2001: A Farm Oddessy

In the classic science-fiction film Star Wars, the character Han Solo turns to Luke Skywalker during a heated space travel scene and says "Traveling through hyperspace ain't like dusting crops, boy!"

Well, Han Solo may be wrong.

Agriculture.com recently covered a story about  SpaceX.  A company that is one of a handful of companies in the world whose scientists and engineers are producing rockets and spacecrafts that company leaders including CEO Elon Musk hope will one day lead to a completely privatized space travel industry with an ultimate goal of "making humanity a multi-planet species." The company is based in Hawthorne, California, but has facilities and employees in Florida, Washington, D.C., and Texas.

What's this got to do with agriculture? SpaceX officials recently announced a farmer in Texas will soon become one of the company's 3,000 employees.

Responsibilities of the job include planning and executing budgets, operating and maintaining machinery, nailing down crop inputs and maintaining the ability to "understand the implications of the weather and make contingency plans," according to a SpaceX report. The job takes at least 10 years of "row crop farming experience" in central Texas and "which shall include a working knowledge of every process required for crop production in the region," according to SpaceX. "Experience in repair and preventative maintenance of John Deere agricultural equipment."

So, is SpaceX sending a farmer to space? Though company officials have been tight-lipped about why they're hiring a farmer, there's speculation that the position has as much to do with the company's operating budget as it does coming up with ways to grow food in space. Agricultural use nets tax-exempt status for not just land, but the tools, equipment and inputs used for growing crops or raising livestock in Texas.

Though SpaceX's ultimate goals in hiring a farmer have yet to be specifically outlined, it's clear company leaders intend for the position's occupant to both continue farm work and have at least some role in the company's operations.

"This position will be required to work around test schedules as necessary to ensure the successful crop production does not interfere with testing progress," according to a statement from SpaceX's website.

Groundwater Decline More Complicated Than Irrigation

Ground water across Texas has declined over the last eight years.  Mostly due to irrigation in agriculture and population growth.  However, a Texas A&M AgriLife Research study has identified other factors having an impact.

Groundwater decline has been the most server in the last four decades.  But not all the news is bad according to Dr. Srinivasulu Ale, AgriLife Research geospatial hydrology assistant professor in Vernon.

In a recent interview with South West Farm Press, Dr. Ale, who help write the book "Long-term (1930-2010) trends in groundwater levels in Texas: Influences of soils, land cover and water use," along with Dr. Sriroop Chaudhuri, said they conducted the study because by 2060 the states population is expected to double.  This will increase the demand for water at a time when water supply is expected to be reduced by 10%.

"We wanted to know which areas are more vulnerable to water shortages," he said.  "In order to plan and implement strategies to deal with the water level declines, we needed to know how these levels were declining spatially and temporally."

BASF Commitment to Research

What is BASF researching?  And what is the amount of effort and money they are putting in?  Markus Heldt, President, BASF Crop Protection recently answered those questions in an interview by Agriculture.com.

How to Feed 9 Billion People

This is your challenge.  In 30 years you're going to have to feed 9 billion people with less land and less water.  How do you do that?

To do this, farmers will have to use the best technology available.  Including some that isn't entirely popular with the public.

South West Farm Press recently covered a event featuring speakers discussing this very topic.  The most important thing is communication with the public.  The event was the Rolling Plains Spring Field Day held at the Texas A&M AgriLife Research station near Chillicothe.  The event featured Julie Borlaug, granddaughter of the late Dr. Norman Borlaug, a Noble Peace Prize laureate known internationally as the "Father of the Green Revolution."

As well as speaking she moderated a wheat seed industry panel consisting of: Jon Rich with AgriPro-Syngenta in Junction City, KS; Marla Barnett with Limagrain Cereal Seeds in Wichita, KS; Sid Perry with WestBred-Monsanto in Filer, ID; and Janet Lewis with Bayer CropScience in Lincoln, NE.

March 25th was my grandfathers' birthday and many people have asked me if he was here today what would his message be about how we are going to feed 9 billion people by 2050," Borlaug said.  "I think he would probably tell you there are three areas we need to be concerned about."

Involve the Next Generation

"It's important for us to continue to train the next generation of agricultural scientist," Borlaug said.  "We need to engage students; we need engage those even outside of agriculture, because it's going to take people from various backgrounds across different disciplines to help figure out how to feed 9 billion people."

