Considering a farm land bubble
Photo by Ray Sawhill (http://www.flickr.com/photos/raysawhill/). Some Rights Reserved.
Hoard's Dairyman, one of the leading publications in the dairy industry, published an article last week about an issue that's drawing increasing interest, and some concern: the rising prices of farmland.
Fueled by strong exports, ethanol standards, and, most recently, last summer's drought, row crops like corn and soy are very valuable. Farmers haven't seen better days in those commodities in decades. Big companies and regular ole' people are snapping up land to cash in.
As we all know, where there's a boom, there's likely a bust somewhere down the road.
Hoard's concludes its article with this ominous quote, especially when you consider all those Americans who are underwater on the mortgages they took out before the housing bubble burst:
"No one will want to be the last person buying land if a market bubble is forming and land prices drop,” said the Federal Reserve Bank’s Jeffrey Jensen.
Last fall, I was surprised when Cornell Cooperative Extension ag specialist Jay Matteson told me that people are buying up land in northern New York State that had grown back to brush. It hadn't been farmed in years.
This part of New York is dairy country. But more farmers are planting corn, soy, wheat, you name it, to make money on the high grain prices. Some people are worried the trend's yet another pressure on struggling dairy farmers.
So, what are you seeing in your neck of the woods? Who's buying land? Your neighbors? Corporations from out of town? How are the prices? How's it affecting business and the community?