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Another Bubble Pops: Price Of Farmland Suffers First Annual Decline Since 1986
One of the bigger asset bubbles in recent US history has nothing to do with stock, bonds or commodities, and unlike the real estate bust of 2007 (which has since rebounded only for the ultra-luxury segment), barely batted an eyelid during the Great Financial Crisis. Curiously, it was not until early this decade that the institutional money even noticed said bubble, something he discussed in October of 2010 when we profiled TIAA-CREF's investment in this particular asset class. We are talking of course about farmland.
And yet, like all other bubbles - be they the result of retail euphoria or central bank rigging - this one too must come to a close, and as the WSJ reports, the first crack in the farmland bubble are appearing, after farmland values declined in parts of the Midwest for the first time in decades last year "reflecting a cooling in the market driven by two years of bumper crops and sharply lower grain prices, according to Federal Reserve reports on Thursday."
Putting this in context, the average price of farmland in the Federal Reserve Bank of Chicago’s district, which includes Illinois, Iowa and other big farm states, fell 3% in 2014, marking the first annual decline since 1986, which makes farmlands the only asset class that had not seen a down year in nearly three decades!
Prices for cropland during the fourth quarter remained steady compared with the previous quarter, according to the bank’s survey of agricultural lenders, though half of all respondents said they expect farmland values to decline further in the current quarter.
Demonstrating the robustness of farms as an asset class, the price decline was sporadic and not pervasive: "in the St. Louis Fed’s district, which includes parts of Illinois, Kentucky and Arkansas, prices for “quality” farmland gained 0.8% in the fourth quarter compared with year-ago levels, despite lower crop prices and farm incomes in the region. A majority of lenders in the district expect values to cool in the current quarter compared with the first quarter of last year, reflecting reduced demand for land amid tighter profit margins for farmers."
Still, the sudden bout of commodity deflation that spooked markets in late 2014 and which the permabulls are calibrating on a daily basis to determine if lower or higher oil prices are bad or good for the economy, is being felt not only across the entire commodity supply chain, most notably in China and the BRICs, but across the US farmland sector. According to the WSJ, the reports "spotlight an overall slowdown in the U.S. farm economy and in the appreciation of farmland prices. Crop prices had soared for much of the past decade, fueled by drought and rising demand for corn from ethanol processors and foreign importers. The gains pushed agricultural land values so high that some analysts warned of a bubble."
And like any burst bubble, it is likely to only get worse as price discovery to the downside accelerate: on Tuesday, the U.S. Department of Agriculture projected net U.S. farm income this year would fall to $73.6 billion, the lowest since 2009, from $108 billion in 2014.
Not helping is a crop season that has been far better than was expected due to "flawless weather" over the growing season, leading to the largest ever US crop by value, leading to a crash in the prices of corn which have tumbled more than 50% since the summer of 2012, when they soared to record highs amid a severe U.S. drought.
As a result, farmland values in corn-producing states are the first to go:
In the Chicago Fed district, farmland values in the latest quarter dropped in major corn-producing states like Illinois, Iowa and Indiana compared with year-ago levels, while land values in Wisconsin increased slightly and were unchanged in Michigan. The fourth quarter of 2014 marked the first time since the third quarter of 2009 that cropland values in the district dropped overall compared with a year earlier.
“Lower corn and soybean prices have been primary factors contributing to the drop in farmland values,” David Oppedahl, senior business economist at the Chicago Fed, wrote in Thursday’s report, adding that for 2015, “district farmland values seem to be headed lower.”
What will exacerbates the situation is that like with the US shale patch, farmers are clamping down on expenditures in hopes of preserving cash flow: the St. Louis Fed said farm income, household spending by farms and expenditures on farm equipment declined in its region. Midwestern bankers expect a continued slowdown in the current quarter in those three categories.
“It is very difficult for farmers to buy farmland and new equipment with corn prices in the $3.50 range,” said one Missouri lender in the St. Louis Fed report.
What is worst, is that while the junk bond funded shale boom, which judging by the record rig closures, is well in the bust phase, the next industry that may see a dramatic surge in indebtedness is none other than America's food belt:
Bankers in the Midwest also noted a rise in financial strain for crop farmers in the latest quarter. Lenders in the Chicago region reported a dramatic increase in demand for farm loans compared with year-ago levels, with an index of loan-demand reaching the highest level since 1994. Farm loan repayment rates also were “much weaker,” in the fourth quarter of 2014 compared with the same period a year earlier, the bank said, with an index of loan-repayment falling to the lowest level since 2002.
In short: US farming may be on the verge, if not already in, a recession.
That's bad; what's worse is that banks, full to the gills with fungible excess reserves, will be delighted to provide vulture capital to farmers desperately in need of capital in the coming years. Why? Because as is widely known, the "money" is really created in computers, either the Fed's or banks', out of thin air. Money, which will be promptly collateralized by arable, rich farmland.
And should the industry fail to recover if the mega-commodity bubble of years gone by is unable to reflate? Well, guess who will be the proud owner of America's vast and rich farming heartland? Answer: the same people that quietly over the past few years also became America's largest landlord.
And with that, the great asset transfer from everyone to the wealthiest 0.1% will be almost complete...

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Wow, 1986 seems to be a record year of sorts.....
http://www.zerohedge.com/news/2015-02-02/baltic-dry-plunges-fastest-pace...
Never mind that, we already blew past that record low......
What happened in 1987 again?
So if my goal is to work until I die at which point I will still have a flushing shitter, three hots a day (if I can use that many calories), and sleep in a warm bed ... and I leave chips on the table when I go ... what am I missing?
People trying to trade and "make money" are missing the boat.
Just find something you like to do, don't get run over, and enjoy the ride.
Regards,
Cooter
Yes, there are things FAR more important in life than money.
