Farm Prices Headed North

What prompted my previous essay on the vicious circle that has been started was this story:

Farmland prices continue to jump

The latest results mirror a trend noted by the U.S. Department of Agriculture in an earlier report. USDA officials found that the average value of an acre of Wisconsin farmland, about $2,250 in 2002, had jumped to $3,366 in 2006, the last year for which data is available. That’s a nearly 50 percent increase.

The appreciation was even more marked in the southwest corner of the state, where prices have increased fourfold in the last five years.

Prices are “going through the roof,” said Ed Kraisinger, a real estate agent who markets farmland in Grant, Iowa, Lafayette and Sauk counties. An acre there that might have sold for about $1,500 five years ago is now worth as much as $6,000, he said.

That’s great for farmers who owned land five years ago. A lot of millionaires have been created in Iowa (at least on paper). If only the government would now mandate that all of our incomes increase by fourfold, perhaps we could afford to buy some farmland.

Not surprisingly, a spokesman for the Farm Bureau doesn’t see any connection between any of this and ethanol mandates:

The trend is driven in part by record prices for commodities such as corn and soybeans, according to Paul Zimmerman, a spokesman for the Wisconsin Farm Bureau. Other factors include increased demand for land from people looking to build rural homes, as well as the need among dairy farmers for more land to comply with new state regulations limiting the amount of manure that can be spread over an area.

Ethanol, a biofuel made from corn, doesn’t seem to be a major factor in the increase of farmland values, Zimmerman said, because the demand for ethanol accounts for only a small portion of the price of a bushel of corn.

Keep telling yourself that, Mr. Zimmerman – that the trend is being driven by record corn and soybean prices, but that has little to do with ethanol mandates. As I said in the earlier essay, what we have done is put policies in place that have rewarded a select few – disproportionately in Iowa – while bringing consequences down upon us all.

Why don’t we create more wealth by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? Wouldn’t that create wealth? Wouldn’t that create jobs? I am sure we can count on fans of ethanol mandates to support computer mandates. Heck, maybe we can make everyone wealthy with enough mandates.

12 thoughts on “Farm Prices Headed North”

  1. It probably has been 7 generations since anyone in my family farmed, but I gotta say, maybe farmers deserve some good times.
    Corn prices, until the recent run-up, were lower than they were in the 1980s. I asked one ag. economist (before the run-up) how many acres a corn farmer needed. He said 2000 acres. You net about $25 an acre. Now, they make $250 an acre, and so every year is a bonanza.
    But, I have no antipathy to farmers, or any productive people, at oil companies or car makers. People working are never the bad guys. I wish my liberal and conservative friends would remember that.
    The bad guys in the current scenario are the Thug Oil States, who are inflicting lower GDP on the world, hurting most Third World nations.
    Through thuggery and connivance, they are driving up oil prices, now aided by speculative actions of hedge and sovereign wealth funds.
    These high prices will hold for a while. But only for a while.

  2. I do notice that prices of anything not nailed down has skyrocketed.

    Why wouldn’t farm prices go up too?

    I submit the cost over runs on the War on some Terrorists as recently discovered by retired World Bank economist Joseph Stiglitz says costs are 3 trillion dollars, not 500 billion.

    Look at copper, moly, wheat, and other commodities one will notice prices are shooting up.

    It’s the currency! Our money supply is being inflated at never before seen rates of increase.

  3. IMO the environmental issues that scaling up Solar PV manufacturing that are starting in China are much more important than discussing the price of farmland again today.

    I wrote this essay on what is happening as Solar PV scales this morning.

  4. Alt Energy development could be benefiting from too much money, looking for a home.

    I might even think in that domain, as long as it isn’t my money, that bubbles are good.

    I mean, the fuel cell losers lost, but they at least tested the idea to the limit of current technology.

  5. i just want to say, this site is prob the best energy blog site i’ve seen. the articles are superb. so is the discussion. it beats the oildrum by a lot.

  6. Seen this? Pollution Is Called a Byproduct of a ‘Clean’ Fuel Seems like the biofuel industry insists on shooting itself in the foot.

    The money quote: “You can eat the stuff, after all,” Mr. Hollebone said. “But as with most organic materials, oil and glycerin deplete the oxygen content of water very quickly, and that will suffocate fish and other organisms. And for birds, a vegetable oil spill is just as deadly as a crude oil spill.” OUCH!

    Or how about this: “They’re environmental Jimmy Swaggarts, in my opinion,” said Representative Brian P. Bilbray, Republican of California, who spoke out against the $18 billion energy package recently passed by Congress that provides tax credits for biofuels. “What is being sold as green fuel just doesn’t pencil out.”
    A few fly-by-night operators, combined with dumb food->fuel policies and the future good get ugly quickly. Unfortunately that would include the few deserving biofuel cases…

  7. M3? That disappeared long ago. Can’t have anyone figuring out what is going on, can we?

    Too bad the biodiesel plant operators are such pigs. Glycerin can be fed into a biodigester, same as manure from a feedlot next to an Ethanol Distillery. It should not go to waste.

    I feel it is better to convert all the manure one can into methane and burn it, than let the methane form and gas off naturally into the atmosphere, since methane is far more GW than CO2. if it even matters.

  8. They stopped counting M3 years ago, the question is (without going all tinfoil on why they stopped counting it) is how important it is to modern inflation.

    Inflation has seemed asymmetrical to me in the last few years. I called housing an asymmetrical inflation, but then it was found to be a bubble.

    Maybe commodities are inflating, or maybe they are bubbles …

    but it seems the quantity of M3 money is expanding rapidly, and that might have something to do with it.

  9. “The trend is driven in part by record prices for commodities such as corn and soybeans, according to Paul Zimmerman, a spokesman for the Wisconsin Farm Bureau. Other factors include increased demand for land from people looking to build rural homes, as well as the need among dairy farmers for more land to comply with new state regulations limiting the amount of manure that can be spread over an area.”

    I would like to see an analysis that shows how increased need for land to spread manure increases the price of land. I cannot figure this one out.

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