Minding Ag's Business

Farmland Apocalypse?

Nine out of 10 subscribers think there's a farmland bubble, but the difference in opinion is how it will end.

Former Kansas City Federal Reserve President Tom Hoenig and FDIC Chief Sheila Bair first raised official alarms about farmland bubbles back in 2010. It may sound like ancient history, but that's when excellent Illinois farmland was selling for a modest $7,000 instead of $13,000/acre, as it is today. In the last three years, Illinois's best soils have galloped 65%, according to the state's latest Illinois Society of Professional Farm Managers and Rural Appraisers report.

Now slightly more than half of DTN readers think we're headed for a Corn Belt apocalypse similar to the 2008 housing bubble.

In a DTN online poll of 432 subscribers last week, 50% of respondents said they think Corn Belt farmland is forming a bubble and risks crashing, 39% believe farmland is forming a bubble but will have a soft landing and 9% believe farmland values aren't close to a top yet and will continue to rally.

These polls aren't exactly scientific, since we don't know who is responding and we don't have a large pool of responses per state. But they do seem to mirror attitudes at record setting real estate auctions earlier this year.

Not surprisingly, where you live influences your vote. While nine out of 10 Iowans responding to the survey believe the bubble theory, 56% of them predict a soft landing. Some 47% of Kansans, 42% of Kentuckians and 41% of Illinois and Indiana residents also predict a safer return to earth when markets adjust.

But in the same time frame, cash rents have upped the ante, too.

In 2007, renters in the middle third of the pay range wrote checks for $183/acre for excellent quality Illinois farmland. By 2013, they were averaging $396. That's an extra $213/acre overhead charge renters carry today. It could be a heavy load should grain markets slide back to earth, too.

Subscriber Rob Barrett, president of Heritage State Bank in Nevada, Mo., worries less about what happens to landowners than renters.Although circumstances are slightly different today than in the 1980s, many of the challenges still exist, he said in an e-mail. "Ag is so capital intensive, our producers need to cover a lot of land to make things work. Many have the interest factor mitigated, but rate risk is still a major concern as it will also be a reflection of the dollar’s strength which would adversely impact commodities exported and inputs imported. With that being said, I guess my bigger fear is not real estate prices crashing or even lowering as much as budgets continuing to work if expenses rise (rents as well as inputs) and grain prices lower to more historic averages."

Do you agree the problem is a cash rent bubble, not a land bubble? Is it too risky to commit to a long-term cash rent lease today?

