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Advisor

Is economic recovery good for Ag?

Was reading another publication regarding the economic recovery in the U.S.. It suggests ag would benefit if the recovery is sluggish, and would suffer under a more aggressive recovery and growth rate.  What do you think?

 

 

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3 Replies
Honored Advisor

Re: Is economic recovery good for Ag?

I think it depends upon how you define "ag." 

 

There will always be investment capital that will chase the best place for certain people to stash money, and that drives up certain prices - maybe some in ag land in some places.  That capital is anything but loyal, and will follow a different course pretty rapidly when the economy starts to recover, and other investment opportunities start to yield fruit again.

 

I would expect that to take at least some air out of the balloon/bubble in land prices.  Even a slight step back in bidding could be deemed a 'recession' in land values, I suppose.  Rent pricing is usually some function of purchase price, so maybe rents would stagnate, or even regress. 

 

People selling out, as the perception of a ceiling reached is generated, could dampen values, too, don't you think?

 

The other apects of "What is ag?" would, of course, include commodity prices.  So many global forces factor in there, I am thinking it would take a more widespread upturn, than just the US economy catching some pre-election positive traction.  

 

I see some promising signs, but in general am very guarded in my outlook on this alleged recovery.  The figures in the news are so manipulated,  it is hard to trust in them. 

 

I did another drive through the country on a road not on my beaten path yesterday, and saw a whole new round of abandoned houses, that were occupied 2-3 years ago.  This is largely a function of gasoline and heating oil prices, I think...part of what was predicted in "The Long Emergency." 

 

Energy costs make us draw into cities and towns.  They have to slash into the bottom line in ag, too.  Throw in spikes in other input prices, and I see a cloud on our horizon. 

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Veteran Advisor

Re: Is economic recovery good for Ag?

Right now, we are filling up with meat in cold storage.  With a recovery, people will be buying more meat, increasing demand for all ag products. 
On the other hand, the recovery may take investment dollars elsewhere, and increase interest rates, but on the other hand, do we really justify land pushing $20K, either?

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Senior Advisor

Re: It's good for me.

 I prefer to see customers with money in their pockets and less demand on  unemployment benefits. Plus a government with more revenues coming in and perhaps lowering the deficit s which has powered an attack by the haves against the have less. Spending is still catching all the blame while revenues are off a bunch

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