Posted December 31, 2015
The New Year
May See Renewed Demand for Iowa Land
The last day of
the Old Year saw prices for good quality Iowa farm land at about $9,000 per
acre. This is not based on 'averages' or reported sales, but on anecdotal
observations in North Central Iowa. Sales are good with more investor
buyers and 1031 rollers out there looking across the borders into Iowa.
Danny Thomas of
CBRE, a Real Estate Trade Publication, said recently, " Farmland
investments appeal to pension and sovereign funds with significant amounts of
cash."
This presents
some problems for corporate buyers of Iowa land, as Iowa Code 9H
basically prohibits most companies from owning much Iowa Farmland.
That law says an
authorized farm corporation includes those with 25 or fewer shareholders.
To be a family
farm corporation, the corporation must be founded for the purpose of farming
and owning farmland, and those owning a majority of the voting stocks and a
majority of the shareholders must be related. Also, 60% or more of the gross
revenues must come from farming. Most investment companies, trusts and LLCs can
only own land if they meet those requirements.
Some experts
are eyeing Iowa Land and have stated that they believe that investors may 'work
their way through" such impediments, and "ultimately, they won'd be
an impediment to investment."
Why anti
corporate farming laws? A corporation owes a duty to shareholders to
maximize profits. This is not always compatible with the idea of
sustainable farming.
A 'land ethic'
has been described by Professor Neil Hamilton as an ethical duty one has to
keep and preserve soil fertility for future generations. No
corporate Director has any duty to unborn, future Americans.
Professor
Hamilton is right; Iowa's Anti Corporate Farm laws are good.