See the Illinois land data at http://www.ispfmra.org/…

Follow me on Twitter@MarciaZTaylor



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ryn bohr
5/13/2013 | 10:58 AM CDT
Unknown, thats why your sick all the time.. you refuse to look at the facts in front of you because you know your wrong., i gave references and articles that call out the farmers. And to think they are ripping out trees to, so we can have 7k per acre blow around. True conservationist?? yea right.,,remind u , not all farmers are this way, but the younger generation sure thinks everything is easy, and they should, goverment checks, not farming.
5/10/2013 | 2:46 PM CDT
My dad always told me that there is no cure for stupid. So I decided to stop playing doctor.
ryn bohr
5/7/2013 | 3:55 PM CDT
Humm,,silence is golden
ryn bohr
5/6/2013 | 2:19 PM CDT
http://www.cnn.com/ALLPOLITICS/time/1998/11/16/sweet.deal.html Now put corn in the words or sugur cane. Its the same deal. Tax payers have to pay for the distruction that is caused by drain tiling and farm subsides,, and subsidized insurance premiums,,,yes it is true,,Stop drinking the cargil, AMD, Pioriener , monsanto koolaid
ryn bohr
5/6/2013 | 9:52 AM CDT
this post is from CNBC news: Crop insurance allows farmers to protect themselves from weather, disaster and market-related losses. The government subsidizes their premiums, and covers a portion of the claims paid by the 16 private insurance companies that participate in the program. The companies wrote $114 billion in coverage last year. The government subsidy helps make crop insurance a lucrative business for the insurance providers, according to government data which shows a 23 percent rate of return. Among the companies with crop insurance arms are Archer Daniels Midland (ADM), Deere (DE) and Wells Fargo (WFC). Little wonder the industry lobbied heavily for a shift to crop insurance, spending $730,000 on the effort last year alone.
ryn bohr
5/6/2013 | 9:46 AM CDT
5/3/2013 | 3:28 PM CDT
Ryn, you confuse me. YOu posted three times and mentioned "stop the insurance premium reimbursements". This is a seperate issue from Insurance premium subsides, or direct payments. The latter has nothing to do with crop insurance and more to do with international trade agreements, and farm Bills dating back decades. So why are you now mentioning direct payments. I believe it is our right as citizens to have an opinion, but don't be misguided by information put out by BB or EWG. Remember BB gets paid by the highest bidder to write an opinion about a subject. Review his past work on Bio Fuels that was paid for by a South American organization. It would be easy for me to do a study and come to a conclusion that would support the ideology of the party paying me for such work. Just Sayin. This doesnt mean that Crop insurance or other farm programs are perfect, they are not.
ryn bohr
5/3/2013 | 9:04 AM CDT
Unknown, farmers receive "direct payments
5/3/2013 | 7:52 AM CDT
Again Ryn, It is illegal to reimburse insurance premiums, and if any farmer received such reimbursement it is punishable by law. Maybe u mean insurance subsides, which is a totally different matter. A large number of businesses in society get subsides in some form or another. I.e. Small business grants or loans, tax incentives to move into a taxing body, energy efficiency rebates etc. the list can go on.
ryn bohr
5/2/2013 | 4:05 PM CDT
Here is the answer for you, in simple text, if found guilty of swampbusting, or drain tiling to drain a swamp, during the time you or whomever was under the farm program, he or she has to forfit the 3 previous years payment that were recieved on those acres and 20% fine of total acres farmed under that persons name.,, 2 hudderite colonies got nail 5 yrs ago in SD and they had to pay back over 250k. A farm by watertown sd, got fined 300k and they came out in the paper saying they will fight it, well they did and still lost, because they wanted their cake and eat it to. A neighbor in both cases turned them in, because they were draining in the road ditches and causing the roads go bad. anyway, i'm done with the post, simply put, i believe in a safety net, but we need to put rules in place that they can't get goverment payments on land that is just broke up(and inforce it), and only get payments on bad weather years. Enough payments going to farmers that just made and cleared over 200k a year. And stop the insurance premium reimburements. Start conserving the land , not distroying it, we need a balance apoarch to the problem.
5/1/2013 | 8:48 PM CDT
"No portion of the net book premium or the A&O subsidy may be rebated in any form to policyholders, except as authorized by the Act and approved in writing by the FCIC." RMA.usda.gov
ryn bohr
5/1/2013 | 8:36 PM CDT
so i take it by your lack of a answer you don't know the fine is?,,i thought your a farmer...hummm,,
5/1/2013 | 7:22 PM CDT
Ryn, It doesn't matter whom Mr. Unkown is. It is illegal and that is the law, Jack!!!!
ryn bohr
4/30/2013 | 4:51 PM CDT
