There are some shifts in use for Delta agriculture land, but values remain high, or are increasing, for the most part. There’s a growing demand to convert some farmland to recreational use, and land devoted to catfish farming is on the wane, but king cotton still reigns.
“The value for good, sandy cotton land has never gone down. It stays strong and maintains value,” said Bill Allen, president of Bank Plus in Belzoni. “The catfish ponds have really gone down, but now we’re seeing that rebound as catfish prices have improved. Overall, values for all land have held up, and that’s a good thing.”
Jerry Gillespie, senior vice president of credit with Guaranty Bank & Trust in Belzoni, agrees that the value of most farmland continues to go up. “Back in the 1980s, it went down 50 % in value,” he said. “Now it has gone past that and continues to increase. That puts the value back in the land and that helps farmers.”
With his agrarian background and 23 years of dealing with investment grade farm land, John Dean of Leland easily sums up land values. “The highest grade is the sandy, loam soil that grows cotton because it can grow anything,” he said. “That sells for $2,000 to $2,400 per acre. Step down to silty, clay loam that yields just about the same, and it sells from $1,700 to $2,000. Clay soils that are used primarily to grow rice sell for $1,400 to $1,600.”
He points out that other factors are considered, including how much the land has been upgraded and what allotments the land has. “You must understand soils and what they will grow,” he said. “We deal with multi-million-dollar farms with the same degree of sophistication as any other kind of valuable real estate.”
Dean, whose family farmed for four generations, observes that several things bode well for the outlook of farmland. The Delta had two years of back-to-back excellent yields. “That pours a lot of money back into the little towns that are based on an agricultural economy,” he said. “The investment community is becoming more cognizant of technology that’s being done to create plants that are more tolerant and resistant. With biotechnology we can tailor a plant that will do what we want it to do and have bigger yields with fewer people involved.”
He believes there’s a good federal farm bill in place with loans to help farmers compete on a worldwide basis. There are numerous tax-deferred exchanges that can be used in land sales, and the cheaper dollar/strong Euro lures investment funds into good agriculture land.
“All of these things will cause the land to hold value,” he said. “We are blessed with a massive river that almost fully recharges our underground aquifer every year, and it’s not real deep below the surface. That’s crucial.”
These favorable investment factors draw investors to Mississippi’s flat, alluvial plain where good returns can be achieved. Institutional and individual investors have noticed that the Delta’s land values are holding up and seek to put funds into crop production.
“There have been normal increases for some time. Capital appreciation has been good,” Dean said. “The last 18 months have seen some gains that are good if you own the land, but we don’t want to see sustained double-digit appreciation.”
Licensed in several states, Dean holds the accredited land Realtor designation and certified international property designation through the Realtors Land Institute He goes where he can find properties of high quality, mostly handling property in the Delta of Mississippi, Arkansas and Louisiana.
“There are various qualities of farm land just like classes of rental property,” he said. “The future of farm land looks very bright.”
Wayne Harris is the agriculture and commercial lender for Union Planters Bank and covers all of North Mississippi, seeing a lot of different farmers and land. “Generally speaking, the last three or four years have seen good improvement in value and good stability,” he said. “Not only for agricultural use but also recreational. Many times land has just as high a value through leasing for recreational uses.”
He said there’s a combination of uses in most cases since farmers often have some land that’s not suitable for farming. Crop residue is beneficial to wildlife, too. “Many farmers in the Delta have recognized that value and are capitalizing on this land use,” he said. “That same thing is happening in other parts of the state but not to the same extent.”
Mark Lewis’ Mississippi Land Company of Hattiesburg deals every day with recreational use land. “Tens of thousands of acres have been converted from agricultural to recreational use. The best use of land has changed,” he said. “There’s also a lot of conservation going on through government programs such as the Wetlands Reserve Program and Conservation Reserve Program.”
He says a lot of land is being converted with conservation easements which is like making charity donations and receiving a tax break that can spread out over several years or be taken all at once.
Contact MBJ contributing Lynn Lofton at firstname.lastname@example.org.