Considering a farm land bubble

Photo by Ray Sawhill ( 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?

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  1. It's good to see those old abandoned places becoming productive again. There has been such a loss of rural life over the last thirty years, and all that land has grown up to brush…serving no one. The drought in the mid-west could very well become the new normal. Food production will have to move to places with useful weather patterns, and some of that growth may take place here.
    It will be interesting to see if some of the small rural towns get a new life after almost disappearing.
    Bubble or no, the short term question seems to be whether enough new land can be put into production to make up for the tremendous losses in the drought stricken mid-west. Grain prices jumped 40% last fall, and have dropped back some, but may very well take a huge jump with the failure of this season's crops.
    Here in the United States, we are pretty much insulated against hunger. but every price rise represents starvation somewhere else.

  2. I live on an old non-working dairy farm because I enjoy the quieter life style and the opportunity to enable some of the few wild critters left a nearly 300 acre tract of sanctuary.

    With the local tax roles plummeting the townships have instituted a re-assessment plan whereby those of us living on potentially productive land are going to now be assessed at a higher tax basis than if it were being farmed. Now there is a bubble for you.

    • Ken, Is that true!? I'd like to hear a bit more about it. I already pay too much in local taxes on an almost unused 100 acre wooded tract.

  3. There is no question that land prices have been rising in NNY. However, I think it is more that the area is catching up to other agricultural areas than a bubble forming. Out west the prices have gotten to the point where we could ask the bubble question, but not here.
    Grain prices have risen to levels where it is consistently profitable to raise grain in this area, and technologies have helped mitigate some of the challenges with climate and growing seasons. All this has encouraged moderately higher land prices, and has made it possible to reclaim and improve land which previously had been neglected. The land which is changing hands is generally being added to a larger established operation, or being sold to people with a different model of living, such as the Amish or semi-urban homesteader types. Small conventional dairy farms very simply have a tough time competing with the efficiencies and or capitalization of these other types. Corporations from out of town are not buying much if any land in NNY, the same with investors. The land is still mostly in the hands of the people who work it, albeit in differing ways. This is certainly changing the community, but not necessarily for the bad. It is simply a new reality, change is constant whether we like it or not. Opportunities are still here, just not the same ones which were 40 years ago.