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  1. #1
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    Farm/Land Prices....

    So what's going on these days? New bubble forming? Just getting started?

    I heard the other day that a farm in IL recently was sold for >$11,000 an acre!

    Anyone buying/selling farms in Iowa have any market knowledge?



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    Re: Farm/Land Prices....

    Too ******* high.



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    Re: Farm/Land Prices....

    Just curious, where in Illinois?



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    Re: Farm/Land Prices....

    Market's high right now. Land in Clay County just went for 9600 yesterday. I don't know if it's a bubble. I think it is because of history but with the current demand on corn and the amount we're selling, I don't know how it ends. I think a lot of growers would agree with me when I say these levels aren't good for anyone. It costs a metric **** ton to put a crop in the ground anymore and with these prices landlords are wanting their cut (rightfully so). With this whole deal I think we will continue to consolidate at an even higher rate because those growers with more land can afford to pay the 300-400 dollar cash rent while the smaller guys cannot spread out that risk. IMO, it's not good for farming. Are the profits good right now? Yes, but we also have to realize that for a guy doing things the right way, it is probably costing greater than $600/acre to put a crop in. Crop insurance right now will cover and be more than sufficient in 2011 but if the bottom drops out there could be huge risk in 2012. I would like to rent a little land but right now it just isn't feasible. I hope we're not seeing anything like we did in the 80s.

    So, to answer your question, maybe it's a bubble. I don't know.


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    Re: Farm/Land Prices....

    That's way too much.

    But Iowa land was an average of $5064 an acre in 2010.

    With corn at $3.55 a bushel and yielding about 180 an acre...

    and beans at $9.20 a bushel and yielding about 52 an acre...


    That's a payback period of 8-11 years. I think the bubble is more in the grain prices than it is in the land. The land bubble could pop too, but it's going to be the fault of grain prices falling if they pop. Which will happen if we ever quit tax subsidizing ethanol to make it competitive with oil.


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    Re: Farm/Land Prices....

    Quote Originally Posted by vmbplayer View Post
    That's way too much.

    But Iowa land was an average of $5064 an acre in 2010.

    With corn at $3.55 a bushel and yielding about 180 an acre...

    and beans at $9.20 a bushel and yielding about 52 an acre...


    That's a payback period of 8-11 years. I think the bubble is more in the grain prices than it is in the land. The land bubble could pop too, but it's going to be the fault of grain prices falling if they pop. Which will happen if we ever quit tax subsidizing ethanol to make it competitive with oil.
    Indeed. The farmers have cash, not getting leveraged like they did in the 80s.



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    Re: Farm/Land Prices....

    It's interesting for sure. Cash rent is crazy and it's hard to understand how anyone can pay the rent that landowners are demanding.



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    Re: Farm/Land Prices....

    How much are you guys seeing for rent/acre and what part of the state are you in?


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    Re: Farm/Land Prices....

    Our renter came over and offered to pay an additional $30 an acre and this was after she raised the rent $20. Southwest Iowa land on terraced ground getting $150/acre



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    Re: Farm/Land Prices....

    Quote Originally Posted by vmbplayer View Post
    That's way too much.

    But Iowa land was an average of $5064 an acre in 2010.

    With corn at $3.55 a bushel and yielding about 180 an acre...

    and beans at $9.20 a bushel and yielding about 52 an acre...


    That's a payback period of 8-11 years. I think the bubble is more in the grain prices than it is in the land. The land bubble could pop too, but it's going to be the fault of grain prices falling if they pop. Which will happen if we ever quit tax subsidizing ethanol to make it competitive with oil.
    Thats an 8-11 year payback with ZERO expenses. You think farming is free? An 8-11 year payback in a normal industry is terrible. Add in some of these are investor purchases that are expecting $300 cash rents (30 year payback). I realize most of these are factoring in inflation in land prices but this is a huge bubble in my opinion.

    All we need to pop it is high inflation rates or a new gas product that would rid the effects of ethanol.



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    Re: Farm/Land Prices....

    If you have the money it is not too much. Where it ends who knows. The guys that are buying land thinks it is going to keep going up. Guys that are not hope it falls. A lot of farm sales this winter. Lots of new iron setting around as well.


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    Re: Farm/Land Prices....

    Quote Originally Posted by cycloner29 View Post
    Our renter came over and offered to pay an additional $30 an acre and this was after she raised the rent $20. Southwest Iowa land on terraced ground getting $150/acre
    You should be getting $50 more an acre. But glad you are good to your renter and not jacking them around.


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    Re: Farm/Land Prices....

    Quote Originally Posted by LutherBlue View Post
    Indeed. The farmers have cash, not getting leveraged like they did in the 80s.
    Most yes, but not all. If you farm 4000 acres and you go all corn you are looking at somewhere in the 2.4 million range to put your crop in. That's a lot of cash. Not all of those guys have that. Also, there's a lot of people, I think, with a low amount of equity relative to what they need for capital each and every year.

    Quote Originally Posted by vmbplayer View Post
    That's way too much.

    But Iowa land was an average of $5064 an acre in 2010.

    With corn at $3.55 a bushel and yielding about 180 an acre...

    and beans at $9.20 a bushel and yielding about 52 an acre...


    That's a payback period of 8-11 years. I think the bubble is more in the grain prices than it is in the land. The land bubble could pop too, but it's going to be the fault of grain prices falling if they pop. Which will happen if we ever quit tax subsidizing ethanol to make it competitive with oil.
    Right. I agree but you also have to realize these ethanol plants bought a lot of corn this year for $4.00 which is still economical relative to oil.

    Quote Originally Posted by vmbplayer View Post
    How much are you guys seeing for rent/acre and what part of the state are you in?
    Anywhere from probably 180-400. I would guess average is around 200 but I don't know for sure. Emmet County. I can't imagine what Sioux County is doing.


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    Re: Farm/Land Prices....

    Quote Originally Posted by kingcy View Post
    You should be getting $50 more an acre. But glad you are good to your renter and not jacking them around.
    Relative to the market? Maybe, maybe not. There's some pretty marginal land in Southwest Iowa.


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    Re: Farm/Land Prices....

    [QUOTE=vmbplayer;2199879]How much are you guys seeing for rent/acre and what part of the state are you in?

    Farm land is getting high but some people need to do something with their money. Today you can sell next year crop for around $5.30 per bushel. I have had an average of around 250 bushel per acre except last year. It cost around $500.00 an acre to put it in with out your machinery. There is a profit. I have around 3500 acres that my wifes nephew farms and we crop share. I retired when I was 57 so it gives me something to do. There is a profit and pretty good now. A few week ago I had two friends each sell 150,000 bushel of corn and each got a check for $1,035,000.00 and some change. You can see why land is so high.



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