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Posted December 31, 2015
The New Year May See Renewed Demand for Iowa Land
The last day of the Old Year saw prices for good quality Iowa farm land at about $9,000 per acre. This is not based on 'averages' or reported sales, but on anecdotal observations in North Central Iowa. Sales are good with more investor buyers and 1031 rollers out there looking across the borders into Iowa.
Danny Thomas of CBRE, a Real Estate Trade Publication, said recently, " Farmland investments appeal to pension and sovereign funds with significant amounts of cash."
This presents some problems for corporate buyers of Iowa land, as Iowa Code 9H basically prohibits most companies from owning much Iowa Farmland.
That law says an authorized farm corporation includes those with 25 or fewer shareholders.
To be a family farm corporation, the corporation must be founded for the purpose of farming and owning farmland, and those owning a majority of the voting stocks and a majority of the shareholders must be related. Also, 60% or more of the gross revenues must come from farming. Most investment companies, trusts and LLCs can only own land if they meet those requirements.
Some experts are eyeing Iowa Land and have stated that they believe that investors may 'work their way through" such impediments, and "ultimately, they won'd be an impediment to investment."
Why anti corporate farming laws? A corporation owes a duty to shareholders to maximize profits. This is not always compatible with the idea of sustainable farming.
A 'land ethic' has been described by Professor Neil Hamilton as an ethical duty one has to keep and preserve soil fertility for future generations. No corporate Director has any duty to unborn, future Americans.
Professor Hamilton is right; Iowa's Anti Corporate Farm laws are good.