Farmland Barometer - July 2011

Farmland Barometer Home » Farmland Barometer July 2011 » Summary


Agriculture is experiencing incredible forces from every angle. At Heartland Ag Group Ltd. we are watching the following key areas:

  • Commodity Prices - We are using $6.00 corn and $12.00 soybeans as a focal point for our 2011 income projections. We will have volatile trading ranges.
  • 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 is coming up - - be careful. The stimulus package, 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).
  • 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 D.C. as politicians search for money to fill deficits. Income, capital gains, and estate taxes will be threatening.
  • Ethanol - Our Wall Street darling status has turned to political pigs at the trough. The boom might be over.
  • Inflation - Farmland is a wonderful hedge against inflation and perhaps our rapid rise is signaling inflation coming. China has raised interest rates five times this year to offset inflation.
  • 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.
  • Net Farm Income - We see a solid future for net profits from farmland that will drive farmland values upward into the future.