Price of farmland continues to rise in state, survey shows

On the Farm

August 20, 2006|By TED SHELSBY

High farmland prices - already considered the biggest threat to the future of Maryland agriculture - are continuing to rise as land becomes scarcer.

Driven by one of the hottest real estate development markets in the nation, Maryland farmland value rose 12.7 percent last year to $8,900 an acre, according to a U.S. Department of Agriculture survey.

That figure is for land that is sold and continues to be used for farming, an increasingly uncommon scenario in Maryland, say state agriculture officials. In most cases, farmland is sold for development, and the prices of building lots are cracking $500,000 in some parts of the state.

Maryland has the sixth-most-expensive farmland in the country and, as a result, has been losing farmland at a rate nearly four times that of the nation as a whole.

The effects of rising farmland prices have been changing the face of farming in Maryland and will continue to do so, agriculture officials say.

"It has already gotten too expensive for most farmers to buy land for farming, unless the farmer is in some high-value crop, such as a nursery," said state Agriculture Secretary Lewis R. Riley.

Farmland on the water or near metropolitan areas is commanding premium prices, but values are rising even in outlying areas.

"No matter where you go - Wicomico County, Somerset County - land is expensive," Riley said. "Even in rural areas, the cost of land has risen drastically."

Riley said the price of agricultural land near his farm in Parsonsburg, about six miles east of Salisbury, is rising beyond the reach of many farmers.

"A few years ago, you could buy a lot here for $30,000 or $40,000," Riley said. "Now they are going for $100,000 or $150,000."

The high cost of land is changing the way farmers run their operations, said James Hanson, the acting associate director of Maryland Cooperative Extension at the University of Maryland, College Park.

"It is forcing farmers into the production of high-value crops, like fruits and vegetables and organic produce," Hanson said.

He said more farmers are making cheese or ice cream from milk and selling directly to consumers.

Riley said farms that produce nursery plants are the fastest-growing sector of Maryland's agriculture industry.

"You don't need a lot of land to have a greenhouse," he said.

Hanson noted that the high cost of farmland is making it more difficult to transfer a farm from one generation to the next.

"It is nearly impossible for someone who wants to stay in farming to buy out the other family members," he said.

And as land values rise, farms disappear. Jeanne McCarthy-Kersey, deputy director of the USDA's Maryland agriculture statistics office, said the state lost 10,000 acres of farmland last year.

During the past eight years, 7.3 percent of the state's farmland has disappeared. This compares with a 2 percent decline in farmland for the nation over the same period.

Riley said there is a benefit to rising land value: rising equity.

"That's the one good thing it does for farmers," he said. "That's important. It helps them get their operating loans from the bank to plant their crops each year."

Rhode Island leads the nation with farmland selling for $12,500 an acre, followed by Massachusetts at $11,600, Connecticut at $11,400 and New Jersey at $10,900.

In Delaware, farmland value rose 21.4 percent to $10,200 an acre last year.

The average price for the 48 contiguous states is $1,900 an acre.

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