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Lucrative land: increased demand for farmland drives up prices in Jefferson County

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A decade ago, dairy farmers described fertile farmland south of the Black River in Jefferson County as “a best-kept secret.”

But as the price of commodity crops has climbed steeply, so has the demand for tillable farmland here. Land prices have doubled over the past five years as the area has evolved into a mecca for out-of-state farmers. Amish farmers have moved from Ohio and Pennsylvania to start farms here, while farmers from states across the Northeast and Midwest have scooped up the once inexpensive farmland to grow cash crops.

Seasoned dairy farmers have watched cash-crop farmers from outside the region move here to plant grain corn and soybeans on farmland previously tilled only for hay and silage.

Tillable farmland in the southern half of the county sold for $1,000 to $1,500 per acre five years ago, farmers say, but now goes for $2,000 to $3,000 per acre. In the county’s northern half, farmland that sold for less than $500 per acre is now priced at more than $1,000.

But dairy farms that rely on tillable land to feed their cattle haven’t sat on the sidelines to be outcompeted by cash-crop farmers on land sales. Instead, they have scooped up large swaths of farmland to lock in sales before prices climb higher, said Howard D. Barney, 70. He co-owns Butterville Farms off Route 75 in Henderson with his two grown sons, Jesse A. and John A.

Thanks to recent land purchases, the 950-cow dairy farm now owns about two-thirds of its 2,900 acres of tillable farmland; it leases the rest. About 1,600 acres of corn silage and 1,300 acres of hay will be harvested this fall.

“We used to pay much less than $100 an acre per month to rent land until the price of soybeans and grain went up, and then all hell went loose,” Mr. Barney said. “Now we’re competing with grain and soybean farmers. A few years ago, some of our neighbors were only getting $2 a bushel for grain corn. But last fall, they were getting $7 to $8 a bushel. It’s made buying land more competitive.”

GOBBLING UP LAND

In February, Butterville Farms joined Robbins Family Grain, Sackets Harbor, and Hillcrest Farms, Ellisburg, to buy 2,600 acres of prime farmland in the towns of Watertown and Hounsfield for $4 million from a Connecticut landowner. In that deal, Butterville acquired 400 acres of tillable farmland off Route 3 in the town of Watertown.

Mr. Barney, who has witnessed his fifth-generation dairy farm evolve for decades, said other farmers were surprised when Butterville bought 1,600 acres of land near its property about five years ago at a price of $1,400 per acre.

That price was considered expensive at the time, Mr. Barney said, but the land “has now at least doubled in value. We’d now get $4,000 per acre for that land.”

The Barneys, looking to the future, have aggressively bought land when opportunities have arisen in recent years, said Jesse, 46. Though prices are relatively high now compared with five years ago, he said, large dairy farms still are gobbling up as much land as possible.

“Here, everything we harvest goes through our cows,” he said. “As far as corn goes, it’s better that we harvest from our own land, because it’s now cheaper to grow than it is to buy. And if you wait to buy land, you can’t get any. We’d like prices to go back down to where they were, but I don’t think that’s going to happen.”

ECONOMIeS OF SCALE

The increasing value of commodity crops has spurred farmers to repurpose land, growing grain and soybeans to cash in on prices, said Michael E. Hunter, field crops expert for Cornell Cooperative Extension of Jefferson County. Seven years ago, for example, grain was sold at about $3.50 per bushel and soybeans for about $6.50 per bushel. Today, soybeans are being sold in advance at $13.82 per bushel for November, while grain is priced at $4.59 per bushel for December, according to the Chicago Mercantile Exchange.

Because of that trend, cash-crop farmers have purchased marginal farmland with heavier clay in the northern half of the county during the past five years for low prices, Mr. Hunter said. Soil on farms north of the Black River tends to drain water less efficiently, which results in lower harvest yields. While buying marginal farmland for cash crops is unusual, he said, farmers are raking in profits by doing so.

