My wife and I are looking to invest for our retirement, being a farm kid I am naturally inclined to buy crop land as this is the most familiar investment to me. My problem is I can not understand why cropland has remained priced so high, farmers are losing money on every acre planted yet crop land remains priced very high. Do you guys who own or are looking into buying land feel that there is potential for prices on land to come down? Our money in savings is doing basically nothing at this point and we need to get it invested properly.

They don't make it anymore and it will stay high and continue to gain but will probably level out and settle before going up as crop prices are low

Investors are keeping the price high, also super low interest rates. If interest rates climb, land prices will go backwards. But land is like a Winchester, you can not pay to much for it, you can just buy it too soon.

The 12 billion dollars from the tax payers will likely keep it from going on the market for lower prices.

If you shop around and hold out, it can be a good investment. If you utilize all the resources at your disposal it will help profitability. Straight tillable will usually bring high premiums because its convenient for farmers to run big sections of land with one equipment move. So land with a mix gets priced lower, but if you're not looking to hunt it, hunters pay a premium to lease this mixed ground. I know some of you despise leasing, but its marketable and helps the bottom line in a land investment. In my area, dryground tillable rents at 50/ac while hunting land easily leases at 25/ac. As I said in the other post, I got my land for 1300/ac. I don't lease my hunting rights because I want to hunt it, but my land is a 40% tillable, 30% pasture, 15% lowground with a river running through it, and 15% timber.
With that being said, I still believe that as an investment, especially in current markets, mutual funds will return at a higher rate than land. But, land is more than just an investment to me, and if that's the case for you, then land may be just the right investment.

buy timber land

At some point the land value will have to be reflective of net income it produces. Right now it's very inflated in comparison.

This is something I have considered but I honestly just do not know as much about timber as I do about farming even though I run a tree service full time doing urban tree trimming and removal.

Here are some of my further thoughts.

1) there is a ton of under exploited land in Africa and Mongolia, I do worry Chinese investment/involvement will turn those regions into food producing powerhouses which could have a negative effect on the long term outlook.

2) I worry about getting in to early, I am not convinced current prices can hold, if interest rates rise it should send prices into the basement though I cannot see interest rising much.

3) Government manipulation of farming is so strong I feel it is hard to predict weather prices will go up or down at any point in the future regardless of other factors.

Suppressed commodity prices and slightly more increases in interest rates could/should get farm ground prices to ease a little bit more.

I just bought a farm for $9400 an acre. I am bullish on it’s value 20 years from
now.

Farmland at this point in time is over priced for the return when raising crops like corn, beans, wheat, alfalfa etc. It was over priced when corn was $7 and beans $14 but not by much and thus the bidding up to buy, rent and plant more acres. Not much different than stocks in many ways when returns are low based on price, but for farmland the unknown is the variable costs to produce, the yield and the price. You can however buy insurance and have subsidies on crops which is not available for stocks and thus the price of land over time holds values well above actual returns on an annual basis. In our current world I don't see that changing much or soon, however with prices holding at the far upper end of values overall price increases may be lower than in the past. 2-3% growth on say 10K per year is good growth over 20 years time but holding the property that long may return about what a house does which is not much if you need to relocate etc.
If you want to buy and rent out the land to a farmer during these times I would cash rent the land out as having to buy half the inputs to sell half the crop or whatever percentage you settle on will be a high cost of ownership until you sell.

Bryce

I am looking to buy and then cash rent, I do own a commercial poultry barn and 20 black angus so having a field close by to spread litter and manure on would increase the value of the manure as well. I am currently 28 years old and already live were I hope to someday die so I am looking at any purchase as a very long term investment. At current land and rent prices it is around 30 years just to break even on the investment of the land.

Donner, I don't know much about farm land prices in your area but I think you are going about this the right way...asking intelligent questions. Good luck to you.

I bought a little chunk of farmland 15 years ago. Best investment ever. Yearly rent check and the price value has more than tripled. But yeah, when will it stop...or go backwards. I really don't see it going backwards as even at current prices it never hits the market before its sold in my area (for Farmland anyhow).

My concern with farm ground is that it appears the current pricing is based on a bubble created by government mandated ethanol in gasoline. Like the housing bubble that was created by government mandated loan practices, it will burst at some point. Although I would like to invest in farm ground because I could then also hunt it, my preference is to trust my money to investments controlled by free market forces.

I did buy some farm ground in 2002 and sold it in 2012 and it worked out very well for me. However, I didn't buy it for an investment and just happened to catch the timing right.

Farm ground is over priced as an investment. Factors that are keeping it up:
1. Farmers and investors with cash they don't need. Have 1 million dollars and honestly don't need it then land that you know is overpriced is fine to buy. Times get tough and the cash runs out then prices will plummet.
2. Government propping up of ag via insurance, ethanol, CRP.
3. Non-locals buying land. Some guy from CA has been buying land around here and never has come out here. Ever. He just buys and owns it. (See #1)
Someday someone is going to go broke and lose it all. 5 years, 20 years, 50 years, who knows. Eventually our govt. debt is going to have to be paid and the govt. will have to cut back. Eventually people will say: Why are we price supporting farmers whose net worth is millions? The poor old farmer view will wear off. Eventually there will be a series of droughts. Right now our area is in a big one. Someday the 30's will come back. When the Midwest has a drought that lasts 3+ years it will get bad. Is someone going to rent your farm during a drought? If you cannot take most of the payment burden without any farm income I would be concerned. Now cash is another story. Of course times can get tough and our government can bail out all of those that made poor decisions. And yes I live on and have a farm as do several of my relatives.

I am no expert but I was raised on a timber/cattle operation that is now up around 3000 or 3500 acres. That is a large private holding in this part of the country. Point being my dad has always told me that land is the best investment a person could ever make as long as you can afford it without going into debt up to your eyeballs. It certainly has worked out for him.

Typical hunting land here is leased for $7.00 an acre and up depending on where it is located and how much land is involved. Some of the best hunting land here is leased for $12.00+ an acre and steadily climbing. That kind of income alone goes a long way towards paying the taxes and maybe even more on the land.

Bankers, lawyers, and wealthy buy the land where I grew up. Even worthless rocky clay ground. Some wealthy farmers buy good land just to ensure their Grandsons will have land to farm.
At some point, taxes will outweigh profitability but big money guys will figure out a way to use it as a loss on taxes.

This^^^^

Or GOOD farm ground you can rent to the neighboring farmers.

No one around here sells timber land till it's been cut, takes years to come back. Cropland rents for $200 an acre and costs over 5 grand, land right now in this area is a bad investment.

Where else are you going to get a 200 dollar a year return on 5k?