Is a bubble forming in US farmland?

[Brian4Liberty]

As we know, the price of farm commodities has been going up. On a daily basis, CNBC praises the rise in price of food commodities, and touts the profits still to be made. The other day Warren Buffett was on CNBC, and when asked about investing in gold, he replied the he would rather own all of the farmland in the US.

Is farmland undergoing a speculative bubble?



...as prices for agricultural land surge across America’s grain belt, regulators are warning that a new real estate bubble may be forming...

http://www.msnbc.msn.com/id/41895036/ns/business-the_new_york_times/

[Brian4Liberty]

Here is a link on Warren Buffett talking up food commodities and farm land.



"Warren Buffett appeared on CNBC this morning, and said that he believes that farmland is a good investment..."
http://blogs.forbes.com/benzingainsights/2011/03/02/how-to-play-warren-buffett-the-farmer/

[dannno]

Time to start another veggie garden..

[Johnnybags]

Not at all,
we will export food to the world to infinity as long as we have monetization. While prime megafarmalnd is booming the ole 20-50 acre plot with a house is not and will be the next boom. I would rather own food than gold but food is perishable. The next housing boom will be a typical flat with acreage. Locally grown and sold. We are headed to the future backwards. Add in a water source and you are golden.

I grew about 1/2 ton of veggies last year on a 20ftx20ft plot which would cost about 4,000 at the market. When it comes down to it, food is it.

[Brian4Liberty]

Warren Buffett bashes the metals (gold/silver) on a regular basis. Then he talks about buying food commodities and farmland because of all of the money printing. Speculative bubbles in food result in people starving, violence and war. If he is concerned about monetary inflation, why bash gold and instead recommend actions that will result in deaths? Why doesn't he invest in a new resort in Haiti? Why doesn't he build an electric car factory? Why doesn't he invest in some new technology? Why doesn't he build a space tourism business?

No, he would rather starve people...and bash gold.


http://www.youtube.com/watch?v=OJvprC3eX44
http://www.youtube.com/watch?v=OJvprC3eX44

[Brian4Liberty]

Another link:



http://www.msnbc.msn.com/id/41895036/ns/business-the_new_york_times/

The surge in prices has been dizzying throughout the Midwest, with double-digit percentage increases last year in Illinois, Indiana, Iowa, Kansas, Minnesota and Nebraska. In parts of Iowa, prices for good farmland rose as much as 23 percent last year, according to the Federal Reserve Bank of Chicago.

Just a few years ago, farmers marveled as land prices began to rise in response to demand for corn to make ethanol. More recently, soaring prices for wheat, corn, soybeans and other crops have driven the increase. Corn futures on the Chicago Board of Trade closed at $7.27 a bushel on Tuesday, up from $3.70 a year earlier. Soybean futures were $13.67, up from $9.52 cents on March 1 last year. Average grain prices, adjusted for inflation, are nearing the giddy levels they reached in the late 1970s, the peak of the last disastrous boom-and-bust cycle for agricultural land.

[oyarde]

Yes and no . If you buy now , you are paying too much . Unlike homes though , people do not flip farm land and borrow against it . The avg farmer in the US has less debt and more cash on hand now than in the 70's .

[Brian4Liberty]

Yes and no . If you buy now , you are paying too much . Unlike homes though , people do not flip farm land and borrow against it . The avg farmer in the US has less debt and more cash on hand now than in the 70's .

The story talks about guys who bought with zero down. 100% borrrowed money. If it becomes more of a bubble, that could become common. Deja vu all over again....

[EndDaFed]

The story talks about guys who bought with zero down. 100% borrrowed money. If it becomes more of a bubble, that could become common. Deja vu all over again....

If that is the case it would be great to pick up some land on the cheap when this thing goes down.

[Texan4Life]

Farm land values going up? I think so, but it is because of urban sprawl. Yes commodity prices are going up, but the cost of doing business is going up faster. Diesel, fertilizer, equipment, taxes, ect.

[Brian4Liberty]

Yes commodity prices are going up, but the cost of doing business is going up faster. Diesel, fertilizer, equipment, taxes, ect.

There's the big problem. Remote investors don't care about actually farming the land. No worries about diesel or fertilizer. They want to sell it at a profit. More farmland goes fallow, food prices go up even more. The downward spiral.