Profits Lure Investors To Farmland In Arkansas

by George Waldon  on Monday, Nov. 19, 2012 12:00 am  

Continued economic uncertainties are prompting a back-to-the-land movement among investors.

And a favored choice of land is farmland.

“People feel like investing in farmland is very safe and very secure,” said Tommy Drew, a Little Rock real estate broker specializing in agri and hunting properties. “You can grow stuff on it. You can get buried on it. You can get back to the basics.

“There’s not much good stuff on the market, but when it does come on the market, there’s a line of qualified buyers waiting to bid on it.”

Increased demand has helped boost the value of irrigated cropland in Arkansas by an average of 10.8 percent annually during the past five years, according to the U.S. Department of Agriculture.

That kind of appreciation, combined with a string of profitable harvest years, has brought new-found cachet to Arkansas cropland and attracted the gaze of investors seeking to diversify portfolios.

Despite the risky reputation of farming thanks to the vagaries of commodity prices and weather, agri real estate is viewed as a smart investment hedge.

“Since 1970, farmland has averaged a better cash-on-cash return than the S&P 500, but from a risk profile, it’s viewed more like a corporate bond,” said Gar Lile, president of Lile Real Estate Inc.

“Everybody thinks we’re heading into a big inflationary period, and farmland has outperformed inflation during the past 15 years.”

The value of farms vary with the soil type, topography, access to water and man-made improvements to the land.

“Prices for Arkansas cropland are all over the board,” said Lile, whose Little Rock firm specializes in rural properties. “For really good land, prices are in excess of $4,000 an acre.

“There is a tremendous amount of demand for quality land, improved farms with good grades and good water. The market is really seeking large tracts with sandy loam ground for high rotation farming.”



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