The bigger problem is that damn near everything is driven by money, or numbers at the least.
Everyone knows the PRICE, few know the VALUE.
not driven by money, but goal seeking...of infinite growth.
Shit...we dont' even use money. We use fiatscos
This is just the beginning. Only 2% of Illinois farm land changes ownership each year, so as the article states, price discovery takes a while, especially when prices are down. I don't like the GMO seeds for many reasons, but those yields have made grain farming a lot harder. I would expect a long over due return to smaller, more efficient farms, with some live stock.
March is the traditional time for signing new land rental contracts. That will show the real damage.
I thought that they already owned the land, that we were merely "renters" who had to pay yearly (taxes) rent on the property or else face eviction.
Bankers and bureaucrats have been the controlling interests in farming since at least the Great Depression. Nothing changes until we all realize most of the 20th century was shit covered in icing.
Search "get big or get out"
Wrong.. legally rental prices have to be set by the end of October. Much of Illinois and the surrounding states have many smaller tracts in the hands of the bankers in form of trusts. Farmers, if they have managed their finances properly and avoided the occasional disaster are farming up to 2000-3000 acres (800-1000 hectares) as grain operations in family corperate form with the head getting over $300k anually. These farms employ 3-4 induviduals (usually family members) full time and and additional part time labor that usually are at the median income level or below. Cattle and dairly employ slightly more. One must also reconize that the on farm write offs include all housing, most transportation and some food costs. Such operations usually have land, building and equipment values of over $25-$40M with much of the make up of the farmland share crop or cash lease. Top Illinois farmland leases in Illinois where over $400/acre and have recently contracted 10%. CME futures have been heavily factored into the considrations along with yeilds that have been consistantly well over 2oo bu/acre for maize with a nominal rotation into soybeans every 4 years. [This is not speclation.]
money is a tool.
not to mention water under the land. a million staws sucking the aquafirs dry.
humans-terminal
doom of a species by natural secection.
terminal. inevitable
good news is some will survive
tic toc
All you have to do to find water in the Midwest is punch a hole in the ground. The water table is at 15-20 feet on Mule Creek and Muddy Creek. Forty inches of rain each year, and floods to some extent almost every Spring.
We need a pipeline to those dry old farts in Arizona;)
big pic, i owned 40 acres and the water table would rise to the surface each spring. not crop land though. thinking cali, nebraska, basically rain dependent crop land where we irregate when nature doesn't provide. and these are vast tracts of cropland. cue water drilling. booming business in cali. just sayin.
Yeah, until you try to buy some. Farm land prices low and dropping, grain prices at multi-year lows, nothing a good drought won't fix.
We just need to legalize marijuana in the Midwest. Quite a bit higher price per bushel than corn.
Like everything that government wants in on-legalizing marijuana will effectively become confiscation of the industry with government cronies doing the growing.
Remember when the only lottery available was the Irish Sweepstakes - now government has monopolized lotteries.
Prices will crash when it is legalized. The law enforcement industrial complex won't let it happen. There's too much money to be made arresting people, holding trials, putting them in prison etc. Think of all the law enforcers, judges, lawyers etc that will be out of high paying jobs if narcotics were legalized.
Nothing hurts farmers more than cheap oil.......
Talked to a friend on the phone for about an hour and a half today (long, I know, but we were catching up) and he mentioned oil prices and "recovery" I stopped him in his tracks....
It's amazing how that word (recovery) has invaded our language. It's the new narrative. "Recovery" no longer means healing or mending, recovery now means: higher costs.
Oil "recovery": pay more for your irreplenishable fossil fuels!
Housing "recovery": pay more for these stix & brix!
What's next, a "recovery" at the grocery store?!?!
just speeds the process
doomers unite!
rejected posh push sets
dyslexics untie!
Control of the language controls the debate controls the mind. Control, resistance is futile.
Good news, food and energy prices are headed up again!!! Everybody rejoice.
Jim Rogers advice isn't panning out very well.
Bullshit.
Jim Rogers advice was damned good advice for the last several years and for several years before that.
IF you bought without going into debt you are miles ahead of the game and can either:
A. Get out now at the first sign of downturn and cash in your chips.
B. Buy more while it's on sale: scoop up assets from levered players that got in late and/or at too high prices and are about to be shaken out.
Somebody has to put food on the tables and most prices haven't fallen much from highs. Traditional median prices are what you've gotta look at. Debt loads will destroy any biz that levers up too much...
Cali/West US is probably gonna still be in a drought come season and will be worthless. GMO and fertilizer problems aside: the mid-west is still the breadbasket and although it's a hard row to hoe they aren't making any more cropland...
Well...they can till new cropland. It just takes money/time to make it fertal.
rodgers is bowtied fuckhead, same with the pony tailed swissy...
There's plenty of fallow farm land on the east coast. No need to clear anything.
Go for it honcho, and let us know how rich you get.
(I think you meant fertile, unless you are talking about fertal Myrtle.)
honcho....okay. You give me the money and replace my wage and I will go do it. I will require a contract. BTW, I am thinking pasture to convert. It is there. However, if you look at my original post it stated that to do this it would require......money/time.
Do you think the settlers found the land ready to plant.
well, it's all about timing and it also depends on an individual's allocation of their own personal financial resources. Everybody has a different financial situation and their own way of using those finances to their advantage if they're awake and trying to prepare the best they can for the collapse...some who ran out there and bought farm land at the highs and didn't have anything left to buy all this silver at these lows may be in a regretfully bad situation. Those who bought phyzz silver at the highs when farm land was still low may be pissed that they made the wrong move at the wrong time. It's different for everybody depending on their personal situation, needs, wants, preferences, etc. etc. etc.