"unknown" hows that mask you hide behind?. Do you know what the fine is for someone who breaks the "swampbusting" rule is? I do, I want to see what your answer is first. Around SD and ND and Iowa alot of farmer that are on the farm program(which i have no issue with,except the insurance premiums reimbursements) are distroying wetlands and are getting paid for it,by illegal practices. All you have to do is drive up the red river valley and theirs your proof. Or by Brookings SD. The program needs a major overall. ASAP!!..They should only get goverment checks on bad years. Just wait for the dirt to fly this summer, because most farmers( not all) just want to make a quick buck and distroy the land to do it.
4/30/2013 | 4:31 PM CDT
FYI to everyone on here that reads these post. It is illegal for anyone, including the goverment, insurance agents, or insurance companies to refund insurance premiums.
4/30/2013 | 11:01 AM CDT
PLEASE clean up the terrible grammar, bad spelling, and outright nastiness of your comments. I like to read honest opinions that I can think about for their merits and not be hit over the head and insulted with their coarseness.
4/29/2013 | 6:39 PM CDT
Ryn. This needs to be put to rest. No Farmer wants or likes the government to be involved in their operation, but farming is highly regulated so farmers are left to particpate. If I buy a farm with my money and I own it, I have to get approval from the government to tile it, till it the way I see fit, and use conservation if required. All these I would do because I want the land to hold its value as an asset, but I have govt agencies telling me to do this or I cant do that. The price I pay to have someone else tell me what I can do is enrollment into the govt programs. If you thing this is not true, look how they are afraid to pass a farm bill that doesnt tie conservation to a program of some kind. Elimate a program and then they find a way to tie conservation to another program like crop insurance. The government has added crop insurance as a requirement for many programs past and present, has adjusted crop insurance programs to get higher participation, but its the farmer's fault? Again, Crop Insurance is a good program to provide a food supply that is essential to the security and heath of the United States, not just those that produce it. There will always be programs that get abused but the government has done a excellent job in the last few years in reducing fraud thru Data Mining. Let crop insurance do what it was intented to do, let the cheats get caught, and all of us can sit down to dinner each night thanking all of those that work countless hours to provide for us. Amen.!
ryn bohr
4/29/2013 | 4:51 PM CDT
So Brandon and "unknown", could you farm and pay the needed input cost for farming with or without goverment money? I would put a 100 bill, that 8 out of 10 farmers are "Illegaly" carrying acres over on to land they rent that is crap and shouldn't be farmed in the first place, and push the fertilzer and sprays hard , just to get it to come up and die, just to claim the insurance on the "illegaly" carried over acres. How else can they afford 200 per acre for crappy hard ground by our farm. I'm NOT saying all farmers are this way, but i bet 8 out of 10 are.....,,,Brandon, if you have a good year farming ,no weather issues, prices are decent, do you still think you intitled to goverment handouts???
Brandon Butler
4/29/2013 | 2:55 PM CDT
To further the immediate above comment, does Ryn et all think that any checks received from the government are automatically play money, i.e. to buy the "covette car"? Are those checks different than selling a semi load of hogs and getting $27,000? Can't that check be used to buy a "covette"? Or is it more likely (Ryn's "friend" notwithstanding) that any payments from the government have been factored in to the finances of the farm operation? And as far as the comment about pulling a planter up a gravel hill with two tractors to cheat on yields, well, keep on doing things like that. You'll either get narked off by neighbors directly or indirectly (by the coffee shop talk getting back to the county director), or the actual county director will do a little driving around or an audit and put an end to all that nonsense. I'd say that Ryn's "friend" will a) either be out of business by being such a dumbass to go buy "covette cars" instead of paying bills, or b) he will be out of business by being a piss poor accountant. Or perhaps Ryn was being a little bit dramatic to try to make a point, as misguided as said point is.
4/29/2013 | 2:45 PM CDT
Ryn, Ive concluded you are just plain stupid..... Any gov't problem has a percentage of it's particpants that are cheats and do stupid things with the money and we can all agree, that's not right. I know of many individuals that are flying around in corporate jets paid for by the monies use to build roads and bridges. Put to distort facts to prove your case, is politician like.
H. Clay Daulton
4/29/2013 | 11:09 AM CDT
Although DTN has carried a series of articles on farm economics, and while the article did mention loan interest costs, it did not appear to have referenced the interest rate Return[s] on Investment (ROIs) as considered in land purchase decision making. Money within and outside of agriculture is flocking to land as an invesment, because one can only get negative real returns when its parked in savings. And brokerage accounts usually look good only temporarily. Bernanke got his job having stated that "targeted inflation" is good. Additionally, his ongoing policies have made owning cash profoundly stupid! Where would our government's budget be if it actually had to pay meaningful interest on its true debt -- dead broke. The US government can only afford itself if interest rates stay low, and that means paying big bucks for ground is NOT a bad idea.
