associate | realtor
Born and raised in Northern Michigan, Kevin Query spent his formative years honing his agricultural skill set by working with various farms ranging from large-scale fruit production to small-scale, niche vegetable production within the Grand Traverse region.
Expanding upon his learned knowledge, Kevin earned a B.S. in Crop and Soil Science from Michigan State University and has previously worked as a research specialist studying various cropping methods, fertility management and innovative water and nutrient conservation technologies. As a licensed realtor, Kevin aims to provide a knowledge-based resource to farmers who wish to buy and sell productive land throughout Michigan.
Commercially Operated Farmland - A New Investment Opportunity?
With an increased awareness of growing uncertainty in the financial markets, investors are seeking alternative strategies to insulate their assets against the inevitable cyclic downturns of economies. While real estate has historically proven to be dependable investment vehicle that can be utilized to bolster a portfolio, it is susceptible to any number or variables in the marketplace that can negatively impact valuation. However, one subset of real estate has historically remained relatively unphased by economic turbulence: farmland.
Since the end of the second World War, farmland in the United States has undergone a steady increase in value every year except for four (1983, ’85-’87). Several factors lend to the rapidly increasing valuation of productive farmland both domestically and internationally. As a dramatically increasing global population that continues to develop an ever-expanding demand for more varied diets, a decreasing volume of arable land coupled with regional water insecurities and a myriad of challenging climatic variabilities that present the potential to negatively impact crop yields, what little land suitable for agricultural output that remains continues to exponentially increase in value as the opportunity presented in real estate that provides dependable production is realized.
More specifically, one subset of agricultural real estate that stands to benefit the greatest from the forecasted global disruptions in agricultural production happens to be none other than Michigan itself. Taking into consideration the geographic and economic capabilities that Michigan already provides to agricultural producers, this region furnishes unparalleled security to investors seeking opportunity in farmland real estate. Here are just a few reasons why Michigan agriculture is a smart investment:
- Compared to most fruit-producing regions of the world, the prevailing winds of Lake Michigan are such that it provides a geographic advantage to the production zones adjacent to the western shore of Michigan. As the lake warms throughout the summer, the resulting prevailing winds transfer the accumulated thermal energy from the lake to the shoreline throughout the fall and extend our growing seasons to comparable latitudes of northern Texas, New Mexico and Tennessee. Lake Michigan also serves as a insulative buffer to extreme fluctuations in temperature during the season that can negatively affect comparable land-locked agricultural districts around the world – providing yet another safe-guard for dependable agricultural output in this region in the face of an increasing occurrence of climatic variability.
- Unlike the majority of agricultural production in the Midwest, the western shore of Michigan is composed primarily of fruit production. When compared to more conventional crops such as corn and soybeans that comprise the majority of domestic agricultural production, fruit acreage generally yields a significantly higher value-per-acre of agricultural output than that of field crops. Whereas one bushel of corn (56 lbs) fetches roughly $580 an acre in net revenue, one acre of Honeycrisp apples can yield as much as $35,000 an acre. Additionally, the climatic conditions of Northwestern Michigan provide an optimal growing zone for fresh-market fruit production – a market which tends to yield the greatest return to both growers and investors.
- As compared to most conventional real estate investments, farmland can offer investors several tax benefits that can maximize the value of land investments – namely Michigan’s Farmland Preservation Act as well meeting the “Like-kind” requirement of commercial 1031 tax-deferred exchanges. In addition to the the initial tax incentives provided when purchasing agricultural land, additional infrastructure that is built on agriculturally zoned land is exempt from sales tax and generally exempt from most zoning ordinances.
- Above all else, the most important factor in this region’s agricultural value is the unequaled water security this state provides to farmland operations. Fruit-producing regions in the United States, namely Eastern Oregon, Southern California and Western Arizona, continue to face unprecedented water security pressures amid increasingly variable snowpack and precipitation events. As ground-water depletion and regulatory appropriation restrictions in those regions continues to exacerbate an already precarious situation, what little water that will remain in the future for growers will be dedicated to crops that cannot be grown in other areas of the United States such as citruses, avocados and nuts. When considering that the second most biodiverse state in the country is Michigan, our state provides an already vast network of harvesting, processing and storage capabilities to more easily facilitate a transition for affected producers to move their operations to our state, and significantly increasing the value of farmland in the process.
When contemplating your next moves in real estate investment, consider that no other asset class has undergone such dependable increases in valuation than that of productive agricultural land. Further consider what the agricultural landscape will look like 30 years down the road when the most valuable asset on planet earth, water, becomes one of the most hotly contested resources among nations that this world has ever seen.