Travel has taken me to the four corners of the U.S. and Canada recently. In this whirlwind tour, the following are some of my observations of agriculture and the economy.
- Land values of $10,000/acre by 2010 in Iowa are the talk amongst coffee shops because of demand for crops for energy. I heard this same comment in 1977-78 fresh out of graduate school that land values would be $10,000 an acre by 1985 because of global markets. There tends to be froth and exuberance in wealth creation based upon paper values in many sections of the country. This may not be economically sustainable in the long run.
- The housing market has many faces. Participants in my lending seminars agree more homes are on the market. Some areas are observing reduced price signs with no movement of homes. Some are now noticing a 5-10% discount in value or incentives such as BMW’s or big screen TVs if the sale takes place. Others are observing price increases but at a slower rate.
- Producers are harvesting their last crop in many areas with urban sprawl. This “last harvest” is a harvest of land for homes and development. Land with no improvements is still selling steadily in many areas of North America.
- Some lenders in remote rural areas are having difficulty recruiting and retaining ag lenders. Some producers are noticing the same trend regarding labor. When you hire an individual, you directly or indirectly hire the spouse. Retention of workers has much to do with their spouses.
- Surprising amounts of people are moving from Florida and California to Oklahoma and Texas and buying rural homes and farm ground. They are cashing in on appreciated wealth and moving to lower cost of living areas.
Half of the ag lenders in our schools are using cell phones rather than calculators to do math calculations. We have come a long ways in a decade, or have we? People in my generation could do the calculations in our heads.
Editor’s note: Dave Kohl, The Corn And Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.