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Senior Contributor

Re: Land Markets

Remember the coffee shop is over burdened with negative personalities. Oh that's too much and that will never work. A group of non doers doing nothing while the real doers are out doing.

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Honored Advisor

Re: Land Markets

I probably shouldn`t say "coffee shop" because I don`t know of any farmer coffee shops anymore.  More accurately if you go to a small elevator when it isn`t busy and you can get talking to the manager, you can find out alot of things. At a farm sale under a shade tree you can find out the real scuttlebutt.  Smiley Happy

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Honored Advisor

Re: Land Markets

In my opinion with all the worldwide issues coming to a front, it`s way too early for a buying opportunity.  Back, I`m guessing 1980ish I was in high school living and breathing farming and the economy and I got ahold of a issue of Successful Farming the headlines were something like "Boom or Bust! Experts claim land prices could tumble from $3,000 down to $1200" .  I read and re-read the article many times and kept it.  And you know within a few short years the experts in that article were exactly right, land had dropped 60%.  I don`t have that back issue of Successful Farming any longer, but if there was a way to buy back issues, I would definitely buy that one just to see similarities to what`s going on today.

 

Interest rates are concerning me right now, I don`t know how a country with $18 Trillion nat debt could allow anything other than zero % rates, but things don`t have to make sense in order to happen these days.  If interest rates just go back up to close to a historical "normal" rate, alot of gooses are gonna be cooked.  The old lady and I are in emergency opperating procedures right now, full flaps and trimmed to lowest airspeed to avoid a stall and circling for a nic pasture to land...in other words we are going to try and be "DEBT FREE!!!" this time next year.

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Honored Advisor

Re: Land Markets

I got this inner fear that land is not affected directly by farm profitability as it once was......

The question arises.  Which drove land prices up in the last 8 years grain prices or monitary policy?

If monitary policy and frozen interest rates , then we may watch profitability fall faster and than land prices.

Which, as wright pointed out, makes land unaffordable for the ag sector while it is still atractive for investors.

 

I think we keep expecting traditional results in a very untraditional environment...

 

BA your example from the 80's hammered some areas badly, especially if there was a shortage of young producers like a county or two in Ks that hug the Nebraska border... ..... but as I remember there was very little outside interest in farm land at the time.  Farmers were the only ones carrying the land market.  Not so true now...  Even hunters have been in the market for farm land..

 

There are ramifications to monitary policy, as you point out.  What happens if we don't like them but can't change direction??

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Veteran Advisor

Re: Land Markets

SW  - good observations also - I keep remarking to the folks up north here in Nebr. that our landscape is rapidly looking like the Ks. highplains - fewer and fewer yardlights although out side  $$$  keeps appearing with strong amounts of cash  --- The performance of Wall Street and the laughable returns on Cert Deposits has investors interests brisk ---The retired folks use to sell and bank some and live off the interest which is a slap in the face now --- Wonder if the folks at the money store have a bother some feeling when the  $$$ is reloaned at say 7% --- As mentioned be fore running a sizeable operation that used to take say 500k at 7.5% 10 years ago and now needs  $1.5 million operating at 4%  -  interesting concept on cheap interest ? 

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Veteran Advisor

Re: Land Markets

Don - you must not go to the right coffee shop. 

Ours has a cross-section of small and big time farmers; truckers;

construction contractors; the chief of poilice and a couple county deputies from time to time.

I know this is not unique because in my travels I have found much the same from

Vermont to Georgia to Montana.  If you want to talk farming or the weather you'll fit right in.

Continuing ed credits available thru CSU (Coffe Shop University). Smiley Happy

Honored Advisor

Re: Land Markets

Hey SW, that is true I think there is more outside money that has went into farming than many of us realize.  I know a farmer that partnered up with a wealthy car dealer, no shortage of money the car dealer bought land, machinery, bins the farmer gets to play in this sandbox in exchange for his expertise..and of course the car dealer gets to play on the toys whenever he wants too Smiley Happy

 

Another farmer buddied up to a couple of wealthy individuals that will buy land that the farmer says is a good deal and he gets to farm it...so basically just about every farm that comes up for sale they either win or were in the last few bids  Smiley Happy

 

Then machinery dealers, many like to also farm or have a family member that farms.  They can get that symbiotic advantage of pulling machinery off the lot to do their farming, with a machinery cost of essentially zero.   Of course it might be kind of hard selling a guy a planter that you just rented 1,000 acres away from  Smiley Happy

 

But I really would like to read the book that some could write one day on how they seemingly defied gravity and grew their opperation just in the last 5,6 years.  People you thought were putt-putt farmers, allergic to owning land all of a sudden were bidding with both hands on $10,000 + land.  There was outside money there and if that car dealer maybe slows down and has to liquidate farm land to keep the trophy wife happy, things could go the other way too.  The super rich can get bored with their hobbies too.

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Veteran Advisor

Re: Land Markets

all you have to do is to look at the "bonanza" farms of the midwest and their demise to know that is true.

 

If we could get rid of the crop insurance with no limit coverage, the farming landscape would change pretty quickly.

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Veteran Advisor

Re: Land Markets

That's the set up Red - no limit --- also seeing some sales reflect a '' 4% ''  buyers premium - interesting  

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Highlighted
Veteran Contributor

Re: Land Markets

I doubt if we will ever get rid of crop ins Red. This last farm bill the bankers association lobby spent a lot of money to make sure their was a decent safety net for the ag sector. Right or wrong, just like yield estimations/acre estimations by the USDA and all these private companies you have to work with what they give ya.

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