21 11월, 05:11www.enterprisepub.com
After years of giddy growth in U.S. farmland values, a new Federal survey indicates a plateau in that growth is underway. Jeff Caldwell of Agriculture.com , wrote recently that although numbers show a “year-over-year double-digit gain” as of October across the greatest portion of the Corn Belt, the trend “effectively ended at the start of the third quarter. Evidence, Caldwell wrote, that there is a growing realization that a leveling off is occurring.
Things are still humming along as farmland values rose 14 percent this October over last year, but all but 1 percent of the gain came in the first three quarters of 2013, according to data released by the Federal Reserve Bank of Chicago. Caldwell noted that trend is in line with recent views that farmland may face a less bullish market in the months to come.
Caldwell said Fed economists believe the reversal in farmland values in the fourth quarter of this year may be sustainable in the next few months, mostly because of grain prices. With the bumper crops this fall, despite varying and often harsh weather conditions, lower grain prices were experienced, bringing the land values versus crop values closer to the break-even point.
In another article on the subject, Caldwell asked, “Is the farmland market – one of many experts say is starting to level off from the boom in values over much of the last decade – just taking a breather from its rocket ride higher, or is the expected leveling an inevitable function of the marketplace?”
Caldwell points out that Mike Duffy, Iowa State University Extension Ag Economist, notes that history has shown the cyclical nature of the farmland market over the last century, with several “drivers” of those cycles. “But”, Duffy asks, “is to day different?” He said speculation on what is happening to land values is rife.
Farm income is key. Duffy told Caldwell that “what happens to farm income will have a direct bearing on land values. While it isn’t a perfect correlation, it is a strong one.” Duffy thinks farm income is “something of a wildcard” right now. There were several land booms in the last century, with the one for the period of 1973-1981, referred to as “the second golden era of agriculture. Land went from an average $482 per acre to a whopping $2,147 per acre in that period.
So, land values may be plateauing but they are still robust by any measure. The future will be told by a combination of farm input costs and prices at market, not to mention the cyclical nature of the land market. And, so it goes in the gambling game we call farming.
I’ll see ya!