Is the farmland price bubble poised to burst?
With farmland across the nation soaring, many farmers are questioning the potential fallout if – or when – the farmland price bubble pops.
"The concern clearly is not so much how much higher are they going to go, but when this bubble breaks, how low will they go and what will the aftermath of that be?" Michael Hein, vice president of the Liberty Trust and Savings Bank in Durant, Iowa, told USA Today. "If profits start to diminish, there will be an impact on land values as well."
Farmland values in the nation’s midsection are used by federal economists to gauge the farm economy and to determine the health of the banking system.
In Illinois, a farm recently sold for a staggering $15,375 an acre, while in Nebraska land value is estimated to be $3,040 per acre, more than double the estimate from three years ago. Across the Plains, farmland values are up more than 20 percent.
USA Today reports that while the bubble for today’s farmland prices may burst, it will likely won't be as dramatic as seen in the early 1980s. In the decades following that particular burst, farmers have become more financially conservative and better equipped to weather possible downdrafts in land values.
What happens to farmland prices next is unclear.
“Government uncertainty, high commodity prices and record low interest rates have been fueling a strong farmland market for several years,” Randall Hertz, president of Hertz Real Estate Services, wrote in an article available here. “It’s uncertain how these factors may change in the future and how those changes may impact the value of farmland.”
- Junge Control introduces Zone Automation
- UAV maker PrecisionHawk receives $10 million in financing
- Tool helps track insects blowing in the wind
- FAO calls for “paradigm shift” toward sustainable agriculture
- Newly revised “Midwest Cover Crops Field Guide” released
- Weed seed present at harvest offers weed control opportunity
- U.S. GMO labeling foes triple spending in first half of this year
- Source shows half of GMO research is independent
- Activists fighting Golden Rice even more in 2014
- White House issues veto threat on bill to block WOTUS rule
- How much corn can the ethanol industry use?
- East-West Seed signs marketing collaboration with Monsanto