I certainly hope those land values will fall back down to my personal comfort level...that's what I've been waiting for while I've been stacking some cheap phyzz. Those who have waited for the inverse to evenually occur between phyzz and land and who have built up big stacks of phyzz silver will hopefully be able to buy massive amounts of prime land on the cheap at some point in time. Just gotta hope to time it right and maybe get lucky too. Be diligent and always searching and researching for an advantage.
Hopefully the massive authoritarian tyranny of the MIC and the gov-scum NWO sociopath mutants who are hell bent on destroying this world won't come crashing down on us first.
You do not buy land you only rent it from the state you are in , try not paying the property tax and see what happen's .
This is accurate unless and until you become ready, willing, and able to defend that land. . . When the State comes, they can demand your gold, your land, or your family. Land is safer, in my view, b/c it can't be moved AFTER it is confiscated. That makes it an asymmetric risk scenario. The State would have to put and keep boots on your ground to keep you from reclaiming it. That gets really expensive.
I like your idea but it will not work, unless you own your own nuclear weapon........they have something called a Sheriffs auction where your land is sold to some other sheeple farmer. Now you have to shot that farmer to reclaim the land. Then things really go down hill fast......
you cannot farm without the general agreement of the local population. Big areas to police, only a matter of time before it grinds to a halt as few can afford 24/7 surveillance
Farm and ranch land have an ag exemption in many states. It lowers the property taxes to pennies on the dollar plus you grow or raise your own food instead of buying GMO from Monsanto
Not in Kansas.....I would like a list of those states that farmland is exempt from property taxes......does this include the house you live in on the farm?
None of that Markov walk will matter one whit if you've got food on your table 10 years from now.
You should buy it on the way down.
The way we were encouraged to buy Gold on its long slide from 1800 to 1200.
It's always a good time to buy (RE, stocks, PM).
Jim Rogers gave that advice in 2004. If you just woke up or learned to read then yes, it looks like you missed the party. Unfortunately we add 80 million mouths to the planet every year and the amount of annual ag production in bushels or metric tons, not fiat paper, is skewed higher by the copious amounts of petroleum based fertilizer, genetic engineering, and aquifer based irrigation. Irrigated agriculture production is the single factor allowing the marginal excess food production to keep prices affordable for the third world. This party is not over.
http://www.earthpolicy.org/books/fpep/fpepch6
BTW - There will be a shooting war in Asia for clean water.
Demand for the majority of crops produced is generated by bio-fuel, and ethanol requirements.
What I find ironic about Jim Rogers is that he always harped on the fact that "Gold went up for 12 years in a row" and didn't recommend buying it. Yet, US farmland went up for 30 years in a row and he still recommended it?
Who wants toxic, contaminated, gmo infected land to grow sick food on? Even the farmers are finally realizing that now. The land is not happy, and neither is Mother Nature.
As you grow, so shall you weep.
GMO infected land to grow sick food on?
ROFL. You are fucking clueless.
How about this: Large scale monoculture farming that depends heavily on petrochemicals and natural gas based fertilizer where the soil is lacking in biodiversity and is unsustainable without those petrochemicals and natural gas based fertilizers. It is telling that the nutritional content of some of our crops has fallen from 50 or 60 years ago for various reasons
The problem with agriculture today is that we try to outright control nature. That will only work for so long, then we'll pay the price when we can no longer do so. .
soil is dead w/o constant input of petro chemical. no mico organisms. done deal, just the demise.
7.2 billion to the edge of the cliff. what part of finite don't you down voters understand.
oh, yea read your fucking bible. multiply and spread the word, ha...
Just unleash the powers of creation! We can have abundance!
https://www.youtube.com/watch?v=K1rKDXuZ8C0
I do not think the bible says anything about manipulating nature and all the other destructive things we do to the earth. In a simple agrarian society, multiply and prosper (it doesn't say indefinitely btw) works. It is when you start covering farmland with giant cities that things start going sideways.
Edit: Put it another way, remove all the Babylons and things get right with nature very quickly.
" It is when you start covering farmland with giant cities that things start going sideways. "
^^^THIS^^^ cannot be overstated.
Greater NYC and sprawling Cairo have devoured and destroyed two of the most fertile estuary zones on the planet.
These resources have been pointlessly disasterously squandered.
How many billions would it take to reverse: to move the people out and tear the infrastructure and contaminants off of the rich former farmlands of Queens and Brooklyn?? Urbanization and pollution have paved and poisoned what were once and should presently be major regional breadbaskets.
Lots of the ZH crowd knows absolutely nothing about actually producing something other than electronic digits and drool. Regular stupid horse manure comments on oil and gas production, fracking, global warming and affirmative belief in UFO aliens.
Notice in the article that the price of highly quality land has continued to increase. It is the hobby farmer or sundown farmer land that has declined. Much of that land is sold to someone building a house in the country that wants some space. Quality of land and productivity has little to do with the choice. The headline is misleading, but who would consider a 3% decline to be bursting a bubble in the first place.
The article is talking about cropland, not hobby farms. Lower corn and soybean prices led the US Dept of Agriculture to project that farm income would fall to $73.6 billion, the lowest since 2009, from $108 billion in 2014. THAT is what is leading to the drop in cropland prices. And the drop is more than 3% in the Corn Belt:
"The value of farmland in the Corn Belt is dipping. In Iowa value dropped 7 percent last year.
The drop can be attributed to the record-breaking crops produced by corn and soybean farmers in 2014. The massive supply meant a big drop in commodity prices and that has caused a decline in the value of farmland used to grow corn, according to the Federal Reserve Banks in Chicago and Kansas City.
For the upper Corn Belt, from Iowa to Michigan, it’s the first decline in almost 30 years. Todd Kuethe, from the TIAA-CREF Center for Farmland Values at University of Illinois, says farmland prices follow the path of commodities prices and farm income.
"Farmland prices are like a glacier," Kuethe says. "They do move, but they move very slowly, and it takes a really sustained to move them.