ryn bohr
4/28/2013 | 10:26 AM CDT
Keith, i could put articles on here about how to fill out the paperwork to get the goverment checks. theyre not by the paper, from the goverment usda office. I have a friend that said to me one time, he recieved a 7k check from the goverment, for insurance, and he goes, "humm i don't even know what this is for , but i'll take it" while he is buying a covette car. and a new pickup in the same day.
ryn bohr
4/26/2013 | 12:23 PM CDT
Keith, i totally agree with you on regards to young farmers, they have no idea how to actually farm. They just gotta know how to deposit a check from the goverment and sign a check to the Case/john deer dealer, or sign a check for a new pickup every year, so they can drive to the local bar and talk smart. Our family is a 5th generation farm. And we have seen the ups and downs. We fixed our equipment(not buy a new one if something broke). If this post would alow me to, i could post the insurance premium check sheet to you all, and then you all would be shut up. What i'm getting at in this post is simple, why would the goverment pay farmers when they have a average to good year?, I agree on bad years like the drought, but floods is questable, because way way to many farmers are farming land that shouldn't be farmed(example they cutting sloughs or farming low areas that water normally sets) then after 2 yrs they can declare that farm ground, even though it erodes and water sets there. Heck last year, i saw 2 4 wheel case's pulling a corn planter up a hill at a angle just to get it planted, eventhough it will never grow,(gravel ground) and it never did. why do they do that, because they "Illegal" carryed the bushels over to it. and insured the difference on the LDP. So lets say he got 175 bushels on good ground per acear at 6.50 insured at. well guess what he got the same thing on the bad ground that is highly erodable and gravel. I believe in the safety net,(not the insurance premiums reinburesd though,next time ask your crop insurance guy, he wouldn't want to tell you, but he will,on how it works). See alot of poeple are going off the program now, because they got all their money already from the tax payers, and are big enough to do it. but when a drought hits or flood, they cry and cry. Piss on them, they made a choice. P.S...i will give the farmers a break, when they stop whining on how hard it is, but yet they pull out of the bar with their new 40k boat and pickup, while they distroy tree belts and put drain tile in, while the tax payers have to fix the roads caused by the extra run off from the drain tiles). Bottom line, they need to drasticly change the farm program. The massive flooding and erosion that is happening is just mind boggeling. just look in the air and in the streams.
4/26/2013 | 8:59 AM CDT
I have been thinking long & hard about what to say. A true american farmer does not lie, steal, cheat no one. If he does he is not true farmer. I am a old school farmer with those same values. It seems like the younger generation farmer not all of them but the majority do seem to wine, cry, & belly ache when things dont go there way. I was taught @ young age you take what is given you & go with it & don`t complain about it. When you get knocked down pick yourself up, dust yourself off,& learn from your mistake. So I guess what I am trying to say is that you younger farmers out there quit belly aching about how bad you have it & find yourself some values & go with it & then & only then will you become the true american farmer. So Ryn I guess I do have a agenda & that is to get people like you to stop your belly acheing about how bad you got it.And yes one more thing Ryn it is you that better check your facts about Dan & Katie. I am talking about when they were working for CBS.
4/26/2013 | 8:28 AM CDT
Bill, off subject again, but I'm not sure how you were able to build a multimillon dollar net worth in just a few short years. I've farmed for many years in a highly productive and very competitive area only to have made some decent profits in the last few years. If I spread that out over the last quarter century and divided by my hours worked, not sure if I made minimun wage. I would love to meet your accountant and tax advisor because I'm getting the shaft from someone. I would doubt you're a farmer anyway, we have more class then to boost about our successes in such an irrogant way.
4/26/2013 | 8:20 AM CDT
I apologize for the bad grammar and spelling, but I get typing so fast trying to responded to the ignorance that is on display by some. My Dad always said, you can't fix stupid.
Bill Billson
4/26/2013 | 8:11 AM CDT
We farmers are no different than Exxon. We have a strong lobby that guaratees us excessive subsidies and profit guarantees at the expense of jon doe taxpayer. As long as we keep running that Paul Harvey commercial depicting farmers work ethics from the 1970s to get the welfare payments to build our multimillion dollar net worths. I LOVE AMERICA!
4/26/2013 | 8:09 AM CDT
