Will farming be the next "bubble"?

[HSKR]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

[carlfense]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

I wouldn't be surprised at all. If only I could time it right . . . sell the farm right before the burst and buy back in after the crash so that I wouldn't have to pay income taxes . . . hmmmm . . .

[Cactusboy]

If the subsidies ever end you'd think they'd at least take steps to make sure it doesn't burst a bubble. Like maybe having them be delayed..and then phased out slowly. Even that could create a panic..but you'd think they could still account for this to at least some meaningful extent.

[NUance]

Land prices will come back down some when interest rates go up. And when corn/wheat prices come back down from the sky.

[krc1995]

it has to come down. But as my dear dad always use to say "Land is always a good investment for the long haul as they don't make any more of it."

 

The ethanol thing will come to an end. I think 25 years from now, new technologies will likely make ethanol obsolete as ethanol is not that effecient of an energy source.

[Tree Planter]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

 

It may come down some, but I doubt in the long run. With climate change, many places in the world will become less productive. Nebraska sits squarely on Ogallala aquifer, which make Nebraska land even more valuable in the long run when there is uncertainty in changing weather patterns.

[HSKR]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

 

It may come down some, but I doubt in the long run. With climate change, many places in the world will become less productive. Nebraska sits squarely on Ogallala aquifer, which make Nebraska land even more valuable in the long run when there is uncertainty in changing weather patterns.

So climate change will make many places in the world less productive but not Nebraska?

[krc1995]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

 

It may come down some, but I doubt in the long run. With climate change, many places in the world will become less productive. Nebraska sits squarely on Ogallala aquifer, which make Nebraska land even more valuable in the long run when there is uncertainty in changing weather patterns.

So climate change will make many places in the world less productive but not Nebraska?

I heard several other people say that the next world world war would be over water and water rights. Of course these are bar room guys, but it still got me thinking.

[HSKR]

it has to come down. But as my dear dad always use to say "Land is always a good investment for the long haul as they don't make any more of it."

 

The ethanol thing will come to an end. I think 25 years from now, new technologies will likely make ethanol obsolete as ethanol is not that effecient of an energy source.

 

They don't make any more of it and we are adding about 75 million people a year to the planet's population. It may be the two best things farming has going for it. The ethanol thing is another debate I find interesting but probably best discussed in length in a new thread. I find it interesting that there are both a lot of ultra conservatives and liberals who both hate the subsidization of ethanol. Obviously the politicians who love it are the ones in corn growing states. It will be interesting to see what happens to the government support of it and if it can survive on its own without it. If it happened today, I would say no, but ethanol technologies have also been improving and there is a huge market right now for gluten and distillers grain.

[carlfense]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

 

It may come down some, but I doubt in the long run. With climate change, many places in the world will become less productive. Nebraska sits squarely on Ogallala aquifer, which make Nebraska land even more valuable in the long run when there is uncertainty in changing weather patterns.

So climate change will make many places in the world less productive but not Nebraska?

. . . did you really miss what he was saying?

 

(Edited for civility.)

[HSKR]

After watching the housing bubble collapse, I've got to wonder how far behind Ag land is from doing the same thing. It's been a great few years lately for crop prices. High fuel prices also make ethanol more viable, thus keeping the demand for corn high. If you have been watching prices of Ag land the last five years, it's been pretty crazy. I recently read on an ad that a quarter of irrigated around Crete went for $8500 an acre. That's $1.36 million for a stinking quarter of land! What happens if one of the first cuts is ethanol subsidies? That could very likely happen. What if demand decreases for a couple of years. What's a farmer going to do with a $1.36 million quarter of land if corn drops to $2.25? His profit won't even pay the taxes on that.

 

When the housing bubble burst, it didn't surprise me at all. In two years time, a $175K house was selling for $200K not from increased construction costs but simply demand. Once the economy went sour that same house was now worth $165K and a lot of people were in big trouble. What's going on with Ag land prices is eerily similar. Hopefully demand stays were it is and we can keep prices high because right now the Ag economy is the best thing Nebraska has going for it.

 

It may come down some, but I doubt in the long run. With climate change, many places in the world will become less productive. Nebraska sits squarely on Ogallala aquifer, which make Nebraska land even more valuable in the long run when there is uncertainty in changing weather patterns.

So climate change will make many places in the world less productive but not Nebraska?

. . . are you being deliberately obtuse or did you really miss what he was saying?

I want to know what places will be less productive and what places won't. If he knows this much that certain places will be less productive, then I figured he would know what the future is for Nebraska. If climate change is going to change productive areas of the world, then surely it's not going to simply leave Nebraska alone or do we live in some kind of climate change anomaly where it wouldn't change our output? The Ogallala Aquifer wouldn't do us much good for agriculture if climate change dries it up?

 

But if you want to, you can explain what he is saying for me, thanks.

[HSKR]

http://journalstar.com/business/agriculture/york-county-land-sale-nets-k-an-acre/article_2737b0e6-ba31-5fa7-ad0d-f9e728823bfc.html

 

$10,400 an acre!!! The bubble still seems to be growing.

[Cactusboy]

and I thought the 7k my relatives just got was crazy.

 

Well I hope at least the loans given for buying land are solid.

[Punisher]

and I thought the 7k my relatives just got was crazy.

 

Well I hope at least the loans given for buying land are solid.

 

Funny this is most farmers are borrowing very little to buy land or are not borrowing at all. Grain prices have been very good for the past several years and crop yields have been good too, so they have the cash.

[HSKR]

and I thought the 7k my relatives just got was crazy.

 

Well I hope at least the loans given for buying land are solid.

 

Funny this is most farmers are borrowing very little to buy land or are not borrowing at all. Grain prices have been very good for the past several years and crop yields have been good too, so they have the cash.

Exactly. Most of the farmers buying land now have the cash. The banking industry isn't making much profit off of farmers because they aren't taking out loans for a lot of this stuff.