Farmers pay developer prices for Mich. cropland

Land in rural southwestern Michigan is selling for $10,000 an acre -- not for real estate development, but for farming, Rosemary Parker writes for the Kalamazoo Gazette. "Everybody wants land to farm right now," said Larry "Cassey" Jones, Allegan County Board of Commissioners vice chairman. "It's just skyrocketing." (Encarta map)

Five to ten years ago speculators and developers were buying land at similar rates, said Bob Boehm, manager of the Michigan Farm Bureau commodity department. "Softening of the general economy and strengthening of the agricultural economy has lessened the pressure for diversion of farmland" into residential and commercial development, he said.

And maybe even reversed the trend? Parker's story begins, "The developers weren't laughing when Vicksburg village trustee Ray Vliek, 87, quipped at a recent meeting: 'By golly, I believe I'd tear those houses down and put in corn.' Developers paid $10,000 an acre for the land to build houses, the same price now being commanded for irrigated farmland, Vliek said."

Land prices began to rise when the ethanol boom hit in 2006, nearly doubling corn prices, Parker writes. "In southwestern Michigan that year, prices went from $1.85 per bushel in August to about $3.50 per bushel in October. Since then, corn prices have doubled again, to more than $8 a bushel this spring. Wheat and soybeans have seen similar gains."

Roger Betz, a Michigan State University extension district farm educator, cautions that farms must deal with with increasing fuel, fertilizer and equipment prices. A recent study by MSU showed agriculture and food generate an economic impact of $63.7 billion, making it the state's second-largest industry behind manufacturing. Michigan agriculture has become more important this year because of the devastating floods in other parts of the Corn Belt. (Read more)