Price of Md. farmland is sixth in U.S.

Rapidly rising values seen as threat to future of agriculture in state

August 15, 2005|By Ted Shelsby | Ted Shelsby,SUN STAFF

Dairy cows and other livestock in Maryland graze on the sixth-most-expensive farmland in the country, according to a survey released last week by the U.S. Department of Agriculture.

Fueled by the red-hot market for development, the average price of an acre of Maryland farmland, including farm buildings, is up nearly 38.6 percent from last year, to $7,900 an acre.

That increase compares with a rise of 11 percent for farmland in the contiguous 48 states - the biggest gain in nearly a quarter of a century.

"It's a scary situation," said state Agriculture Secretary Lewis R. Riley. "It is a major threat to the future of farming in the state."

As Riley was quick to point out, "these prices are for land that stays in farming. If a farmer sells his land for development, the prices they get are incredible."

The USDA survey on land values was based on farmland being sold as farmland. "In Maryland, that is becoming increasingly hard to find," said Jeanne McCarthy-Kersey, deputy director of the USDA's statistics service for Maryland.

When the land stays in farming, she said, it is often the case of "a millionaire buying a farm on the Eastern Shore and building an estate. He doesn't want to be a farmer, but he wants cornfields around the property to create a buffer, so he rents the property to farm neighbors looking to expand.

"This way he can sit on his porch and look out on the cornfields."

In neighboring Delaware, farmland value jumped 40 percent this year to $8,400 an acre. Rhode Island leads the nation with farmland selling for $11,200 an acre, followed by Connecticut at $10,800 and Massachusetts at $10,300.

Tim Sullivan, head of Tim Sullivan Properties Inc. in Bel Air, said 2- and 3-acre farm lots in Harford County with development rights are bringing $250,000 and more. "Prices have gone up 2 1/2 times in recent years," he said.

The trend is not limited to the fast-growing counties of the metropolitan area.

"Even in rural areas, Western Maryland and the Eastern Shore - and I'm not talking about Ocean City - prices have shot up 50 percent, 75 percent, more than 100 percent the past three years," Riley said. "We're seeing small building lots in rural areas bring well above $100,000.

"A few years ago they were selling for $50,000 to $60,000," he said.

Riley called the rapidly escalating prices a major threat to agriculture. "The enticement to farmers is so great," he said, "it's hard for them to turn down the money."

Riley said that many farmers could sell their land, put the money in the bank and live more comfortably than they do laboring long hours in the field.

"And when they sell," he said, "there goes our farms."

Riley said the price of farmland makes it nearly impossible for young people who want to go into farming to buy the necessary land. "The land costs so much," he explained, "that the economics don't work. It's hard to make enough money farming to pay the mortgage."

The agriculture secretary said the trend also threatens the ability of the state and the counties to acquire property for agricultural land preservation, a program that seeks to maintain the open space and the picturesque landscapes that add to the quality of life.

"We have $50 million for ag-land preservation this year," he said. "That includes state, county and some federal dollars. Land prices have shot up so much that [that] money won't buy as much as it once did."

Bill Boniface, who runs a horse farm in Darlington, said the availability of land is the top concern of young farmers across the state. "They can't get it," he said.

Boniface, 41, is chairman of the Young Farmers Advisory Board. The General Assembly created the 12-member board last year to looks for ways to draw more young people into farming.

"Right now we are in a Catch-22," Boniface said. "It's great for farmers that their property values are so great, but it makes it almost impossible for young people to get into farming."

He said changes are needed to reverse this trend.

"We need to come up with a package of things to help farmers," Boniface said. "It should include ag-land preservation and some financial incentives. Perhaps the elimination of the capital gains tax on a farmer if he sells his farm to a young farmer."

Boniface said the legislature might want to look at reducing other taxes on farms and "do a better job of hooking up retiring farmers with young farmers wanting to get in the business. They could be the middleman."

Riley is aware of the difficulty of young people moving into agriculture. "It is nearly impossible," he said. "You either have to marry into a farm or inherit one.

"We have got to find ways to help farmers," Riley said. "We have got to make farming more profitable. That's how we are going to keep our farms. Right now, the incentive for them to sell out is too great."

McCarthy-Kersey quoted the most recent census figures that show the changing face of agriculture in Maryland.

Between 1997 and 2002, there was a 32 percent increase in the number of small farms, so-called "gentlemen farms" with sales of less than $2,500 a year. During the same span, the number of more traditional farm operations - those with sales of $10,000 to $100,000 - was down 26 percent.

"Forty-three percent of the farmers in Maryland don't count farming as their primary occupation," she said. "They are lawyers or plumbers or some other occupation, who like living on a farm."

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