Why land prices are soaring : Reverse Migration

Hi All,

Found this article on Economic Times. Now we have an answer as to why agricultural land prices are soaring. May be one of the reasons and why its becoming increasingly difficult to buy lands with hard earned money or savings :astonished: :astonished: .



KOLKATA/AHMEDABAD: Shyam Mukati, a 38-year-old farmer from Madhya Pradesh, has just sold his three acres of land in Indore suburbs at a premium and bought seven acres in Dewas district, which is 263 km away from Indore. A higher acreage means a bigger tonnage of crop and therefore a better price recovery. Like Mukati, Arun Saini, a potato farmer from Deesa city in Banaskantha district of Gujarat, sold his 10 acres to buy 50 acres 10 km away from the city. “It is a good deal for me. I am closer to markets and water level is good here,” said Saini.

Welcome to an emerging reverse migratory trend being fuelled chiefly by economic factors. Fairly affluent farmers who had bought farmland in city suburbs to enjoy the comfort of city life as well are now selling their properties and moving deeper into countryside. With property prices going up, suburban assets have given these farmers great returns which they have invested on larger tracts of land. Larger landholding is always an advantage, be it in terms of land value or farm output where tonnage is linked to acreage.

“Five years ago, only 1 per cent of our members would have opted for a reverse migration. But significantly in the last few years, it has gone up to 5-10 per cent,” said Prabhakar Kelkar, general secretary, Bharatiya Kisan Sangh.

Farmers tend to sell off their holdings closer to cities to real estate developers and builders. “Sometimes it so happens that state developmental corporations or municipal corporations eye on certain land. State agencies pay much less than real estate developers,” said a Punjab-based farmer, who has sold off his land closer to Chandigarh. But he did not want to quantify the volume of land he has bought in Rajasthan, where he will grow guar, which gave an astronomical return to farmers last year.

While unlocking higher value from the land is one of the major considerations, farmers are also looking at buying land in those areas where crops with higher returns are grown. Pointed out Rajesh Agarwal, coordinator of the Soya Bean Processors Association (Sopa): “We have seen that affluent farmers moving from urban areas to interiors of Madhya Pradesh and cultivating soya bean as the returns from the crop have improved in the last one year. There are even farmers from Punjab and Haryana who have moved in.” Soya bean prices have appreciated by 91 per cent in the last one year from Rs 2,350 per quintal to Rs 4,500 per quintal.

The trend is also picking up in south India as well. P Chengal Reddy, general secretary of Confederation of Indian Farmers Association, said small and marginal farmers holding 1-2 acres are moving to northern coastal parts of Andhra Pradesh such as Srikakulam and Vijayanagram. “Some farmers are also going to Orissa,” said Reddy.

Apart from finding it a good business deal to buy land in other parts of the state and villages, some are also making purchases for emotional reasons. The 65-year-old Jagjit Sharma, a farmer from village Gundurdehi in district Balod of Chhattisgarh, is finalising a deal to purchase 10-15 acres of agriculture land near Batala, a small town in the border district of Gurdaspur of Punjab. Sharma’s family had migrated during Partition to Chhattisgarh. He now wants to reconnect with his ancestral land. “As the land is along the border, prices are not as exorbitant as in other parts of Punjab. I plan to grow fruit trees apart from wheat and basmati,” he said. Economists feel that this trend will result in a better utilisation of resources.

“Irrigation facility and markets are the factors leading to migration which is an economic phenomenon. It is good as it leads to a better allocation of resources. However, it has to be seen that people are not exploited, owing to the land rights law,” said economist Yoginder K Alagh, chairman of Institute of Rural Management, Anand.

Here is the link

economictimes.indiatimes.com/new … 534724.cms

I can vouch for this having witnessed the phenomena first hand in a region around Delhi. But it’s not just “affluent farmers” who are doing this… farmers from all classes are moving to “interiors” where land prices are cheaper compared to where they have the farm.

We bought a small agricultural plot about two years ago 100 Km outside Delhi. Its price has increased around 70% in less than two years partly because farmers in Greater NOIDA, an area close to Delhi, were recently awarded a hefty compensation by land authority and are now moving to interior areas (including where we have the land) several Km away.

Even the poor farmer from whom we bought the tiny piece of land, which falls on a state highway, has purchased twice the amount of land, relatively cheaper, in an interior area far off from the highway.

For the sake of full disclosure, I should add that all of the price increase is not because of farmers from NOIDA. Another reason, perhaps equally significant, is planned widening of the state highway.