Kuethe says in the next couple years, the overall decline in the Corn Belt’s farmland value could see an additional drop of 5 to 10 percent."
Hobby farms value is as much or more in the buildings, pastures and gardens as in the limited amount of cropland, and most aren't even operated as businesses.
Kind like the Mel Gibson Movie
-" Too much sun or Too much Rain or Too much corn, I can wait... "
hobby farm value is determined by supply and demand. one per 40. not many with plenty of boomers with cash to buy but not many for sale. i could put mine on the market and make 80 k in one year. people want out of the rat race as they hit the golden years-plain and simple. bought for 240- put 40 into remodel worth 380 in a heartbeat. no neighbors, can shoot my guns, grow garden, make lots of noise and best of all no fucking barking dogs by irresponsible dog owners.
No they are not.............where the fuck do you get that idea..........all the farmers around here buy gmo corn and beans as 1) that is the only thing they can buy. 2.) Pioneer and Monsanto seed dealers do not sell anything unless it is GMO....and 3) you pay through the ass for it. A bag or corn will cost you $290 (enough for 2,5 acres) while non-GMO seed (if you can find it) sells for $50 a bag. 4) Most farmers prefer the GMO as they can spray herbicide and forget about the crop until harvest. 5)Leaves them more time in their easy chairs to watch sports as the average age of farmers are 59 years old (and rising).
Factually incorrect.
I ought to know..........I pay the bills on 2,000 acres of farm ground..what is your farming background?
all the farmers around here buy gmo corn and beans as 1) that is the only thing they can buy.
Is a lie and you know it. Don't be an insincere lying fuckwit.
ban gmos now:
http://www.i-sis.org.uk/banGMOsNow.php (with description)
direct (free) download pdf:
http://www.i-sis.org.uk/Ban_GMOs_Now.pdf
never mind the isis part, means
institute of science in society
there youll find everything you allways wanted to know about gmo, nice scientific facts, all gathered together with sources;) stuff you ll never read in the newspapers, never ever.
a pitty im so late for this post:(
If only we could divest you lysenkoian nutcases to madagasscar to contend for survival with the snakes.
This pans out well for the locals that paid 20 large an acre not far from here. I was shaking my head then, and was told by many that "we are mainly insulated from the bad stuff".
This is true to a certain extent, but a lot of the old timers that lost their shorts back in the early 80's are pushing up daisies, and the folks that do remember find it too easy to forget how hard it was during that time.
I am in my early 30's and consult heavily with an old farmer in his 70's who lives a couple of miles away. He is afraid of debt like the plague. Pays cash for everything, and has his whole life - with the exception of a motgage for a new house. He had it paid off in a couple of years. His family ate a lot of potatoes those days.
When I was born, the hospital bill was paid for by selling a load of hogs. Didn't even know what health 'insurance' was back then.
I grew up with a lot of people like your old farmer buddy. Learnas much as you can from him. He's good people.
farmers are no different than all people - some up to their eyeballs in debt, other buy everything used at auctions and run not only a cash crop busines but are getting rich. drive around and look at the age of equipment on the land. new shiney = debt. hello, debt means servatude and it better be a "good" crop which didn't happen in my local last year. coldest spring ever and way to much rain. corn went in late may with modified seeds to grow quick. marginal crop but better than nothing. they take soil samples as the land is gridded and gps'd. the info inputted into compterized tractors and the monsanto system puts down the right phos, nit, pot as the tractors goes over the land. the cut down every tree to edge of road. evfery sq ft is farmed for max output with no concern of twenty years from now. farmers are no different that corp oligarchs-max yield per yr. rape the land incrementaly. wake the fuck up, folks - its a business to get as rich as possible.
no differnt than apple hiring slave labor from chinsa just the inputs are different...
The big guys hire grade 9 drop out, stoners to drive the planters, sprayers and combines...everything is steered by GPS.
When China goes to war with us, and knocks out the GPS satelites...We'll starve to death because no one knows how to steer a machine any more.
Soil miners.
ya got that right..........the only thing that makes crops grow today is petrochemicals.....one year without that input and yeilds will drop to single digits per acre. Then let the culling begin...........
blueskyes,I'm a guy in his late fifties.Any advise about the amount of lkand a afamily of three need?
I would think that 1 acre per person would suffice, and even allow you to eat meat like chicken, and pork. But it all depends on the quality of the land.
I currently have 25 acres in a very sandy region. Over half of that is bush - which is good for the wood-stove. The soil is good for growing almost any crop - except that you have to fertilize with chemical fertilizer every year. IF you do not, you do not get a crop - period.
I am looking to buy a farm of 50 acres - with a sandy clay loam soil - something that will hold nutrients between years. Study topography, and soil types. Make note of the landscape. Check the well water - make sure it's sweet, and plentiful. My curent well is full of iron water.
The really nice thing about my current location is it's remoteness from cities. I have to drive 20 minutes to get to any kind of population center - this is also one of the downfalls.
These are a few points to consider in my mind.
Have you ever considered permaculture, I am taking a 3 month course on it know...it is basically restoring the land and catching all the water that hits your property while using it to create an edible forest. I have been doing aquaponics for a year now and it has been alot of fun, but i want to take it to the next level.
Read some Viktor Schauberger. He has a lot to say about iron and land. They have pushed the whole world into consuming a variety of pertroleum products. All part of the big plan to create dependence.
In the 80s leverage among farmland purchasers was much higher and interest rates were a multiple of what they are today. The situation today is much more favorable and far less likely to implode to the extent it did in the 80s. Now pull the ethanol mandate & stop all direct & indirect subsidies for ethanol and biofuels and the sky really will fall.
