So why do we buy land?

This was written as a guest post for the Vita Plus Thank Farmers! blog.


It isn’t often that land on the other side of our fence line goes up for sale. So, after a few months of phone calls and paperwork, we were excited to complete the final step of transferring the title.
After the four of us – my father-in-law, mother-in-law, husband and myself – finished our celebratory lunch at the Pizza Hut buffet, we drove out to look at the field. We parked the car for a minute while my father-in-law led a simple prayer to express gratitude for the new land. Then began the couple-month wait for spring to arrive so we could actually work in this new field.

During the months that followed, I started penciling some numbers. I knew rent was a big part of the annual expense on those respective fields, but it also was a huge cost to purchase the land. I was curious to see how long it would take to break even on the investment.

For simple math, let’s say it was $200 per acre to rent each year compared with $6,000 per acre to buy. With just that comparison alone, it would take 30 years before you start coming out ahead buying the land versus renting it. That doesn’t take into account that rent price will likely continue rising with time, but I also didn’t calculate the interest and property tax that has to be paid on the purchased land.

So why do we buy land?

How many scenarios exist where a person or company buys something that won’t hit its breakeven point for three decades? My husband is 30 years old now, which means he will be 60 years old at that point…hopefully in the process of planning for his retirement.

The biggest benefit from a business standpoint is that owning land presents a greater opportunity for quality soil management. With rented land, we never have a guarantee of how many years we’ll be farming it, so the fertilizer (nutrients) program is designed for a year-to-year basis. With owned land, we look more holistically at the soil to sustain the nutrient quality continuously.

The other reason is more from a personal standpoint. This investment honors the history of this as a family farm. The road we live on is named after our family because of the legacy it started MANY years ago with this farm. We are fully rooted here and committed to carrying on that tradition. There is no way for us to know whether our children or other relatives will take over the farm after us, but we are keeping that in mind even if it means more sacrifice for us now.

Farming doesn’t easily compare to anything else – it’s a family business, a lifestyle, a responsibility to society.

The decision to buy land doesn’t easily compare either. It’s a business decision that requires analysis of cash flow, tax implications, etc. It’s also a personal decision that will affect family members and others. For us, farmland is kind of like our “yard” – it just happens to span a few country blocks.

We are grateful for and humbled by this opportunity.