This will require new economic and political policies, advancements in engineering, medicine energy, but mostly agriculture.

We need what her grandfather called "hunger fighters."  Entrepreneurs, scientist, researchers, policy makers and farmers.

They need to embrace bold new ideas and work with people along different disciplines.  They must engage smallhold farmers and private and public sectors to come up with sustainable ideas.

"So we need to continue to reinvest in that and move our generation forward, so they will become the next Norm Borlaug and leaders in agriculture," she said.

Funding Dilema

"We need to re-engage the funding entities and those outside of agriculture to understand why their support is so important," Borlaug said.  "We are going to need a lot of technology and improvements to feed 9 billion people, especially with climate change and scarce natural resources."

The third thing she stressed is - "the misunderstanding and misinformation that's spread about agriculture."  She said that mainly comes from the anti-science, anti-GMO groups who don't understand the basic role of biotechnology in agriculture.

Borlaug said her grandfather was known to say "fear of change is the greatest obstacle to progress."

The ag sector must address the public differently.  People need to understand how important new technology, innovation and biotechnology are to our future.

"It is no longer enough to just have collective support of the research and private sector.  We must gain the support of the general public in order to move agriculture research forward."

Most arguments against these advancements are emotional and not rational.  They resonate because they fuel the anti-corporate mentality.

She brings up the GMO golden rice crop in the Philippines.  "Do you as biotech opponents really want to deny golden rice to those children who could so profoundly benefit?  Are you willing to condemn them to blindness and death out of your own ignorance?  I say out of your opposition, you are somewhat responsible for their vitamin A deficiency and blindness."

This is not to say biotechnology is the only solution.  "but we must understand that a multi-faceted integrated solution is needed."

Wheat Breeding

Wheat is the most important food crop in the world.  It's time to reinvest time and energy into the crop.  

"What's happened over the years is that in the U.S., wheat has not been looked upon as a high staple crop like corn and soybeans," Rich said.

There is a lower cost of molecular markers and the ability to "speed breed" to bring greater yields.  

"I think it has been largely customer-driven - seedsmen and farmer driven," Barnett said.  "We've seen the demand for wheat yields to be increased.  Farmers have long been asking, "Why am I still getting the same wheat yields my grandfather got while my corn yields have tripled?"

The industry has learned a lot from corn, soybeans, cotton and canola that can be applied to wheat.

GM Wheat?

Right now there is no GMO wheat on the market.  However, acceptance will be necessary the panel suggested.

"Most people don't know what GMO means; they don't know that GMO is a technique, a tool that can be used in the breeding toolbox," Lewis said.  "There is a lot of confusion on what GMO is, and it has been a slow process of education for the general public.  There is a perception issue."

The breeders agreed it is important to look into GMO and non-GMO solutions.  And if there is a non-GMO answer then that's the route to peruse because it's cheaper.  They also agreed research needs to be done on nitrogen use efficiency, heat tolerance and water use efficiency.

"We have a skeptical public, which is okay; but we also have a gullible public, which is discouraging," Perry said.  "They are willing to accept the popular view on something rather than scientific research.  So take every opportunity to educate the people around you."

GMO acceptance is more likely to come with food safety.

"It's an emotional issue to a lot of people, and an education issue," he said.  "We need to educate the people on what GMO traits can do and how we feed people correctly.  We can reduce the amount of pesticides; we can reduce the amount of nitrogen we put in the soil; we can reduce the amount of irrigation we have to apply to get those maximum yields."

In the end, the most important thing to the public will be the pocket book.  We need to make a loaf of bread cheaper and the production cheaper for the farmer.

"It's a real luxury here in the U.S. as long as our bellies are full and food is cheap, we can complain about having GMOs in our products," Perry said.  "But that is a real disservice to others in the world who don't have that luxury.  I don't know how we can get that across to our public; a lot of it is in their hands."

Pesticide Looneys and Conspiracy Theorist

Recently, Delta Farm Press wrote an article debunking many myths surrounding pesticides and GMO crops.  Of course they were ready for some responses from the community on this subject.  To see some of the responses click here.

Now think a little about what was said.  The only logical conclusion is that these people haven't done their research.  Instead of getting their facts and thinking about it logically, they responded with emotion.  Let's take a look at some of these responses and clear some things up.

