at a loss where both used the same inputs for expenses. He said modern farming requires close management of land costs and seed costs. He noted that one way farmers are choosing to increase profits is through organic farming. Organic corn can bring $13.40 a bushel versus standard corn at $5.36 a bushel, according to Mommsen. He said the drawback is the estimated 200-300% more field management required for weed control and a somewhat lesser overall land yield than non-organic corn. Mommsen said his personal observation is that there is a lot of organic farming taking place in DeKalb County.
More information on the services of MGW is available on their website at www.mgw.us.com.