And one final note. Yes maybe crop insurance does allow $ 400 rent to take place, all though interesting to note, that a large percentage of the farmers paying these rents "no longer mega farmers" do not carry crop insurance. They work with very tight margins and their profits are not protected at the level of insurance that is offered. In reality the ones that are benefiting are the farm suppliers from seed to chemicals. So give the farmer a break, and back off. I'll remember to bring this matter up when you go to short sell your house that you purchased with no money down, and your lender has to eat the obligation that you signed a contact too. I suspect that you should run a campaign against "short sells" which is utilimately costing the general public billions in banking cost as they try to recouple their losses. So again, instead of insulting the people that keep you alive with the food they produce, go campaign against the other 98% of America that you help out each day.!!!
4/26/2013 | 7:36 AM CDT
No Farmer gets a premium refund. The 65 % you speak of relates to the subsidy. Maybe you should get your facts straight. As a consumer I rather protect my food supply then pay for sum of the subsides that go to other industries. Based on your logic we should take away the Federal subsidy for Flood Insurance and then ship everyone out of Lousiana and Florida. Most farmer's would love to get rid of crop insurance, federal subidies and alike, but the consumer will utilimately pay the price. Example last years insurance payouts allowed many producers to stay in business. If the program was not around, I would venture to say that 1/3 of the acres probably would not get planted in a year following such devastation and the price for food would skyrocket and then the gov't would have to subsidize food at the consumer level. I will go out on a limb and say that's when the rioting will begin. Farmer's would rather be left alone, but the governments role is to protect the public, so we end up selling our protects in a semi-free market place rather than a truely free market place. Then Mr. Joe Subdivision won't be able to buy his snowmoblies and lake house because he is spending too much of his disposable income on food.
Lon Truly
4/26/2013 | 6:38 AM CDT
A billion dollar government gorilla with multimillion dollar investment/profit guarantees has entered just about every farm kitchen in the land. This gorilla is driving land rental prices upwards, margins downward, and smaller farmers out of business. Those who choose to entangle themselves in webs of deceit such as Marcia, Keith, and Bonnie want to ignore and suppress the reality of this gorilla and want to censure the reality of this government manipulation. Fortunately more and more farmers are recognizing that this extreme government intervention in agriculture comes with no end of negative consequences.
ryn bohr
4/25/2013 | 11:29 PM CDT
keith, we do farm, and we know how it works, p.s katie and ran rather have been off cbs for a couple yrs, "know your facts". i never said a word about animals, stop putting words in my mouth to fit your adjenda. what does rippin out treas and putting drain tile down do? distroy the land, as minnisota is finding out now, their yeild are actually going down now and the soil leaches out the fertilizer and goes right into the water supply. thats according to the usda over 9 yrs ago. So this is the first yr you had insurance? this must have been the first yr on the govement farm program/bailout then. you abviously don't know how the goverment run insurance goes. Hey do you know what "LDP" is ? or yield transfer means? If your a farmer, please give the difenition or what it does,, if you wouldn't i will. Keith, you have zero clue on the farm program.
4/25/2013 | 6:01 PM CDT
Ryn your are a idiot if you believe everything you hear on the news about the farmer especialy CBS. It is a known fact that they are against the american farmer. Katie Curic & Dan Rather are the most recent. So before you start putting us farmers down for like raping the land or cruelity to animals or any thing else you think you know about us get your facts straight. FYI this was the first year I had a claim & it sure as hell was not 65% premium pay back!!!!!!! If you think your so smart why aren`t you farming
ryn bohr
4/25/2013 | 4:55 PM CDT
Keith, you get a check, and you know, it, can't kid me, its part of the insurance payment back to you. It was even on the 60 minutes news about the farm program/bailout. If its a business, then all farmers should be treated like a busines, and not givin money to distroy the land. Keith, can i have my money back, on your good years that you still recieve a check ??
4/25/2013 | 4:04 PM CDT
I sure would like to know what has been happening to my 65% premium return,because I sure as hell havent been getting one. If the whiners can`t stand the heat get out of the kitchen. This is buisness people !!!!
Brandon Butler
4/25/2013 | 2:27 PM CDT
The rubber is going to meet the road in 2014, because if things stay as they are, that juicy guaranteed price isn't going to near as high as what has been able to be locked in. Doing nothing has worked for several years (as long as crop insurance has been purchased). Lets see what rents are IF December 2014 futures average 3.80 for the month of February 2014.
