Friday, November 25, 2011

Farmland prices in the Midwest soar

So about a year ago I am standing at Arielle's Soccer game with a large American food producer who had been asked to be part of a think tank out of Washington to prove that there is a coming food shortage. Through work that we have completed in creating exchanges we are aware that 50% of food leaving the farm is already destined to spoil due to the huge inefficiencies in allocation (therefore no shortage). Part of the story that the producer gave me for the reason of  the coming food shortage was the change in tastes that Chinese are having as their economy grows, this all after a few week trip to the region. After having lived in Asia and done business in every country for nearly a decade I knew this was significantly overstated. As many of you that have read my book know, commodities are manipulated and this is no different. I mentioned to many of my colleagues that I bet we would see a run up in the price of agricultural land as the Banks that created the think tanks would have been buying agricultural land and concurrently would be lobbying  the government to provide subsidies to purchase farming land to avert a global shortage of food. Benoit sent this article with the comment that I am scary, I guess because I foresaw this. Aivars Lode

Farmland prices in the Midwest soar

November 16, 2011: 9:12 AM ET
Historic increases in farmland prices seen in parts of the Midwest.Historic increases in farmland prices seen in parts of the Midwest.
NEW YORK (CNNMoney) -- Agricultural land value is soaring in the Midwest, with parts of the region surging 25% from last year, according to two recent Federal Reserve surveys. The jump is the highest increase in three decades.
Record farmland prices are also being reported in the northern Plains.
Surveys released by the Kansas City and Chicago Federal Reserves Tuesday find that despite a struggling U.S. housing market, agricultural land in their districts is booming. And the run-up in prices may have yet to peak, they said.
"District farmland values surged to a record high in the third quarter," the Kansas City survey said. "Cropland values rose more than 25 percent over the past year, and ranchland values increased 14 percent."
In particular, Nebraska experienced exceptionally strong gains in the Kansas City District due to bumper crops -- especially productive seasons for certain crops -- reporting a roughly 40% rise in farmland prices from one year ago.
The surveys indicate that good credit conditions, successful harvests, and elevated levels of farming income helped to contribute to this large surge in an already strong agricultural property market.
According to the Chicago Fed, farmland values in its district had their largest increase since 1977, jumping 7% from the previous quarter.
Iowa farmland prices led the Chicago Fed's district, jumping 31% from last year's 3rd quarter.
However, not every state in the region had such historic success.
The southern Plains, Oklahoma in particular, saw more modest increases -- mainly due to devastating droughts, affecting yields from crops and livestock.  To top of page

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