I'd love to see the ethanol mandate pulled ,, we need food on the table not lower mpg in our cars... It'll kill farmland prices in Illinois and Iowa but that's OK too ,, they grew fat raping us with ethanol through their senators and the democrats desire for votes in the midwest ,, let them reap what they have inflicted on us. Lower corn prices may even help keep some Mexicans south of Texas...
Don't drop the ethanol mandate, just remove the corn subsidy....you can produce ethanol from sugarcane really cheaply but the corn states have basically banned this from happening. Why not take marginal land in the south and plant sugarcane. You will have cheap sugar and cheap ethanol, both of which will kill corn (corn ethanol and high fructose corn syrup). But hey, this is free market type stuff, what am I talking about....
Hey Jerry- I like that "free market" stuff. Think I read something about that in a textbook one time.
In the good ol' USA "free market" is what politicians talk about while they pass laws killing free market conditions in favor of their corporate cronies.
Remember the best Return on Investment is to buy a politician.
That's because Big Brother government provided grants, and interest free loans to companies that built ethanol plants.
Only a dumb fuck bureaucrat would advocate making fuel from the grain, when it can be made from the stalks, husks, and leaves - making a market for the material that is left after the crop is harvested.
" The situation today is much more favorable and far less likely to implode to the extent it did in the 80s. "
So you are thinking that interest rates will be low forever?
I remember back in the late 70's when farmers went down this road buying up land they couldn't afford and then the market took a dive. Lots of those guys ended up without their original farms and nothing to do. Lots of idiots loaded up on big machinery which they ultimately couldn't afford. Same thing will happen again most likely, seems to anyway.
I guess if you were smart enough to part with your land in the last year it would be ok, but a lot of people have sunk lots of cash in farm land.
True but there are lots of rich folks that sunk money too and they bought without debt. They can sit on that land in a downturn and wait for better days.
crisis not even started yet.
This is BS. Sure farmland prices eased a bit. Not that much though. But name another real asset that spins off an income, doesn't become obsolete, is mostly held in strong hands, there's a finite amount of it and it is decreasing in supply. Or would you rather own bonds or a maybe a shopping center for income?
I disagree about strong hands. Though I only have anecdotal evidence. No one around here (South-western Ontario, Canada) who farms more than 500 acres owns their land. It's all mortgaged. The equipment is leased, and the government provides interest free loans for the crop.
The price of farmland has tanked before, and will be much lower this time next year.
A bad crop, 1% interest rate hike, etc... Any one of these will break the collateral chain - just like in the early 80's when you could use someone's land - just to keep the weeds out.
The problem with Ag isn't cropland or grain prices....it's Potash, Nitrogen, Seed and Chemicals.....We're getting ass raped by Monsatan, Agrium, Pioneer, et al. Fucking farmers will try yielding their way out of low prices...most have their heads up their ass. all of the High Priced ground was bought with cash...or most of it. Not like the 80's. We might not fold as easily as you think. If my 800 acres which is debt free goes to $ 100.00/acre....unlessthey can tax it away from me, it will still produce a commodity of value....unlike a Fucking Farcebook stock, Google, or Apple. Try eating an iphone motherfuckers.
I remember looking into whether GMOs yield higher than open pollinated or hybrid crops. It was mixed. GMOs were generally more consistent in yields. Some consistently yielded more than the average of non-GMO, and some lower, but you cannot argue that a farmer didn't know what to expect in terms of yield. (This will change with RoundUp Ready crops as weeds are going to become immune to RoundUp.) Then I read about a farmer who decided to incorporate 1/2 ton of compost per acre, and found that his yields increased by more than the best GMOs. Not a peer reviewed scientific study, but his results were good enough raise an eyebrow. He still used the NPK fertilizer, though at a lower rate, and wasn't anywhere near being USDA certified organic. He just incorporated compost.
Polyface Farm. Read some of Joel Salatin's books
I'd like to read that report on the compost. A half ton of compost of an acre is relatively nothing, a pickup truck load. It would not be enough to make a difference on a 5,000 sft lawn.
GMO yellow rice will prevent blindness from vitamin A deficiency. Many other reasons to use GMO crops, including increased yields to prevent starvation.
That "yellow rice GMO" must be good shit...It's the one GMO example that is used in pro GMO arguments everytime.
I don't know how the Asians ever bred 3 billion humans without Monsanto?
Here is why I don't like GMOs....because Bill Gates likes them.
Why does the entire world have to eat GMOs just because Asians need vitamin D? It sounds sort of retarded when I think about it. If Bill Gates has invested billions in Monsanto to prevent blindness...couldn't he have just promoted vitamin D the same way we get it... by sunlight.
Monsanto didn't discover/create golden rice. Don't let that get in the way of your olde tyme tent revival lysenko! You anti-science luddites rail with the earth is 6000 years old fervor.
You don't believe vitamin D comes from sunlight on skin...and you call me the "luddite?"
Btw, Monsanto was the first to grant the golden rice patent.
Golden rice has increased amounts of vitamin A in it. So I don't understand your non-sequitor. As far as I can tell, those patents were awarded by...the patent office to Syngenta.
The show must go on...
Northern Vigor, do you harbor hatred for the new potato that has been engineered to not bioacumulate carcinogens? That one rub you the wrong way too? After all it is your god given right to eat unadulterated carcinogen potatoes, you know cause they are organic, or something.
Maybe Northern Vigor eats only the nasty purple carrots from strains from the middle ages... GMO really isn't rocket science ,, crops are like dogs ,, we have poodles , we have rotties , we have English Bulldogs ,, but they all came into existance through selective breeding and a common ancestor... GMO really isn't any different than accelerated selective breeding... it's all "in there" ,, just need to accentuate the parts we need or want.
Breeding isn't the same as GMO. Try breeding an arctic char to alfalfa and you end up with compost. But they can slice arctic char DNA into alfalfa to create a desired trait...this is not "selective breeding like poodles to Rottweilers.
