Cropland Predictions For 2014
What does the next year hold for the cropland business? I expect demand to remain strong. At some point in the next handful of years I expect a cropland gold rush. A lot of aging farmers who own land are hanging on and waiting to see if they can't sell at the top. Usually these farmers would've sold by now but they are patiently waiting to see where the prices will hit there peak. When we start getting close to that expect the market to flood with cropland.
Rents will be tied to crop prices. Whether they go up or down that's what you should expect cash rent to follow suit. This isn't any amazing revelation I know but it's something to not forget while going forward.
Acreage will be based on crop insurance. We are seeing crop insurance more and more affecting the cropland market. That mostly comes from the drought we had a few years ago. I don't see this changing anytime soon.
Volatility will continue. This is where you will decide what kind of operation you are going to run. All depends on your personality. Are you a risk taker or not. It all depends on your comfort level how you want to run your operation. Remember, it's your farm. Run it how you want to.
Have a Happy New Years and let's look forward to 2014!
Here in Australia a similar picture with ageing farmers who can 'hang in there' a long time if debt levels are low.
ReplyDeleteI expect price movement here to be pinned to the next serious round of commodity price rises, whenever that might be.
If it doesn't happen, sellers eventually adjust expectations rather than a gold rush the other way. Meanwhile a trend southward with farmland is most likely not on the cards, which is more than can be said of a lot of investment classes.
That should be a prime attraction.
I agree with what's been said here. Of course the blogger is my son, so maybe I am biased. But the basics of the agricultural marketplace do not show any reason to expect long periods of low prices. There are more people on the planet each day, and most of them have higher standards of living than ever, and that means they want meat in their diet. As long as that is the case agriculture will be a strong investment.
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