One person wrote, "China, who purchases a large quantity of corn, has refused to purchase this year because of its GMO status.  Now farmers who have these crops are (affected) because they can't sell them.  The current battle now is should these seed companies be held liable because farmers can't sell them.  It all goes back to pesticides.  Research GMO and the companies that make them.  Your point of view is misinformed.  Do some research."

According to the USDA, which anyone can look up, overall US corn exports has increased by 300 million bushels since the beginning of the year.  And farmers don't trade their products with foreign nations.  Traders do that.

Then their's this.  "It would seem that ignoring the scientific evidence of the impact to humans from endocrine disrupting ag chemicals, that ignoring the scientific research showing the impact on humans from the cancers and immune diseases these and other ag chemicals cause and even ignoring the yield data, showing NO yield increases and in most cases LOWER yields from GMO crops you, the Penton Press Group continue to further the agenda of corporate chemical America.  It is sad ... and criminal.  But congratulations are in order:  you are now fully, legally, accomplices to their crime."

There is no evidence that if you use crop protection products properly that any of what this reader brings up would happen.  Also, to suggest standard practices in farming is somehow illegal is beyond the pale.

What would happen if we band GMO's and pesticides?  Sit back and think before reacting to that question.  Farmers work with a horribly tight deadline to feed the world.  To sustain humanity day upon day, year after year, decade after decade.  They have to deal with changing and unpredictable weather and now growing radicalism and regulation.

What would happen?  Millions would starve to death and global wars would break out.  What sounds more criminal to you?

The Return of El Nino?

As most of you know, predicting the weather is about like throwing a dart at a board.  No one knows for sure what's going to happen.  However, it's Spring!  And us in the agriculture industry can't help but watch the sky's and the evening weather forecast.

Farmers are making the preparations.  In some places the seeds are already down and in Southern Texas, the sorghum is already knee high is some places.

Generally the forecasts are calling for a continued drought in the West and Southwest.  However, the National Weather Service, independent weather forecasters and university weather scientists are hinting at a change.  What is that change?  El Nino!  This could be very welcome news for the Southwest including an increased chance of rain in the mountains.

 Right now the National Weather Climate Prediction Center is calling for a 50-50 chance of an El Nino this year.  An El Nino is a fluctuation in the water temperatures of the tropical Pacific Ocean.  An El Nino means warmer water and an La Nina means colder water.

What Does This Mean For Farmers?

It all depends on the location of your farm or ranch, influences from water temps, wind and an ever-shifting tropical jet stream.  If there is no El Nino the Southwest could be looking at something reminiscent of the dust bowl.  However, even if El Nino is late developing that could mean a wet snowy winter which would lead into a great 2015.  

The National Oceanic and Atmospheric Administration has been noticing some positive changes in the water temperatures in the Pacific.

Nothing is written in stone.  So like most folks I'm suspicious of long range weather forecasts.  But anytime there is a possibility to help us get out of this drought then I'm all for it.  Is El Nino returning?  I sure hope so.

Closing Grain Futures

Just real quick I thought you would be interested in the closing grain futures from March 17th, 2014.

• May corn closed at $4.79, down 7 cents
• May soybeans closed at $13.91 and 3/4, up 3 and 1/4 cents.
• May soybean meal closed at $446.60, up $2.60.
• May soybean oil closed at $41.89, down 40 points.
• May wheat closed at $6.74 and 1/2, down 12 and 3/4 cents.
• April crude oil closed at $98.08, down 81 cents.
• May cotton closed at $92.03, down 16 points.
• April gold closed at $1,372.90, down $6.10.
• Dow Jones Industrial Average: 16,247.22, up 181.55 points.

Climate Changes Impact on Agriculture

Irregardless of what's causing climate change it is in fact changing.  Those in the agriculture industry that don't adjust to this are bound to be left behind.  What are the major things in climate change taking place and what can you do about it?  According to agriculture.com, in a interview with climatologist Mark Seeley from the University of Minnesota here are a few things to look for.

General Temps Are Rising.

What does this mean?  

