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Farmland has become scarce and expensive as growers plow their profits back into their operations.

Tree fruit growers who have been making good profits in recent years and might be looking to expand are competing for land with other farmers, who are also enjoying a profitable period.

“General agriculture land is in very short supply,” reported Steve Weber at Clark Jennings & Associates, Inc., an agricultural real estate company in Yakima, Washington. “All the commodity crops, with perhaps the exception of hops and dairy, have been so strong in the last couple of years that we have a lot of farmers with a good deal of capital or access to capital from the banks. So, anytime we get something on the market—good, bad, or indifferent—we seem to have a boatload of people wanting to buy it.”

Weber said tree fruit growers are finding that the best thing to do with their profits is put them right back in the ground. There are not many other attractive investment options, and, in some cases, family companies might feel they need more acreage as the older generation turns the business over to their children.

“Normally, good ground will always sell at a premium price, but we’re finding very modest ground that people are rushing to get, just to pull all the trees out and put new ones in.”

Weber said land in the Quincy or Babcock Ridge area that might have sold four or five years ago for $4,000 an acre—which seemed a high price at the time—is selling for up to $10,000 an acre.

“I think you’d find almost those same kind of prices in Mattawa,” he said, noting that land in that area has good potential for horticulture, viticulture, or row crops. What’s fueling the high prices for row crops is the large amount of corn being grown nationwide for ethanol.

Jim Weitzel at Gary Mann Real Estate in Ephrata, Washington, said the supply of agricultural land is very tight, demand is very good, and prices are high and rising.

A planted orchard can sell for $11,000 to $12,000 an acre, he said, and ground without trees for $9,000.

He has customers who have asked him to watch out for ground, and anything he finds, he can sell quickly. Some people are looking themselves for land they like and asking the owners if they’re interested in selling, without it even going on the market.

Weber said he’s been encouraging growers who might want to sell their farms to do so while the capital gains tax is 15 percent. The rate was lowered from 20 percent in 2010 and is set to revert to 20 percent on January 1.

“If you ever thought about selling, this is the time to do it,” he said.