Insight: In farm auction frenzy, investors start to bow out
By P.J. Huffstutter
SHELBY COUNTY, IOWA (Reuters) - On a recent morning inside a crowded town hall, auctioneer Jeffrey Obrecht sold off a sliver of western Iowa farmland barely wider than a football field.
The soil had drainage issues. A muddy creek made it tough for a tractor to reach the back corner. Still, the self-described "dirt dealer" figured some investor might want the tiny parcel in the nation's top corn producing state.
His raspy baritone rising high above the din of the crowd, Obrecht struggled to hide his shock as the price tag spiraled ever higher. In the final minutes, the bidding narrowed down to two farmers after an anonymous investor who was bidding by phone had dropped out earlier.
The winner paid $10,450 an acre -- more than double the land's value just two years ago.
"There's no reason that land should have brought that kind of money," Obrecht, 61, said afterward. "Am I dreaming, or did that just happen?"
Here in the nation's heartland, institutional investors, eager speculators and well-heeled farmers have raced in recent years to buy up farmland in order to shelter their wealth from tumultuous Wall Street or expand their profits in the global food chain. And auctioneers like Obrecht have been on the front line of this farm frenzy, charged with talking up the bid amid these sprawling fields and boarded-up agrarian towns.
Their business is thriving as more and more sellers see auctions as their best way to cash in. But the auctioneers are also keen observers of the rally, and what they see is this: Outsiders may have helped set off the investment boom, but it's farmers that are now driving it to worrying extremes.
RUSH FOR LAND DRIVES UP PRICES Continued...