• Changes in depth and duration of soil and lake freeze
• More rapid breakdown in residue
• Later fall nitrogen applications
• Change in survival rates of pests, parasites, plant pathogens and soil microbes
• Change in plant hardiness zones
• Longer growing seasons

Higher Frequency of dewpoints of 70 degrees or Higher

• Seasonal dynamics of pathogens, parasites, insects and microorganism populations
• Increased workload in heat-related healthcare
• Increased stress on livestock

Changes in Precipitation Quantity and Character

• Mitigation of erosion
• Altered irrigation, tile damage, runoff, etc
• Impact on insurance
• Change in sewer runoff design
• Amplified flow means mitigation of flooding potential

What Can You Do?

First off don't ignore it.  Irregardless of what you believe is causing it, it is happening.  Climate change should be impacting what you're doing.  Don't get bogged down in worrying about what's happening globally.  Pay attention to what's happening in your area.  Take those changes into account and make the appropriate changes.

What did Seeley predict in this years planting season?  According to agriculture.com he's predicting a cool and wet season.  However, pay attention to your region.  Just because it's cool and wet in say Georgia, doesn't mean it won't be warm and dry in Wyoming.

For more information on Seeley's report click on the link below.

Climate & Weather Education

Fundamental Puzzle Pieces In The Market

What Are The Fundamental Players In The Commodity Market?

There are three things to think about when look at the commodity prices when it comes to farmland.  US supply, US demand and the US economy.

US Supply

This is production and potential production.  Both have an affect on the market.

US Demand

A good example of this is ethanol.  That has become a very popular source of fuel recently and has really driven then corn demand in this country.

US Economy

As long as the U.S. dollar is strong so will the marketplace for US crops abroad.

Corn is the Market Leader!

With the strong push for ethanol corn has exploded on the US market recently.  It should continue to do so for the foreseeable future.

Weather Will Always Trump!

With all these things that go into what affects commodities, nothing affects it more than the weather.  Keep an eye on the forecasts in the area of your farm.  If you truly want to know what the future of commodity prices are just look to the sky.

Piecing Together a Commodity Marketing Plan

What Affects The Market?

A handful of things really affect the commodity market.  

USDA Reports

USDA reports can really dictate what the next year or so could look like for the farming business.

Foreign Economies

For example, what happens in say Greece with all their economic woes can affect commodities we export out.  Also, China is a big exporter for us.  If that economy falls apart we would feel it as well.

Managed Commodity Funds

The market will react to these as well.  These are really where we see the numbers and how the prices in the market will be adjusted.

World Events

To really truly hurt the farming market a global event has to take place.  Such as an embargo or a third world war.  But little ones like economic woes of Europe can be felt here.

Weather

A few years ago we went through a pretty long drought.  It was actually getting scary.  But like most things the weather came back to the median.  However, that drought really affected prices.  Drove them through the roof.  So weather is something to keep an eye on when thinking about the market.

Farmland Pollution Problem in China

If you've been paying attention to news in farming recently you've heard about what's been going on in China.  According to the Huffington Post More than 8 million acres of Chinese farmland is now too polluted to farm.  

Recently there have been problems with tainted rice and crops in China.  The Chinese government tried to hide this but it was too obvious they had an issue.  

It's unclear how much farmland exactly is polluted.  The estimates vary from only 2% of the 337 million acres of farmland, which is what the government says, to as high as 60 million acres.  The truth is probably somewhere in the middle but the gap is massive so who knows what issues China is really facing.

What's caused this?  It's a number of things.  The growth of the Chinese industry, overuse of chemicals and little to no oversight on environmental issues.

To get more information on this click on the link below to go to the Huffington Post article on the issue.

Millions of Acres of Chinese Farmland Too Polluted To Grow Food

Should We Be Concerned About A Bubble?

What Causes Farmland To Drop In Value?

Farmland rarely drops in value.  It has, on average, gone up in value by 3% to 5% each year.  Recently it has jumped as high as 25% per year.  This has raised a fear of a bubble much like what happened to the housing market.  Will farmland continue to rise 25% per year in value?  No.  Odds are it will go back to normal rates and raise in value of 3% to 5%.  In the past 100 years farmland has dropped in value only three times.

First time was the great depression.  Everything fell then.  Nothing in this country was safe.

The second time was 1980.  It dropped five years straight.  The reason was farmland was driven mostly by debt.  Much like the recent housing market collapse was driven by debt.  Also. during that time we put a trade embargo on Russia.  Commodity prices dropped due to this.  So the combination of debt driven land and the Russian trade embargo led to this drop in value.

