From the Farm: Farmland Auctions

The Morning Show

This is the farmland auction season. But only about 1% of farmland turns over in a given year, in a true arm’s length transaction. Stu Ellis takes a look at that psychological decision on whether or not to buy the farm.

Stu Ellis

If you had money to make an investment, would farmland be among those potential choices? University of Illinois agricultural economist Bruce Sherrick says that may depend on the performance of the stock market…

Bruce Sherrick

I think people, though tend to simplify the questions into should I buy or sell farmland. And the answer is never quite as simple as you would hope for that. But at the end of presentations if the stock market has been up for the last week or two and I ask people this question, they give me a different answer than if the stock market has been down, and that is what asset would you rather own? And in farmland, for most real operators the answer to the question what asset would you rather own, the first answer is always farmland.

Stu Ellis

But for someone who has not owned farmland, Sherrick says they may be more reluctant to buy a tract of land than to buy an equivalent amount of another asset.

Bruce Sherrick

Its not a mysterious market. It may seem that way because it is hard to look at, but it is becoming easier to track, becoming easier to monitor, and paying attention to where it sits in the perspective of holdings an individual might have, that has been by some degree by operators underweighted in the decision process, and by investors who don’t have any exposure to real estate it is quite often under weighted in their exposure to real assets.

Stu Ellis

That’s our report from the farm. I’m Stu Ellis with WCIA3 your local news leader.

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