Splicing Bt bacterium DNA into corn wasn't "selective breeding"
Try understanding what the difference between splicing DNA from different species, and "selective breeding is" before trying to explain it to us.
Nah, he puts teosinte on the table for his family.
syngenta stopped the commercial line of golden rice.
nobody asks why. ..
...
Real yield gains are being made utilising imaging technology. Any field may have many microenvirons in which a particular pedigree may fluorish. Utilising satelite imaging and gps in the tractor allows the farmer to plant the right pedigree in potentially the best spot in the field. Yield gains are pushing 20%. Pretty good.
Under Crop Farmers on youtube shows you
It's a little disingenuous to pretend that your depressed asset won't require upkeep and that those cash purchases were made by individuals not say BlackRock.
How long do you think they will hold onto an asset that doesn't give their podners a stiffy?
Cashflows have turned negative or breakeven for most producers in 2014. If they called their taxman in 2012 and loaded up on a bunch of leveraged M&E they are negative. There won't be the deflationary affect of farmland auctions with bank's selling to a bunch of farmers with no money this time. My friends are all looking for physical assets to buy. If ag prices stay low for 2 more years you will see prices drop for farmland but it won't be fast and it will not be like the 80s. There are a lot of willing buyers on the sideline and most bank's have only been lending 50-60% on the farm land. 1986 wasn't that long ago and a lot of the Board members on these ag bank's do remember it and have been fairly conservative.
One other item: alot of CRP ground has been broken out the last 5 years so total acres are up about 10 million. This will keep production up and may make the rebound in prices slower than most expect. But remember we get an extra 80 million mouths to feed every year.
http://www.earthpolicy.org/books/fpep/fpepch6
The fed prints money---gives it to the big banks who own the fed. The big banks loan it to pension funds like the Ontario Teachers for what? 1%?
The Teachers invest it with Bonfield and they buy farmland from farmers and rent it back for ten year leases at a 4% of land price per annum.
Land pices go up, the pensions report assset values increasing 10% per year. Farmers happy, banks happy, investors happy....Then.
Crops drop in value, weather turns crappy, economy crashes, farmland drops in price, farmers go broke...It doesn't matter what the price is ...the land was bought with worthless paper, and now the new owners have a tangible asset. This is what they were after when they bought it. They wanted to get rid of the dollars before they became worthless with inflation. Farmers left Europe to own their own land, to avoid being serfs...now the banks will be the new landed gentry. And the farmers that owe money that bought land at $20,000 per acre trying to keep up to the land investment funds...those farmers will lose everything.
Silly Ontarians
Everyone around here is bought and paid for.
And the surface lease rent for the energy leases pay the taxes.
This is BS. Sure farmland prices eased a bit. Not that much though. But name another real asset that spins off an income, doesn't become obsolete, is mostly held in strong hands, there's a finite amount of it and it is decreasing in supply. Or would you rather own bonds or a maybe a shopping center for income?
Glad you nailed the conclusion Tylers. That is EXACTLY how it works. The fractional reserve banking phantom AND SENIOR claims on real flows of value concentrate "wealth" and control in the TBTJ banks over time as they front run boom/bust cycles via abuse of control of the effective money supply and knowledge of positions. That's what the oil takedown was and now they are trying for farms.
A Few Good Men and women can end it forever. Convert all your long duration (>20 years) financial assets that are virtually certain to lose value in real terms to physical gold. It's time to squeeze those who've squeezed everyone else in the financial asset ponzi and expose them.
Excellent! Things are working out well for my plan to continue building my real asset based life, and finally end up on some choice productive farmland to live out my life as the landed gentry!
Drop farmland, drop! Then I can buy a nice parcel at the bottom!
WTF: Weaponize The Farmworkers
also...
DTF: Death To Fascists
LOL: Leave Others’ Land
OMG: Observe Mao’s Guidelines
ROFL: Radicalize Our Failing Liberals
OMW Ordnance Materiel Weapons
IANAL Institutions Always Needing a Loan
AFAIK All Financial Assets Increasingly Kafka-esque
WYSIWYG What you stole is what you gained
1976, I was 14 years old, a teacher of Geography, a Catholic priest said:
"- What the Americans are doing is madness are bursting the humus, the fertile part of the soil ...!".
The old priest was about 70, was German.
The old man's teachings have never left my head.
He talked about native vegetation along streams, springs to be preserved, plowing the earth, chemical fertilization, sunlight etc. .
You are wrong when they say that the earth is decreasing price.
The reason is that it does not produce more, the tendency is to turn desert.
No use putting fertilizer or even incorporate other organic elements, it does not redo the humus.
Greed is killing everyone.
Unfortunately.
: - /
It's funny, it is becoming more and more apparent that grasslands do best when intensively grazed for a very short duration before the animals move on, not to return until much of the grass has grown back. It's as though they do best when ranchers run their animals on them like wild herds of grazers would run on them without human intervention. Tightly bunched as a defense mechanism against predators and moving on regularly as a defense mechanism. I hate seeing cattle all spread out on the land. In many areas (not scrubby desert, but grass lands,) the ranchers would probably have much healthier land if they observed this lesson, and they would be able to run more cattle.
Yes, a fella named Allan Savory is the guru of holistic management of lands.
I try to practice his grazier management style and I make a profit.
http://www.savoryinstitute.com/about-us/our-team/allan-savory/
Stack On
joel salatin, greg judy, viktor schauberger, tomkins and bird, rudolph steiner, green deane...
See Hugelkultur, Permaculture, and no-till farming.
The old man was very wise, and ahead of his time, in recognizing the wisdom of working WITH nature, instead of trying to conquer it.
But but but they are not making any more land.
Plenty of rehypothecated land in the paper market. The supply is actually endless.
PRINT MOAR LAND!