The third time was 2008.  That due to fear from what happened at the beginning of the recession.  That only lasted one year.  Since then value has skyrocketed because many investors looked to safer investments to the stock market.  So land was being bought cash and rarely bought with credit.  The charts below explains this well.

Let's compare farmland to another popular asset.  Let's take gold for example.  You hear about how gold is the way to invest.  One issue is, what is gold if everything does collapse?  Pretty much a paper weight.  Farmland is something useful.  Because, no matter what, we are always going to have to eat.  Since 1919, farmland has cost approximately 2.4 ounces of gold per acre.  This year, the ratio nationwide is 1.6 ounces per acre.  I'll leave you with a couple quotes that back up this claim.

"The time to worry is when debt financing on farming is growing more rapidly than prices, and we aren't there yet."  David Merkel.  The Economist.  April 10, 2011.

"Land Bubble?:  There is data circulating that "78% of Iowa farmland is now owned debt free."  The data is from "2012 Iowa Farmland Ownership Survey."  From my perspective this decreases the amount of land that will be sold in panic if crop prices drop or profitability tightens.  Further backing up my belief that we are not on the cusp of bursting the so called "Land Bubble."  Van Trump Report June 11, 2013.

"Unlike the last bust of the 1980's, farmers' debts are also low relative to their assets.  Fertile land is not a crowded trade.  Managers say they believe that less than 1% is held by institutional investors, with cash rich farmers bidding for the rest.  In some states such as Iowa, institutional ownership is banned."  The Financial Times May 2013.

How to Feed the World in 2050

So now we've establish that cropland prices are rising and will continue to rise.  The question you should be asking is why.  Why does it always rise and why did it suddenly spike recently?  The main reason it will always rise is no matter what happens in the world we will always need to eat.  It's a simple supply and demand aspect.  As populations continue to grow the need for food will increase.  With the increase in need of food the price in land that produces food will rise with it.  

The next question was what caused the spike recently.  That is simple.  China and Indian have become very modernized.  The average Chinese and Indians life has improved recently.  What is the number one thing people change when their financial life improves?  Food.  For example, think back to your college days.  What did you eat?  Whatever's cheapest right.  Now look at what you eat today.  You generally eat what you like and what tastes good.  That exact same thing is happening in China and India today.  No longer are they just eating basic things like rice.  Now they are eating beef and pork.

Now let's go back to the growing population.  The amount of people in the world has grown and will continue to grow.  However, the amount of land that can produce food will not grow and will stay the same.  As a matter of fact, only 14% of the worlds land is arable.

So the amount of arable land per person has dropped dramatically.  That's a scary and sobering picture.  The following chart displays the amount of available land per person from 1750 to 2050.  How are we to fix this problem?

China, which is the world's second biggest corn consumer after the United States, will use 47 times more corn now than it did 10 years ago.  That's an increase exceeding the entire corn crop of Brazil which is the worlds third largest producer.  According to Time Magazine, the average American consumes about 250 pounds of meat a year.  Meanwhile, the Chinese average roughly 100 pounds per year, while Indians eat only 10 pounds per year.

So how are we going to meet this demand?  We need to produce more food in the next 50 years than we did in the last 10,000 years.  By 2050 the worlds population will reach 9.1 billion people, 34 percent higher than today.  Nearly all of the population increases will take place in developing countries.  Income levels will be many multiples of what they are today.  In order to feed this larger, more urban and richer population, food production must increase by 70%.  Annual meat production must rise by 200 million tons to reach 470 million tons.

I hate to paint a stark picture but it is the truth.  The world is growing and the rate at which it is growing will only increase.  To meet the demand farm production must increase.  This creates the increase in prices of land.  Can it be done?  I think so.

How I Learned To Stop Trading And Love The Farm

How I Learned To Stop Trading And Love The Farm

I was thinking about discussing this video in depth.  It is a discussion by Stephen Diggle, founder of Vulpes Investment Management to the Global Aginvesting Conference in Singapore, China back in October 2012.  Then it crossed my mind to just show you the video.  This man is far smarter than I am and it makes for an easy post.  So sit down, enjoy and prepare to have your mind blown.

