AUCTIONS IN VOGUE
This hunger among farmers has prompted more sellers to put
their land up for public bidding to see what a sale will bring.
The share of Iowa farmland being sold by auction, rather than
private deals, has doubled to nearly 10 percent in recent
months, according to data from Iowa State University.
The reason is clear: auctions command a premium.
In this week's record-setting Sioux County, Iowa, auction,
caller Pete Pollema tried not to get tongue-tied as the dollar
figure jumped with each investor wink and farmer finger tap.
The historical corn yields had been ho-hum. But it sat in
Sioux County, home to dairies, swine farms and livestock feed
lots that need land to disperse the manure.
An outside investor vied with local farmers, but dropped
out when the price jumped to $17,000 an acre, said Pollema. The
battle came down to two neighboring farmers: One had a fairly
large, 1,500-acre farm operation; the other ran a modest
200-acre dairy.
The little guy won.
``I didn't want to see him pay that much, but he really
wanted it,'' Pollema said. ``I don't know how he financed it.
Last I heard, after the auction, he was at the bank.''
News of the price tag had farmers buzzing at diner counters
and co-op grain bins across the state. After all, a 40-acre
parcel just two miles away sold in a private deal earlier this
year for $10,000 an acre.
``You think them people ain't screaming now?'' Pollem said.
''They're screaming mad.''
LET THE GOOD TIMES ROLL
While auctioneers say that more and more investors are
starting to seek out private sales to avoid public bidding
wars, Obrecht and his peers are still reaping the rewards in
3-to-5 percent commissions or more.
Many are expanding their businesses. Obrecht keeps his
son-in-law on speed dial to serve as a proxy bidder for
investors who want to keep their identity quiet. Rex Schrader,
who owns Schrader Real Estate & Auction Co in Indiana, has
hired more office staff to handle the flood of requests for
soil data and satellite images of farmland coming up for sale.
Scott Musser, who co-owns his family's auction company in
the Pacific Northwest, has beefed up the company's website and
become savvy about helping customers deal with would-be buyers
knocking on his customers' doors to get a sales edge.
Tip No. 1: Tell them to wait for the auction.
``There are four attitudes we see in sellers: I want it; I
need it; I need it real bad; and I'm going to get it no matter
what, because I'm afraid that if I don't act, I'll lose it,''
Musser said. ``We're seeing that last attitude a lot in farmers
and it does propel people to pay more.''
FANCY NEW TRUCKS IN DRIVEWAYS
But parallels to the past are impossible to ignore. Today's
soaring deals recall similar 20th century farm booms, which
were followed by devastating rural depressions.
Obrecht draws comfort from the differences: current
interest rates are far lower; farmers are sitting on piles of
cash and need to plant it somewhere.
So he goes out each day, to sell the dream of owning
farmland. Obrecht, a whirl of energy who favors crisp cotton
shirts and worn boots, is this year's top salesman at Farmers
National Co. He booked $24 million in auction sales in fiscal
2010 that ended Oct. 1.
He will do the same amount in the last quarter of this
year. The commissions have allowed Obrecht to buy his wife a
new Mini Cooper. He has also planted some of his new-found
wealth into farmland.
This past spring, Obrecht and his wife purchased 102 acres
of rich Iowa dirt outside Des Moines. They paid $8,000 an acre
-- the high price made him cringe.
Not everyone can afford land, so some farmers are finding
other ways to spend their money and hedge their taxes. Younger
operators have told Nebraska auctioneer Ruhter they are sinking
their cash into new farm equipment, where financing can
sometimes be easier to obtain.
``That's what happened in the 1980s and that's going to wind
up getting people into trouble,'' Ruhter said. ``I'm seeing a lot
of new combines, new fancy trucks. That's great. Someday, I'll
get to sell them.''
(Editing by Bob Burgdorfer and Maureen Bavdek)