ryn bohr
4/25/2013 | 1:41 PM CDT
crop insurance has everything to do with rent going up, their is vitually NO RISK with tax payer/bailout insurance and thats why people will pay big bucks and distroy the land for short term gains. And on top of that they get their premiums paid back to them up to 65%!!!....people wake up and smell the trees being tore out and erosion, cause by the farmers..
Bonnie Dukowitz
4/25/2013 | 10:13 AM CDT
Good Grief, Lon. You are so obsessed with a concept and so set in opinions, whatever merit your thought process is and conclusions are, have been destroyed with your relentless redundancy. Could you please do as the writers and providers of this blog request and stick to the subject. If owners, renters and the government think $400.00 rent is sustainable, they need brighter Obama bulbs.
Lon Truly
4/25/2013 | 9:31 AM CDT
Keith - you are the only one who thinks that guys paying $400 -$450 rent prices are risking their own dollars and that federal crop insurance is not behind their bids.
4/25/2013 | 9:24 AM CDT
I agree with Brandon if the farmer wants to pay 400-450 a acre that is his risk & his alone. The fact is that alot of farmers are telling the land owners they will pay that price but when the rent comes due they come up with some bs reason why they can`t pay. So Lon & Bill & all other whiners out there it is the guy who promises the big rent check & doesn`t pay his or her bill when it is due is the problem.
ryn bohr
4/24/2013 | 4:57 PM CDT
This has everything to do with insurance, if you can insure 200 bushel corn at $5.50, then why do you need the premium check up to 65% back??You made that choice to insure or not to insure. WHat this means is a farmer can distroy all sloughs(which is illegal,swampbusting,but they still get by with it, along with alot of other illegal practices, aka, carry yeilds over to non productive land). and when the premiums are reimburested,then the farmer will pay high rental rates,because they will get a goverment check no matter what. Thats why rent has sky rocketed, along with high land prices,,usually rent is based off of market value, which the goverment has promped up with the bailout/program. I wish i could drive a new pickup and buy 60k boats and have snowmobiles and new ccombines every year,paid for by tax dollars. Our neighbors do it every year.
Brandon Butler
4/24/2013 | 2:53 PM CDT
You have to know what the yield is. And because that has such variability, you have to use APH coupled with the long run average forecast for prices. Due to the environment we are in, APH will be the easy part of that equation. Are we in a new price paradigm? Who knows, but I get very nervous when I hear the phrase "The market can't/won't go there." That phrase is almost as bad as "The market is broken/doesn't make any sense", which to seasoned traders (the people that actually have their own money at stake) is a joke. However, I digress. Bottom line, regardless of the constant bullish drumbeat of DTN's analysts (i.e. CNN is liberal, Fox News is conservative, and DTN is bullish), pay 400-440 at your own risk. If you think corn will yield 275 per acre and you will get to sell it for $5 + a bushel for the next 3 to 5 years, go for it.
Marcia Taylor
4/24/2013 | 2:36 PM CDT
I know some of you are single-minded in your opinions about crop insurance, but the question was about cash rents. Does $400-$440/acre cash rent work in Illinois when corn is $5?
Bill Billson
4/24/2013 | 8:01 AM CDT
Heavily subsidzed crop insurance is the reason land costs are so high. When you are guaranteed a profit year in and year out before you plant you can bid higher on land because you have zero risk. The people who win are landlords and rich crop agents who work 1 month a year to collecta six figure government subsidy. The losers are the wage earners in town making 30k who pay 60k of my crop insurance tab while I spend all winter on vacation or reviewing which new toys I want to spend my 8 figure net worth on. CROP INSURANCE IS A BIGGER JOKE THAN THE WELFARE PROGRAM
ryn bohr
4/23/2013 | 4:54 PM CDT
Hi, our family has been farming since 1879, 5th generation. And even my dad says this farm program has to be redone. Why should farmers receive up to 65% of their insurance premiums reinmburessed by the tax payer? And on top of that, they still receive goverment checks even on good years. They should put a cap of 150k per yr. And on years that your yeild is within 15% either way of a 5 yr average. then you DON"T get a check Period!!, And regarding insurance premiums, why should they get that money back? i don't on my insurance for my company. I can got into the numbers on how alot of farmers are doing stuff ILLEGALly and getting by with it, example, carrying false yeilds over to other fields to get a higher yeild on bad ground, which increases farm value and also increases their checks. even though that land never produces much. The program/bailout is paying farmers to distroy the land for short term gains. Tilling/ tearing out trees, and putting way way to much fertilizer on. People if you want to know the truth about the farm practices today. just look at the dust blowin in the air.
Chris Grotegut
4/23/2013 | 12:11 PM CDT