Farmland Vs. Other Asset Classes

You must be thinking, "Brad, this is all fine and dandy.  But why should I invest in farmland and not put my money in the stock market or other traditional areas."  I would say, good question.  You could do that.  You could do what everyone else is doing in investing.  You could go to the stock market and take a risk that it'll work.  You could go a safer route like large cap stocks, commercial real estate or bonds.  You could do that.  You would make money.  But what if I told you, long term, you're much more likely to see a greater return on cropland than you would on just about any other investing avenue.

Now you may say, "Brad.  I've heard you say the farmland always goes up in price.  How do you know that?  Nothing always goes up in price."  And I would say you are correct.  Cropland has dipped in price once.  But you need a bunch of things to go wrong at once.  And one of them has to be a global issue.  The only time we saw a drop in cropland real estate values was during the 80's.  Two things happened at the same time.  We went into a recession and we put a trade embargo against the Russians.  Why would an embargo against Russia drop prices?  They were our biggest grain exporter.  Once you take your biggest international customer of grains out of the picture, things drop drastically.

"Ok.  So land value almost rises.  But how do I achieve a good return on investment?  Isn't that the whole point of this blog?"  Yes it is.  And here's your answer.  Farmers are often romanticized in the media.  They are often portrayed as simple folk who work 24/7 and only worry about rain fall.  While some of that is true the simple folk thing is dead wrong.  Good farmers are some of the best business men out there.  They understand in today's world they can no longer go out and buy land to farm it on a daily basis.  They instead need to rely on investors renting the land to them.  So to make themselves appealing to investors they have to think like one.  They must make sure the rent on the land not only makes the farmer money but also gives the investor a reasonable return on their investment.  This is why cropland continues to be such a good investment option.  The next two charts will show you how investments in Illinois cropland stack up and the second one will show you how cash rent has risen over the years to make sure investors achieve that return.

Now to tie it all together nice and neat for you.  With the combination of the land value, investors need and cash rent availability, we come up with how you can achieve a return that makes you happy.  When these three things meld together we have a deal.  The final chart brings it all together for you and shows the average net returns in the Midwest over the past 60 years.

Wait! Just one more chart!  ...  Just kidding.

Mail Time!

From time to time I will answer some of the questions that you the readers will send my way.  I received a large inquiry recently and decided now is a good time to do it.

Carl in Omaha, Neb., asks: What type of opportunities exists when it comes to investing in cropland?

Brad: Many. There are different ways to improve return on investment (ROI). If it's just pure cropland you can share crop, cash rent or custom farm.  Different investors are comfortable with different options based on their knowledge of farming.  For example, a novice investor would probably start out with cash rent.  It's simple, the tenant farmer pays on lump sum and the investor knows what they're getting.  After awhile they may change it to share cropping which the investor would then be more involved in day to day operations.  They share the risk and income of the land.  Custom farming can be a varied option that I would only suggest to someone who knows exactly what they're doing and may even want to use a farm management company.  Other options could be to buy land with some timber and water on it to add hunting income off of it.  Or find land that has some conservation reserve program (CRP) as well.

Steve in Leawood, KS., asks: What's the process of identifying good investments?

Brad: I'll try answering that question without giving away all our secrets.  First we would identify what it is you're looking to do with the land.  Then we would scour our database and various websites to see what best fits.  The next step would be to have a local farmer that we trust give it his blessing and say he would like to farm.  The final step would be to match the price of the land with the estimated rental to achieve the highest ROI we can for you.  Now there's much more to it than that but that's the basic laymen terms to it.

Angela in Overland Park, KS., asks: How do you manage our risks?

Brad: This is simple.  We have many farmers that we work with in various areas of Kansas and Missouri that we trust.  They will tell us right off the bat whether the land we are thinking about is worth it or not.  Local farmers are the best way to find this out.  I can run my numbers and soil maps on land all day long and it my look great.  But a farmer is the most trusted way to finding good land.

Jenny in Des Moines, IA., asks: Isn't farmland heading for a bubble much like the housing market did?

Brad: No.  The reason I feel so comfortable about that is most cropland buyers aren't borrowing money to purchase the land.  They are cash buyers.  Often they are people who are fed up with the stock market and are looking to put their money into something that's more trust worthy.  Yes farmland has skyrocketed recently.  And eventually it will correct itself.  And what I mean by that is, instead of jumping up 20% in value it will drop back to increasing 3% to 5%.  Remember, land will almost always be worth more tomorrow than today.  It takes a global event to cause land values to drop.

