Farmland headed for a bubble?

[JDgator]

I've read several stories about how farmland prices in the midwest are rising out of proportion due to low interest rates and high commodity prices. Wall Street Journal had a piece about it, considering the possibility of a bubble. Farm Industry News says prices for good farmland in Iowa rose 20% last year, and 18% for Illinois.

This wasn't on my radar until maybe a few days ago. Is Mississippi headed for a farmland price bubble? Have our farmland prices risen by double digit percentages? I didn't think things had heated up as much down our way...

[Wingman]

I know that fishponds were going for 900-1000 per acre until the CP-40 program kicked in and now they are going for 1200-1500.

I remember when soybean rent was maybe $50/acre. I heard a buddy of mine say an investment group that had just bought and leveled 1000 acres of ponds near my house offered him the farm lease on them for $175/acre. He declined.

[Jeff]

We just had a farm sell next to my in laws in IL for 9,300/ acre on an 800 acre farm. It was the largest farm purchase ever recorded in a 20 county area. It was purchased by a large farming corp. No WAY they can make that work. There is no doubt there is a farming bubble.

[BR549]

I can show you some cotton land in Sharkey Co going for over 350 an acre rent right now!

[Micah]

What happens when they pull those direct payment subsidies that pay the biggest portion of agriculture rent? Seems to me that government money is the biggest driver in ag land values in the delta. The Obamacrats aren't going to be fighting to keep subsidies in the budget like the democrats of the past, and republicans aren't likely to support them either.

[WilM88]

9,300 an acre? holy... that's insane

[greenheadgrimreaper]

[flyntwt]

Sure, why not?.... Subsidies, speculation, and Popularity can be a toxic mix. When non-farmer types are leveraging a bull only wins scenario, things can blow up quick.

On a side note I think gold has hit a bubble- saw some moron playing drums and singing outside one of those "we buy your gold" shops trying to get people in the door.

(that was seriously not advice. Please don't buy or sell on that last statement- just a little cya for the man looking over my shoulder.)

[JDgator]

[donia]

lots of "investment" acreage in the Delta now. i was asking dad about prices the other day and he was saying the same you are on cotton rent, br549...gotta be a stout farmer to make that payoff year in and year out. 8-10yrs ago non landformed cotton land around our house was going for about 1240/ac...now dad says it is going for 2500-3500/ac due to investment groups buying up all they can get.

[Wingman]

[Jelly]

I've been told that hedgefund companies are buying up the good farm land in the delta.

[dukmisr2005]

some of the investment groups in the delta see our "black" land as the same "black: land in the midwest, and as we know its not. when we busting our butts off to make ends meet on this ground and some one comes in and offers twice what your neighbor will pay, why should you be the fool and turn it down?? i know some large farms today that were purchased in the 60's and 70's this same way. as the buying groups disbanded or whatever, they bought out little shares of the land in smaller chunks, and now have 5,000+ acres with no lein against it.

also the Good Lord above aint makin' no more any time soon.

[torch]

If commodity prices fall you will see a major correction in land prices. A 1400 acre farm close to me sold for 3700.00 an acre. It was purchased by an investment firm. These guys can't make it in CD's and the Stock Market but they can see at leasr an 8% return on the money through land purchase.


This is what happened in the early 80"s we had a correction then intrest rates went to 21%.

[Jeff]

Up by my in laws it's all big companies i.e. hedgefund types out of Chicago buying it up. There is no way anyone can make a living on land that high. Going rate up there for top notch best you could get MS river bottom farm land was about 3,500-4,000/ acre.