CAPE GIRARDEAU, Mo. (AP) — The dollar remains weak and the stock market shaky, but farmland prices are going through the roof.
The Southeast Missourian reports that the value of quality cropland in the Missouri Bootheel region has nearly doubled over the past decade, citing recent surveys conducted by the University of Missouri's Agricultural Economics department.
Ag real estate broker Ken Cantrell of Cape Girardeau said he has a long waiting list of potential buyers.
"Land is just a good investment nowadays," Cantrell said. "People are still afraid of the stock market. Bank interest is not paying very much. Land's not going anywhere."
In fact, Cantrell said there is not enough agricultural property on the market to satisfy demand. Potential buyers from California, Minnesota, Louisiana, Tennessee and Arkansas all attended a recent auction in southeast Missouri.
At the heart of the spike in value are rising commodity prices, driven by growing demand in China and India, countries where people are now consuming more meat. China and India are also driving up cotton prices as the growing middle class purchases quality clothing.
A farm in New Madrid County recently sold at auction for $800 per acre more than the owner expected, Cantrell said. A 100-acre farm in Mississippi County sold for more than $500,000.
"I just don't know how to price them anymore," he said shaking his head.
Both farmers and outside investors see the income potential the prices promise in southeast Missouri, a region that typically has the highest poverty rates in the state.
A 2010 University of Missouri survey showed good cropland in the Bootheel counties of Mississippi, New Madrid, Dunklin, Stoddard, Pemiscot and Butler had the highest values in the state. The average price per acre was $4,019, nearly double the state average of $2,888. In 2000, the same land was valued at $2,086 per acre.
Meanwhile, low interest rates are making it easier for people to afford to finance greater purchase amounts, said Ron Plain, an ag economics professor in the University of Missouri in Columbia. Expenses for farmers are going up, but commodity prices are rising faster.
Fifth-generation farmer Randy Brazel of Buffalo Island, Mo., owns 1,400 acres in Mississippi County, most of which he bought in the past 36 months. He has done so by partnering with people outside the agriculture industry.
"There's a lot of money outside agriculture that's coming in. I see that continuing," he said. "The more unstable the economy gets, the more comfort there is in agriculture, especially in an area like southeast Missouri."
Copyright 2011 The Associated Press.