Institutional investors eye south-central Idaho farmland

Times News | 5 November 2010

Farm in southern Idaho (Photo: Peter M. Graham)

Officials at investor groups and lending institutions say farmland in south-central and eastern Idaho is being targeted by institutional investors who want to buy it and then lease it back to farmers.

Pension funds, foundations and endowments want a hedge against inflation and a safe place for their money.

"They're looking for things that have the tendency to move counter to the rest of the market,'' James McCandless, managing director of Hartford, Conn-based UBS AgriVest LLC, told the Idaho Business Review. "When you have an industry that has high productivity, and that productivity continues to increase, not only per acre but in every area, that's attractive.''

AgriVest has operated in Idaho for almost a quarter century buying property and managing farm portfolios for institutional investors. The company was acquired by the Swiss investment bank UBS in 1999.

Bob Morrison, a senior appraiser for Northwest Farm Credit Services, said he's never seen more interest in farmland in his 35 years in the business.

"It's a concern when you have these institutional investors, because they're not local,'' he said. "These are big institutions. You're just losing your local control.''

Ryan Cranney, whose family farms on 20,000 acres near Burley, said a group of Texas investors recently bought land in Cassia and Bingham counties. He also said a local group is creating a real estate investment trust to buy land.

"You're starting to see a little bit of it,'' he said. "I think it's something you'll see more and more of.''

John Knipe, president and managing broker of Boise-based Knipe Land Co., said he doesn't see outside investment being a huge risk because most farmers who are willing to sell are also free of debt.

"If they don't sell it, that's fine,'' he said. "They'll just leave it to their grandkids. Maybe that helps avoid some risk.''

Sid Freeman, a farmer near Middleton, said investors likely aren't aware of the risks involved with agriculture.

"One bad year truly does have the potential to completely erase your existence as a business,'' he said. "It's the misunderstood risk or the appearance of no risk that are bringing people into it. These folks that are looking toward buying farms as a good investment, they're just not looking at running that farm for profitability. I don't see it.''
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