BITCHEZ!
Hmm... So farmland is defined as in a 30-year or so bubble becasue it has simply risen steadily over that time. And that bubble, due to a 1-year decline in prices, is due to pop.
So by that logic gold is indeed in the 3,000 year old bubble that some jackass was claimin a while back?
I don't buy either thesis, unless the term "bubble" is given the broadest of definitions. Market forces of supply / demand, in (what was anyway) a long-term inflationary environment, seems to be a more accurate take...
You can most often characterize "bubbles" by the means of financing used to cause the bid-up...on the surface, it would appear that mostly cash purchases would indicate that this isn't a bubble, but tracing those purchases back to government subsidy of market players like BlackRock shows that this is indeed appreciation from getting chased by fake dollars.
Just because an asset has had real appreciation doesn't mean there isn't an element of fuckery layered over it.
At least the American in the pic still had the good sense to keep the pitchfork at the ready.
Big whoop: The Chinese can just come in after throwing money at idled rigs, and instead, spray their [] liquidity all over American farms. Good times, good times...
P.S. I don't care what anybody's got to say about it, I wish I'd been a farmer.
There are rich natural resources that should ideally be owned for a return in the real economy with manageable debts. This does not happen when the system is skewed towards Predators taking control of naural resources thru land rights, etc and ensure that the preys can at best remain as tillers of lands and bearers of water.
Come to undeveloped economies that are controlled by cronies of corrupt governments and you find that the abundance of natural resources do not matter for the little People. Is US famland ownership and control heading towards this situation ? Generations of the proverbial poor famers are trapped in this vise of corrupted political power.
Land of opportunity has been sold forward. Invest in some of these better real assets with peril too.
I'm a farmer and I'm doing well. IMO there are two types of farmers, there are the large volume driven operations ( what some call 'agribusiness' ) and there are the smaller, quality driven, direct sales farms ( what some call 'niche' farming or simply small farming ). The problem with the former is that the farmer himself, while producing huge volume of food, only receives a very small portion of the profits. His overhead is enormous; million dollar machinery on lease, big farm mortgage, payroll for hired help, etc. He sells through brokers who take a big bite, who sell to retail outlets that take another big bite. The farmer takes the hits on shipping, and all other costs.
The smaller farmer usually owns his operation, has less expensive machinery, does everything himself ( or with his family ), and in the past twenty years or so he has been selling directly to the consumer. That means every dime of what he produces goes into his pocket minus operating expenses. IMO this is the future of farming, for the individual. Those big volume driven operation are shrinking in number, and they are increasingly being run by large corporations. The number of small farms is actually growing.
Personally, my investment in my 180 acres, the equipment and infrastructure has been the best money I ever spent for many reasons. We're not getting rich out here but I work outside on my own land, we eat good fresh organic produce and grass fed meats, and I get to raise my son here in the country. When I get older, if my son doesn't want the place, I'll sell it, auction off my equipment, and move someplace smaller where I can do this as more of a hobby. I've lived in the city and I'll tell you this is the only way I will live....I'll farm till i die.
I salute you. Farmers are really un- and under-appreciated, especially small farmers who provide healthy and nutritious food. Small rural communities face a number of problems but their plight is getting more and more recognized by agricultural institutions. Also people are becoming more aware of what they eat and how they can eat healthier and food of better quality.
lawyers, doctors, professors making $100k+ per year buy their organic vegetables from farmers who make $30k per. i'm guessing this business model won't last
That model could go on forever (adjusted for inflation). 30k and the partial (or more) self-sufficiency of farm living is viable, long term.
Funny you say that because I do make about 30k per year....sometimes less sometimes more. But my living EXPENSES are about 12-15k. We eat mostly what we grow and heat our house with wood cut on the property. I own my land and equipment, so no big monthly nut to make. I've been able to save more making 30k on the farm, then when I made 60k in the city.
It is all economy of scale. Organic is becoming more mainstream and organic produce finds its way to the supermarket. It is all a matter of demand. People are becoming more aware of what they eat and how that is produced. They want quality food with respect for animals and nature. Still a long way to go but fast food's main ingredients of sugar, salt and unsaturated fats is on the way out because it is making us sick
Big agro is getting into trouble because intensive moncrop agriculture depletes soil and demand ever increasing use of agro-chemicals that are getting more expensive. Big farms have strangulation contracts with big agro-firms and biotech. That business model is not sustainable.
The Food and Agriculture Organisation of the UN is focusing more on holistic approaches to farming with closed loop framing practices and sustainable use of natural resources. That is the way forward.
"......Farmers are really un- and under-appreciated......"
"Nuff Said".
If I can convince my wife I'll be living at the farm again. I agree, nothing better, and it's my Grandpa's farm, but he moved off and has 4800 acres. And with only a few people that's more than enough land. NOTHING is better than spending an entire day out harvesting that land.
The young farmers buy at the top and sell at the bottom to the older farmers. Always seems to work that way.
There used to be a joke that went like this:
How do you make a small fortune?
Start farming with a large fortune!
Former IA farm boy
Good on you, brushhog.
One thought that crossed my mind while reading this, was "3 decades of upward values isn't a bubble." In fact, it may be one of the few instances of PROPER allocation of dollars in that time frame.
The timing of this article, strikes me as being akin to a Jim Cramer "strong buy" or "sell" recommendation...the OPPOSITE is likely the wiser course...
How specifically do you sell direct to the consumer?
Farmer's Market?
I doubt they would regularly come all the way out to your farm.
Thanks.
We started out at farmers markets and it still remains a big part of our business. Through those markets we have found specialty meat markets, restaurants, and are members of a local CSA. Yes some people do come buy at the farm too though that is a smaller share of our business. During the season we will hit about 3-4 farmers markets per week. There is a slow down this time of year up until it picks back up again late April. I have been considering having a website done for the farm as well, and there are some other farmer friends of ours that are doing quite well with theirs. All our end of season excess get run through the livestock auction.....we try to have as little go through there as possible as the margins are small.
