One key to success is to be in the right place at the right time. That is especially true in business, as being in the wrong place at the wrong time can lead to a total loss. Farmers in the past have found themselves on the wrong end of this equation – for example, when land prices are high but commodity prices are low. Other times, farmers have ended up with the sweet end of the stick, Before the housing crisis of 2008, big-name companies took opportunities to buy Chicago area farmland for residential and commercial development. But in 2011, homebuilders cannot profit on land that there is no demand for, so farmers are buying it back at much lower prices than it went for 10 years ago.

One good example is the Baltz brothers. Bob and Ed Baltz took a multi-million dollar deal from a developer, in which the brothers sold their 600 acre property in Will County, Illinois, before the bust. The Baltz brothers sold 300 acres of land, averaging $25,000 per acre, near Chicago. They later used that money to purchase 4,000 acres in downstate counties, most of which they rented to other farmers.

The reason this has become so easy is because lenders cannot afford payments on the land they purchased a few years ago, when they expected to turn around and redevelop it for a huge profit. Farmland in Shorewood, Illinois that went for $65,000 an acre during the housing peak recently was bought by the Baltz brothers for $14,500 per acre. Utilities had already been built into the area as well, since it was purchased by the village in 2005 and zoned for housing development – so not only did the brothers scoop up prime farmland, the land itself is already developed to an unusual extent.

Many non-farmers have tapped into this strategy. While experienced farmers always have an edge, non-farmers can still rent the land to farmers. The return on these investments is satisfactory and future growth is expected. Farmers who keep a savvy eye on the price of land in their regions, and who have a good sense of what the underlying economics will actually support, are in a better position than ever to make smart deals and improve their land base, turning a profit at the same time.

Source:

The Olympian (http://www.theolympian.com/2011/06/23/1698973/shrewd-farmers-live-off-the-land.html)