“Before, the economics weren’t there to produce crops on that heavier soil because you couldn’t make up your expenses,” he said. But because of higher commodity prices, “now farmers can get lower yields on those fields and still make money. People who are now growing corn and soybeans out there weren’t cropping five years ago, but it’s really getting pushed the last couple of years. It’s all being driven by corn and soybean prices. That’s why people are willing to pay more.”

As a result, Mr. Hunter said, farms that were leasing land at low prices have sometimes been bought out by cash-crop farmers who are willing to pay more. That is also a recent trend.

“Some people couldn’t afford land when rent values went up,” he said. “People sometimes have open-ended lease agreements, and someone else will offer to rent land for $10 to $15 more per acre.”

OUT-OF-STATE TRANSPLANTS

Despite climbing prices, tillable farmland here still is much less expensive than in other states, Sackets Harbor dairy farmer Ronald C. Robbins said. Ten years ago, he said, Jefferson County launched marketing initiatives to lure farmers from outside the region to take over farmland here. But those efforts have been scaled back, he said, because the influx of farmers from outside the region is competing with local dairy farms to buy land, driving up prices. He said cash-crop farmers have relocated operations to the north country from Kentucky, Nebraska, Iowa and Canada. Amish farmers have relocated here from Ohio and Pennsylvania.

“Ten years ago, there were all of these small dairies going out of business, and no one was there to take them over. But now that trend has totally reversed itself. Out-of-state people come in here and think land is cheap compared to their area of the country and, at $2,000 per acre, it is. But farmers here become a little protective when we see an outsider coming in who doesn’t necessarily see the way we like to see things done. If they’re here to contribute to the community and make money, that’s a different story, but not if they’re here to make money off the government with crop insurance.”

Tight competition for farmland has spurred large dairy farms such as Robbins Family Grain, which has 950 cows, to acquire farmland while they still can, Mr. Robbins said. After acquiring 950 acres of tillable farmland in the $4 million, three-partner sale in February, the farm plans to harvest 2,600 acres of corn for grain and silage, 2,200 acres of hay and 900 acres of soybeans this fall. A 280-stall dairy barn was built recently at the Sackets Harbor farm off County Road 145, which will enable it to expand its herd to more than 1,100 head of cattle over the next two years.

“Bigger dairies like ours want to have enough cropland now so we can manage our land during poor crop seasons,” he said. “It’s a management risk for a lot of farms, and all of us need land.”

Some small- to medium-size dairy farms, though, find it challenging to expand because of the farmland’s high prices, said Arthur F. Baderman, agricultural educator at Jefferson County’s extension office. “Some of these small farms don’t have anyone in the family to take over and are tired of milking cows,” he said. “They’re looking to either rent or sell land at high prices to larger farms so they can keep living in houses they’ve always lived in. They want to wipe the slate clean and have money for retirement.”

WILL PRICES CONTINUE TO CLIMB?

Seasoned dairy farmers realize that land values sometimes increase rapidly for years, then suddenly level off or decrease when the economy shifts, Mr. Robbins said. Agricultural land values have increased about 4.5 percent each year over the last 200 years, he said, but not at a steady rate.

Over that period, “there have been about six boom times where land values have increased at a rapid rate. But then we’ve hit times where land prices have gone from a positive to negative trend,” he said. “These cycles happen, and you can’t expect what’s going on in the last five years to be the trend in the next five, or further on out. Steep money and high commodity prices encourage people to buy land and expand, but that will change if we go back to low commodity prices in a year and interest rates go up.”

But dairyman Lyle J. Wood, who co-owns a 900-cow dairy farm in Cape Vincent with Scott F. Bourcy, predicted that land prices will continue to climb steadily because of sustained demand for farmland across the county.

“We were generally buying land here for 500 to 600 bucks a year ago, but now it’s over $1,000,” he said. “I think prices are going to go up 10 percent a year for a long time, because everybody is driving up the prices, and you have guys who are doing strictly crop farming.”

The farm, which bought 650 acres of land over the past three years, now owns about 2,000 acres and leases about 2,000, Mr. Wood said.

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