Farmland Barometer - January 2013

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Heartland Outlook

Agriculture is experiencing incredible forces from every angle - - and they are global as well. At Heartland Ag Group Ltd., we are optimistic about our future and are watching the following key areas:

Commodity Prices
We are using $5.75 corn and $12.50 soybeans as a focal point for our 2013 income projections. We will have volatile trading ranges.

Bushels Per Acre
Expect positive yield increases when weather conditions return to normal cycles.

Interest Rates
Are at historic lows - - attractive for farmland mortgages. Farmland returns are attractive to alternate investments. However - - interest rates will rise to combat inflation in future years.

National Politics
A presidential election year has passed - - we survived! The deficit spending and Federal Reserve monetary policy will be very inflationary long term.

World Population
There are a lot of mouths to feed. The growth trend is slowing but global numbers will pass the 9 billion people mark by 2050 (up from 6 billion today).

Weather Trends
Weather has become crucial as we have minimal global stocks of grain available to all of us. Have we left the good weather behind?

United States Economy
This big guy could either help us - - or take us down! Our national lack of finan- cial discipline has been alarming - - it’s threatening.

Sovereign Debt Crisis
Apparently everyone on the planet is spending more than they are taking in. How do you stop this nonsense?

U.S. Tax Policy
There will be a giant sucking sound from Washington to fill our deficits. Income, capital gains, and estate taxes will be threatening.

Farmland is a wonderful hedge against inflation and perhaps our rapid rise is signaling inflation coming. Lots of stimulus money in the system is ultimately very inflationary.

Investor Demand
Agriculture is experiencing an acceleration of money moving from soft assets (financial investments) to hard assets (farm real estate). That will become global in scope. Farmland is the new world currency!

Net Farm Income
We see a solid future for net profits from farmland that will drive farmland values upward into the future.