By Carmelo “Mel” Russo
The Malthusian Theory, originating in the late 18th century, appears to be on hold, temporarily in time, because of some circumstances unforeseen by the English economist. The popular theory predicted that by the new millennium, population (growing exponentially) would outstrip food supply (growing arithmetically). In the 20th century, prices of farmland as well as grain and food prices remained essentially constant for nearly fifty years. At the turn of the century, prices of both farmland and grain commodities doubled and even tripled in some cases after scores of years of price stagnation; this was because cultural practices of fertilization, herbicide and pesticide application, and improved drainage along with genetics have magnified the production of the land more than twofold.
As a result, prices of grains remained low because the supply exceeded the demand causing land prices to remain stable. For example, during the 1970’s, an above average yield of soybeans in Seneca County might be 35 bushels per acre. Today yields have reached 75 bushels per acre on the same land. Accordingly, farmland in the 1970’s was approximately $250- 400 per acre whereas today, plain, good farm land for grains in Seneca County has approached and, in a few instances, far exceeded $5000 per acre for highly productive cropland. For years, however, the price of large quantities of farmland remained relatively low, selling at about $1200 per acre in the early1990’s until most recently selling in the $3500-$4000 per acre for good, well-drained cropland.
- Other factors can affect the value of the farmland:
The size of the field for accessibility to large equipment is a plus, a principle known as “the economies of scale.”
- The number of acres in a purchase; the greater the number of acres, the less purchase price per acre. Fewer acres command higher purchase price per acre, another example of the above law of economics.
- Proximity to existing large farms, farming families or expanding enterprises: the greater the closeness, the higher the price per acre.
- Soil types and their respective drainage and production capabilities. Good drainage and production capabilities bring higher prices.
- Proximity and view to a larger Finger Lake. Proper, uninterrupted slope to the lake can provide extraordinary air drainage to soften extreme cold in fall and winter thereby protecting the sensitive vinifera varieties of grapes. Conversely, air circulation in spring from the cool lakes delays early budding of our precious fruits to protect them from early freeze. If the land slopes to a Finger Lake, it can sell for as much as $10,000 per acre, depending on the above other factors and if it is cleared.
- Road frontage and lake frontage: the more frontage, the higher the price per acre.
- Current commodity prices as well as futures outlook: higher commodity prices with a stable outlook, raise the price of farm land.
- Interest rates: lower interest rates may stimulate higher sale prices.
Who could have thought, that the price of land would rise from less than a penny per acre in 1789 to up to $10,000 per acre today.* Even scrub and woodlands have become more valuable at up to $2000 per acre again, depending on the number of acres and the degree of maturity of forest land. Some are even purchasing non-tillable land at top prices and clearing it.
Meanwhile, the Malthusian theory has yet to materialize for the economist did not foresee the improved agricultural practices and developments, especially genetic modifications to both plant and animal food sources that dramatically increased food productivity. In addition, he did not interpolate the vast amounts of rain forests, deciduous forest and coniferous forests that were to be cleared in the years to come for the production of food for humans. Swamps, deserts, and hedgerows have also been brought into production, all at the cost, unfortunately, of millions of interrelated species that inhabit these specialized ecosystems. Furthermore, Malthus did not take into account the practice of birth control, both that imposed by governments and societies, as well as that resulting from voluntary implementation, especially in more affluent cultures. Nevertheless, various peoples around the world are starving, mostly for political reasons, even though after all this time, there is a surplus of food.
If you would like your farm and/or home evaluated by the most experienced Realtor in the business, call Mel Russo at 315- 568-9404, 315-246-3997 or any Senecayuga Properties agent.
* New York State paid the Cayuga Indian Nation the premium price for the times of $500 for 64,000 acres (= $.078 per acre) in 1789.
© 2016 Mel Russo All Rights Reserved.