Land donated by single farmer creates boon for Willmar Church
Calvary Lutheran in Willmar was stunned when land bequeathed to the church by a single farmer generated $ 4.5 million in windfall.
The staggering auction sum of around 400 acres of farmland looked like a gift from above.
“It’s transformative,” longtime Calvary pastor Dean Johnson said days after the late December auction. “It puts a little zest in our approach.”
Whether it’s a miracle or market forces at work, the sale reflects the value of farmland which continues to rise near or above historical levels. With high crop prices and low interest rates, farmland is proving an irresistible attraction to buyers who see it as a safe investment in times of inflation.
“It’s a classic economic response: Farmland is attractive but scarce,” said Megan Roberts, who teaches farm business management at the University of Minnesota Extension. “People are looking for farmland right now and there isn’t much to be done and it’s driving up the prices.”
This is great news for vendors like Calvary Lutheran, where the church board agreed at the end of December auction to accept a minimum average of $ 8,500 per cultivable acre for the grain farm. which longtime member Jerry Anderson donated upon his death in 2014.
Then came the auction where over 40 active bidders cranked that up to an average of over $ 11,000 an acre.
“The amount of interest was just amazing,” said Kristine Fladeboe Duininck, co-owner of the auction company, Fladeboe Land, which handled the sale. “We could barely keep up.”
Although they are a strong signal of the overall health of the agricultural economy, high and rising farmland prices, coupled with growing investor interest, are an increasingly insurmountable hurdle for young emerging farmers. who would like to own their own land but cannot afford it – or even raise the capital to qualify for loans.
“I receive emails from people who are not farmers but who have purchased land and wish to rent it out to our farmers,” said KaZoua Berry, Marine on Big River Farms program manager based in Sainte-Croix, which provides access to land. people of color, immigrants and others who have traditionally struggled to get into farming. “There’s a lot of privilege in there – and it rubs me the wrong way,” she said.
Berry and her husband grow vegetables on rented land. They would like to buy a farm but haven’t figured out how to make it work financially, she said. “With the prices as they are, we were forced to reconsider how we could ever do it,” she said.
No one knows exactly how high the prices of farmland could go. Prices per acre, which hit $ 9,000 last summer, recently increased from $ 11,000 to $ 12,000. This exceeds the prices observed during the period of sustained high prices in 2013-14.
Another likely factor is the large amount of public support distributed to farmers in recent years. So is technological progress, from the best seeds to precision farming practices.
“What you can produce on an acre of land is so much bigger than before,” said Joe Mahon, agricultural economist for the Federal Reserve in Minneapolis.
Mahon and Roberts, the extension professor, said it was difficult to say if the current trajectory is sustainable or if we are in an agricultural bubble. “Usually you don’t know if you’re in a bubble until it bursts,” Roberts said.
Meanwhile, community institutions see an opportunity in the kind of agricultural fortune that befell Calvary Lutheran.
“By donating your farm to the University of Minnesota Foundation, you can create a lasting charitable legacy for future generations while achieving some of your planning goals,” read a brochure from the foundation.
Ben Webster, the foundation’s senior manager of planned giving, said the foundation recently finalized a deal with a retired dentist who is donating a 109-acre farm in Freeborn County. The dentist does this under an arrangement known as a “retained life estate,” in which the donors retain control of the land until their death, but receive a large income tax deduction for the donation. Meanwhile.
Dave Flor, who spent his career as a dentist in several communities in southern Minnesota, never cultivated the land he ceded. He started buying farmland in the 1980s as an investment and leased it to local farmers for decades. Once the U Foundation takes possession of it, it will sell the land with the proceeds intended for the School of Dentistry.
Flor said he bought the farm in the 1980s for $ 55,000 and recently it was valued at $ 980,000. “It’s almost embarrassing to say it out loud,” he said.
In Calvary Lutheran, Johnson – a former state Senate majority leader and chairman of the United States Board of Regents – said the church board had rejected two previous decisions to sell the Anderson farm before to finally vote to sell it at auction.
The current price of farmland was a big factor, Johnson said. Three buyers, a local farmer and two with investment interest, each bought part of the land. Anderson had stipulated that the proceeds were to be used for capital spending and not the general church fund, Johnson said, and the congregation has just embarked on a process to determine how to spend it.
“We can grow, we can reshape, we can improve,” Johnson said. “And it will all be in the name of Jerry Anderson, may God have his soul.”