ironwood
Active Member
All of the sale that I have watched go for extreme money had the neighbor, or two, with cash as a pushing factor
Is there a farmland bubble?
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All of the sale that I have watched go for extreme money had the neighbor, or two, with cash as a pushing factor
JNRBRONC
Well-Known Member
https://www.extension.iastate.edu/agdm/wholefarm/html/c2-70.html
"There are other factors to watch when considering whether land is on a speculative bubble. Debt is one indication. Debt levels increased during “bubbles” and, when the asset values began to drop, people were put in a position where they owed more than the asset was worth. This either led to default or to forced sales, which decreased the asset value even more. Currently, debt doesn’t appear to be a problem in the land market."
"There are other factors to watch when considering whether land is on a speculative bubble. Debt is one indication. Debt levels increased during “bubbles” and, when the asset values began to drop, people were put in a position where they owed more than the asset was worth. This either led to default or to forced sales, which decreased the asset value even more. Currently, debt doesn’t appear to be a problem in the land market."
Here's a "curve ball question".... In very short & basic terms - what's a "better value"....
$4,500/acre ground that will "consistently" yield 140 bushels to the acre on corn VS $13,000 ground that will "consistently" yield 200 bushels of corn/acre??? These are VERY REAL EXAMPLES I have seen in the last month!!!
$4,500/acre ground that will "consistently" yield 140 bushels to the acre on corn VS $13,000 ground that will "consistently" yield 200 bushels of corn/acre??? These are VERY REAL EXAMPLES I have seen in the last month!!!
JNRBRONC
Well-Known Member
It depends if it is adjacent to the ground I already farm....
I saw a figure the other day that said current farmers have a nationwide land debt ratio of 11%. That is pretty powerful, but land values follow revenue. When corn goes down we will probably see a correction, especially in the top end, but I have been saying this for 5 years so who knows when it will happen. I think current estimates for 14.3 billion bushels are a pipe dream if everything goes perfect. I think it is more likely we will see a record crop of 13.5 billion bushels and prices will bounce between $4.50 and $6. One last thought, they are making more land, Brazil created 12 million acres last year, anyone who doesn't know what I'm talking about google: cerrado.
Thats what I have never understood. I could buy alot of 150 bushel an acre ground for 2500 an acre.
I should clarify, combination farms, timber/tillable mix.
You had me excited for a minute! Is the timber worth anything? Other than deer production?
ABSOLUTELY! I've seen timber sales on 80 acres of timber range from $10k to $115k. (the 115k was a jefferson county sale about 6 years ago). Then, TSI income of $120/acre net. Periodic harvests every 15-20 years if done correctly. With more management of the timber- each sale will bring more $ per acre as it's properly managed over the years.
& also- think about this.... If you can (and yes, you can!) buy 200 acres with 100 acres tillable yielding 140 bushels/acre & 100 acres timber for $3k.... Sell the timber off for $2-2500k, you still have some pretty cheap tillable (if a guy wanted to do that). I am boggled more guys don't buy this scenario in their area instead of this 10k-14k tillable insanity (that's also boring as heck!! IMO).
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JNRBRONC
Well-Known Member
Harvestable timber has some value, but most like to get it in the Forest Reserve to avoid paying property taxes on it.
You can still harvest timber in forest reserve.
JNRBRONC
Well-Known Member
Never said you couldn't.
Ok, it sounded like u were implying that.
The answer to your question, is the cost to drive across 150 bushel ground is the same as 200 bushel ground. The equipment all costs the same. About the only inputs that go down with cheaper ground are land prices, fertilizer, and transport. Almost everything else is the same. Plus if land is flat and open so you can farm it without turning,it uses less diesel/time than hilly ground where you have to farm around wet spots or timber. Finally in bad years like 2012, my light ground produced 40% of my expected yield. One of the farmers that I've learned a ton from had a field average 197 bu per acre about 5 miles away. 85% of his expected yield. When you multiply his extra 117 bushels per acre times $7.50 = $70,200.... Makes that more expensive ground look better than the comparison in a year with adequate rainfall.