Profits Lure Investors To Farmland In Arkansas

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

The $10 million transaction, which closed in August 2011, included a 160,000-bushel grain storage facility. Rice, soybeans and corn are the crops of choice for the ATRS acreage.

In addition to Arkansas, the pension fund also owns farms in Idaho (5,400 acres) Wisconsin (1,700 acres) and Indiana (762 acres).

Howard Halderman, president of Halderman Farm Management of Wabash, Ind., said market forces began drawing the attention of more investors toward farms about six years ago.

“The big increase started when commodity prices escalated in 2006-07,” said Halderman, who helps coordinate and oversee ATRS farm investments. “The in-come side changed dramatically.

“Once we hit 2008 with the beginning of the recession, inflation concerns became a very big driver, and a lot more dollars became available.

“Investors wanted to have a higher percentage in real assets that are positively correlated to inflation.”

The rental structure provides a financial safeguard for farm investors not found in all real estate holdings.

“You can always lease farmland for more than the cost of ownership regardless of how good or bad times are,” Halderman said.

“That is one of the appealing aspects of farmland that differentiate it from other real assets.”

In the case of ATRS, the Cross County farm is leased for $150 per acre.

That yields a minimum 4 percent return of about $430,000. After deducting the land rent, the pension fund gets an additional 25 percent share of harvest revenue.

The arrangement gives the tenant farmer and ATRS added incentive to work together to maximize crop yields.



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