Is it possible to make deals directly with restraunts that do farm to table? Is there profit in it?
Usually 'farm to table' means having a farm with a restaurant attached to it. You are giving people a meal made up of produce from your farm. I dont know much about the restaurant business and it would be too much for me. That said there is a big 'farm to table' movement among 'foodies'. My area might be too rural and too far removed from that element. We do supply a few restaurants within a 40 miles radius of here though. And yes, these are deals made directly with the chef to supply the restaurant. Many chefs attend farmers markets and you can make nice contacts through there.
Interesting.
Thanks for the information. Trying to learn as I go.
Farming was/is a good life. The young people don't do it because they don't see the benefit - they see a lot of hard work for not a lot of money. And yet most of the farmers i know that are in their 80's raised large families on a quarter or half section and now have a ton of money in the bank. How did they do it?
Farmers are incedible stewards of resources. They are virtually self sufficient. They have a garden. The utilize everything! And most all of their equipment was used and if it broke down, they made the repairs themselves. It was a process. Long term. A commitment to self sufficiency and responsible living. I can't tell you how many nails I've pulled and reused for new projects to replace old.
Could they do it now? I doubt it. Interest rates on their savings was decent all through the 70's 80's and 90's. But this is no longer the case. I can't help but think that most of these tough old timers would have been buried eventually under the current interest rate environment.
The one I know paid $1500 for his 1/4 in 1953. Now that same quarter is worth $600k. And yet, therre is no way that 1/4 is worth $600k from a wealth generating perspective - I don't give a shit what you plant on it.
And now i farm my own place and having been lucky to have been schooled by the brightest and the best (and god damn i worked hard for them growing up), i try my hand at it as a supplemental source of income and an eventual place for retirement. But, its a process. Bit by bit i'm building a life out there just like they did. And through the farm I recognize that nothing really good ever comes easy. One day out there during the spring (when I am making repairs), or when its 80 degrees and I'm on my back replacing the bushing on the knife, you realize just how fucking hard it is to make a dollar. That realization carries into the rest of my life as I forgo immediate gratification for something better in the future. In the end, its all you can do - and I'm pretty sure thats how they thought too.
The farm is a wholesome life. It teaches you more things about life than I care to count and yet few see it that way at all. But, like I said, the youth they don't see the benefits (tangible or intangible). They don't understand what the farm actually encompasses both physically and spiritually. They see a lot of hard work, for not a lot of money.
Things sure have changed since when i was a boy and now. Shit, and I aint even old. Maybe some will figure it out. I hope so.
They don't know what they're missing.
brushhog and all the replyers forget one thing:
the big companies can break the prices, make them as they wish, they own like 90% of the food chain.
and as the (very) big companies own more and more, make the people poorer and poorer, screw the whole thing tighter, the people have to buy cheaper and cheaper, all of this forces the small farmers out of business. not all of them, but most of them.
and then they buy the land. they couldnt survive without money from the gubermint. more land=more money. the bigger you are, the more (fiat) money you get, same like it ever was.
theres a big movement against this whole sh*t, so they re really in a hurry now. next round. faites vos jeux.
I wonder how much GMO food has to do with this....especially corn.
Hey, have you seen the news stories about the babies with DNA from three different people?
Aren't these GMO people? Think about it.
Aren’t you guys sick of this cop-out: “the "money" is really created in computers”….
Justifies government saying, “Hey, the ‘money’ was created on a computer, there never was a Social Security fund, you get nothing! Go live on abandoned farmland.”
The 401Ks aren't yours, the digits are a mental construct and not real.
The pensions, made-up nonsense. Canceled.
American Express somehow “created” money on a computer and I took delivery on a house full of depreciating items. How did that leased car get in my drive?
Hey, they ain’t making land anymore…. In China.
Probably a product of low gas prices from decreasing demand. I've never seen so much corn under tarp in my life in some places. Not going hungry thats for sure
Can't eat Ethanol.
People don't eat the corn manufactured for ethanol :-)
You drink it from a rocks glass as bourbon. And the liver processes etoh as food.
Actually, it is quite the opposite in the real world, but the TBTJ bankers and stooges that serve them would like people to believe the opposite so that they create a self reinforcing, perception driven duress for the farmers and then take title via phantom/fraudulent fractional reserve banking financial assets. It's literally the great lie...
They are trapped and insanely desperate...
farm land ain't going down much because g'ment needs to eat.
Let's hope that this crisis dont affect other industries in America. http://www.hometaurus.com
Actually you can eat it, just tastes like crap. After the crash if you have ethanol and ammo you're pretty much good to go.
The Maunder minimum is hitting. Won't be able to grow anything much of anywhere over the next 70 years. Europe lost 30% of its population in the 17th century when it happened. Not only do things get colder than a witche's tit the lack of heat results in massive draughts because of less evaporation. The US was more fortunate than other locations regarding draught in the 17th century solar minimum but if you are buying farmland do it in the southern latitudes. You won't get much if you choose to farm snow.
Son in law just picked up a red and a black angus steer. 400 lbs. He also picked up a Holstein steer of 400 lbs. 1200 by a year from now and future beef for us. Pleasant surprise came when he got home with the trailer,,, both angus were actually heifers. They came from a small operator that breeds angus show cattle. We are sure they knew the difference between a steer and a heifer but didn't relay the info properly to the farm my son in law bought them from. He had offers of 150 more per each heifer but we are keeping them to raise them for the beef.
With beef prices being what they are even the dairy breed steers are hard to come by and very pricey when you find them.
Good weekend to all. I love farm raised beef.
Farm rasied beef? Are any raised in the city?