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Why is farmland so expensive?

A clod of soil and some corn from some of the priciest land in Missouri: Saline County. (Rehman Tungekar/KBIA)

On Friday, I left the rolling hills of Columbia, Mo., and headed northwest, to the flat farmland of Saline County. The purpose of the drive was to get a look at the priciest cropland in Missouri for a story I'm doing on how investors with no connection to farmland are increasingly interested in buying acreage in the Midwest. I had heard from farmers and real estate brokers that cropland values were at all-time highs in the Corn Belt, and incredibly many of the tracts of land are being paid for in cash.

Howard Audsley, who wears dark glasses and his hair short in a crew cut, drove me there in his Toyota truck. Audsley has appraised farmland in Missouri for 30 years and knows the land well since he grew up on a farm in the area.

“Right on this stretch of road is probably the very best of it,” he told me, slowing the truck to a stop in front of a 160-acre parcel of newly tilled black soil. The tract sold for $10,700 last February, double what it went for five years ago. “And it’s just maybe 15 or 20 square miles total.”

Audsley hopped out of the truck, headed into the field and bended his tall body to pick up a clod of dirt. As it crumbled in the wind, Audsley explained that this soil was part of the reason Saline County land carries such a hefty pricetag.

“Instead of a foot or two or three, it’s more like 10 feet deep,” he said. “It’s just consistently black. Flat black and it’s very productive and fertile ... to begin with but it’s deep enough that the root zone of the plants will go [deep] … There’s moisture there and there’s always going to be water there. It will just produce a crop – a good crop -- every year.”

Audsley says soil type – and he says there are more than 100 different kinds of soil in Missouri –  is just one of the variables he takes into account when figuring out how much a tract of land is worth. Other things he looks at are what land usage will bring the highest economic return; who the likely buyers will be; what the land’s physically capable of being used for; whether there are any legal restrictions on the land; and whether existing structures on the tract could contribute anything of value to the property.

He also keeps records of sale prices to get a sense of how land economics change over time.

“One of the things we try to do is [for] every single class of property everywhere we go, we try to keep track of what has sold and for how much and who bought it and why,” Audsley said.

That’s how Audsley knows the land prices for this pocket of 15 to 20 square miles in Saline County is way above the state average of $3,300 for good quality cropland.

More: Investors angle for a piece of precious farmland

The priciest farmland in Missouri

Each July, the University of Missouri Extension sends out a survey to lenders, rural land appraisers and real estate brokers in the state to get a sense of average values for farmland. This past year, the counties with the most valuable farmland in the state -- those that average more than $5,000 per acre -- include Stoddard, Butler, Mississippi, New Madrid, Pemiscot, Dunklin, Saline, Carroll, Chariton, Pettis, Howard, Boone, Audrain, Callaway, Cooper, Scotland, Clark, Lewis, Marion and Ralls. 

Map by Charles Minshew. Data from the "Missouri Farm Land Values Opinion Survey 2012" by the University of Missouri Extension.