Farmland values in the Texas Panhandle have remained on a steady to significantly higher scenario depending on the area. Because of the low face price compared to the prime areas of the mid west the TX panhandle appears superficially to be a bargain. With a better study of some issues here, one should carefully consider the investment. 1. Drought is in its 3rd year and is not letting up. 2. High feed costs resulting form the drought have had a major negative effect on the regions cattle feeding and dairy industries- both major users of crops produced here. 3. Cow herds are markedly reduced in this region,and across Mexico which historically imported a lot of cattle to finish in the region. This is going to make it hard to sell a feed yard and hard to sell an empty one crop production for feed. 4. Declining water resources for irrigation is the ultimate long term decline card in this region. Water regulations or actual physical lack of water will make it harder to justify farmland values in much of the region at significantly higher than what it would cash flow as a limited irrigated or dry land farm. New investors in the region need to be aware of what they are looking at and remain skeptical as to how the farm is represented. Do your homework, and ask the neighbors before you buy-most of them are brutally honest. The panhandle is a wonderful place but remains the true home of the "Dust Bowl", and a place that if not accurately valued continues as an easy to go broke place trying to farm. Land remains for sale here because simply it does not always work financially, and not all communities have youth ready to take the reins. We have found that it is almost always better to buy a rich farmers place. The land took better care of the family, and they returned better fertility which is often not well understood in land values.
Aaron Cross
4/23/2013 | 11:10 AM CDT
Lon that is an opinion piece by who know whom. Are you really that desparate to back up your arguments by opinion and not fact?
Lon Truly
4/23/2013 | 10:53 AM CDT
Another example of the consequenses of congress offering multimillion dollar investment/profit guarantees is documented here - http://www.grandforksherald.com/event/article/id/261895/ Farmers offered profit guarantees will spend those guarantees and some will spend alot more than those guarantees thereby driving land prices upwards, margins negative, and many smaller farmers out of business. Federal crop insurance is one of the worst assaults congress has ever executed against family farm agriculture in US history.
4/23/2013 | 10:50 AM CDT
There's a shift happening folks. Here in Canada our farm support has diminished. Now we are only guaranteed coverage of 70% of eligible expenses. 1 year ago it was 85% of our 5 year average eligible net income. Bankers will be nervous as crop insurance barely covers input costs. Any capitol purchases are now at risk, so beware.
Bonnie Dukowitz
4/23/2013 | 10:44 AM CDT
You are convincing us Lon and Tom to cancel our fertilizer order, use bin-run seed, see if we have an old cultivator laying around, forget the precision parts of planting, return to recreational tillage practices and attempt to increase our ins. premium. Of course in a few years due to repeated claims the policy will have no value, our equipment will be of only scrap value, the soil health will be mined of all needed elements for plant growth and we could whine at the government blaming all of our issues on corporate America. I don't know if we would then be on the dole of the 80% of the food bill, a victim, natural, organic, or just plain lazy and stupid. Not that we agree with big government, we are, in the least, producing more nutrition than we are consuming.
Aaron Cross
4/23/2013 | 10:36 AM CDT
Great article Marcia, I think you are spot on that it is a cash rent bubble. All it is going to take to see $3-4 corn is a good year in the corn belt, congress getting rid of the rfs, or a host of other variables. Most of the farmland was paid for with a large portion of cash, and what ever financing there is, is most likely locked in at low fixed interest rates. If this year shapes up to be a good year, we could see a harvest price low of $3-4. If not we will continue to see high commodities. Lon this has nothing to do with insurance, and everything to do with the market. If you would quit spewing your EWG rhetoric for one moment and read the article, you would see this. It really bothers me that everytime I come on to read an article by Chris or Marcia, you are on here spreading misinformation, and I don't think I am the only one tired of seeing your ridiculous posts.
4/23/2013 | 7:52 AM CDT
LON and TOM if you think thingsare that good out on the farm; get your check book out and buy soom and quite acting like wineing children. Posted by Dan B at 7;49 am CDT 4/23/13
tom vogel
4/22/2013 | 10:37 PM CDT
Excellent point, Lon. Once you "guarantee" the profit, you know the breakeven point. Anything above that is gravy and spreads the cost of your equipment. This drives rents farmland values higher. Of course, ethanol doesn't hurt either.
Lon Truly
4/22/2013 | 9:18 PM CDT
Perhaps a better characterization would be to call this a federal crop insurance bubble. After all the government is guaranteeing a profit for many farmers with current prices. See http://www.ewg.org/agmag/2013/04/where-scrutiny-crop-insurance-fraud