Derek in Liberty, MO., asks: Are there any unique opportunities around the Kansas City area?

Brad: Yes.  I believe the sweet spot of cropland investing runs right along the Kansas Missouri border.  Is it the best pure cropland you can get?  No.  That's Iowa, Illinois and Indiana (the three I's).  However, if you are an investor, the best bang for your buck is the Kansas Missouri border.  Why?  The price isn't anywhere near the prices you'll see in the three I's.  So you can get more land for less and get a much higher ROI.

Danielle in Leeds, UK., asks: What's the best way to get started?

Brad: I had to answer an international question.  But it's a good one none the less Danielle.  The best way to get started is to contact us and set up an appointment.  Now with you we'll probably have to Skype or conference call but we will make it work.  This way we can find out what it is you're looking to achieve and try to find a deal that best suits your needs.  You can do that by calling us a 913-837-4665 or emailing us at info@ruralkc.com.

"Buy Land They Quit Making It!" ~ Mark Twain

A simple quote from one of my favorite authors.  A simple quote, yet one that speaks volumes.  On the surface it sounds funny and makes you laugh like many of his quotes and sayings.  However, once one thinks about it, it makes perfect sense.  

The question is, what makes something valuable?  Money is valuable.  But too much of it makes it worthless.  Gold is valuable.  But if things really go south it just becomes a paper weight.  Homes are valuable.  But eventually they suffer depreciation.  

Think about it like this.  As a young boy growing up just outside Detroit, MI, I love collecting baseball cards.  I even had a book that would tell me how much each card was worth.  I had varying degrees of cards worth varying degrees of money but never amounting to much.  One thing I did know, and anyone who collected baseball cards knows, the most valuable card was a Honus Wagner card.  

Why is his card so valuable?  After all, he was a good play but not great.  He was no Babe Ruth, Ty Cobb or Mickey Mantle.  What was it that made Honus Wagner's baseball card so valuable?  The scarcity of it. 

Which brings me back to Mark Twain's quote.  There is no new land being created.  Unless you're counting the south east coast of the Big Island of Hawaii.  But that land won't be useful in our life time and for many generations to come.  The fact that the land we have is the land we get is why prices for land will always go up.  Yes from time to time land will take a dip.  But it takes a major international event to make that happen.  I will go into more detail on that in a post later.  But to give you an idea of what I mean, land prices didn't go down during the Great Depression.  That's right.  It stayed the same but never dropped.

So when I hear someone say, "Land is going for more now than it ever did before!"  I'll say, yeah that's true.  And that saying will be true tomorrow because land will be going for more tomorrow than it did today.

To give you a good and final idea of what I'm getting at I'll leave you with a quote from Cropland Investment LLC.  "Like buying gold if it paid a dividend."

Who is This Guy?

Who should I use to help me find the perfect farm for me?  What return on investment can I expect?  Where are the best deals to find?  When is a good time to buy farm land?  Why should I buy farm land and not invest in the stock market?  How can I find a trust worthy farmer?

These are common questions we at Rural Kansas City get from new investors.  With this blog I hope to answer these questions and answer much more.  My name is Brad Gaughan senior partner of Rural Kansas City.  First off I know the most important question going on in your mind is, How the heck do you pronounce that boys last name?  Just to avoid future confusion my last name is pronounced like gone.  Think of it like the more common last name Vaughan.  Just substitute the G for the V and away you go.

 

Now that we have that out of the way, the next question would be, why should I listen to this guy.  For one I have lived all over the Midwest.  From Iowa, Nebraska, Michigan, Kansas to Missouri.  I have worked in the agriculture business for the last five years helping investors find farm land that will make a good return.  And, I’m just one heck of a guy.

The gist of this blog is to inform you of what’s going in today’s farming industry and investing.  I will cover what I think is important and you need to know.  I will do my best to explain things in the farming industry in laymen’s term.  Because, believe it or not, farming information and factors can sometimes sound like a different language.  And I invite you to email me any questions you might have.  And don’t be afraid to ask a silly question.  Odds are someone else sitting in same boat as you has the same questions.  My job here is to inform the uniformed and I truly believe there is no substitute for information.

 

So fire away with any questions and comments and lets have fun exploring different aspects of the farming industry.  And hopefully you come away with a better understanding and become a more informed investor of farming.