Land prices

[mbratrud]

Just like the futures Markets, Land needs to have outside investment to help determine fair market value and add depth to the market. How does it help any farmer to have their main asset severely devalued when times get tough? The deeper and more steady our land market is the more confidence and stability that asset becomes IMHO.

I like the Pickup analogy. Same could be said about combines and drills.

It's discouraging to try and buy land in this environment, but why should anyone think it's not fair, I have trouble with that and anyone that thinks rules should be tinkered with. Reminds me of the School yard game, and little Johnny always wants to change the rules when he's not winning.

Certainty is critical to the long term success of any business, right now land is the most stable asset on the farm. I personally I think it is a good thing if it is slightly detached from the ups and downs of the rest of the farm.

[farmaholic]

How does separating farmland prices from the economics of what its used for, making a living/growing crops, do grain producers any good.

Go to town and buy a business that costs more to operate than it can generate in income, let alone pay for itself. I don't get it??

It's the depths of some of the "investors" pockets that are shewing the values. Opportunity came a while back and some saw it when Sask's land ownership rules were relaxed. Then some were lucky enough to grow successive good crops with some good prices.

I don't want to see my equity shrink either but I think there is a reality check in store. If there is a correction, how much and how long before it reaches or goes beyond the current values again? Remember the early Eighties and how long it took to regain the lost value? Over 20 years? Will it be different this time(if there's a correction) because of relaxed land ownership rules and the economics of growing grain won't apply? Only time will reveal the future, the rest is speculation.

[mbratrud]

Obviously no matter what rules are in place land values will be determined by return on investment. The broader spectrum of land owners I believe reduces the volatility. I look at what land prices have done in the last 7 years as a catch up from the previous 20 especially in Sask. Over shoots in some areas for sure but I think it will sort itself out. As for comparisons to the eighties who knows? Time will tell. It's just very frustrating when people want government policy to push the market in their favour. In total disregard to those who have taken risks when they didn't.

[jake550]

Same reasons that land has been priced lower than other parts of North America haven't changed. And now with lower grain prices again and if they stay low it could cause some major problems for many.

[Hopalong]

Would think some will remember Sask Land Bank and efforts to to get new farmers going with limited equity. Not a roaring success.
Sask govt might think twice about getting too involved with land ownership regulation.
Agree with those who say likely or best to leave things as is.

[jake550]

Absolutely agree that the land should be owned by the families farming it. However I don't think they should ever be forced to dip into that equity to buy fertilizer, seed, chemical and equipment or to purchase more land. If land can't pay for itself on its own it's overpriced. But $400,000 for most new pieces of equipment makes even less sense.

[farmaholic]

mbratrud, I agree with everything in your last post. Especially the catch up for Sask land prices. Where I farm, land still "sounds" cheap in comparison to some other areas that don't seem to have any better quality land than here. I was lucky enough to have all my land purchased over 10 years ago. So I got the net worth bump without doing anything other than buying early. Now I just need to get my head around the new reality of paying 3 to 4 times more than I paid for any previous purchased land. Right now I'm enjoying watching from the side lines and may look at playing if things correct a bit. If things continue to escalate I guess I was wrong and am further behind. Anyone's "guess" is as good as mine....

[bucket]

Farmaholic - questions?

With the returns on your land appreciating would it not make sense to look at taking some profit?

When I was younger, had I bought all the land available then and overpaid by 10 percent I would have no problem selling or renting it at high prices.

No longer looking for more work for less pay.

[phoenix64]

No risk!! pumped every nickel of oilfield money over 30 years into buying land and equipment! Never had to compete against anyone else but other farmers, like I said before producers will bid up land just as high as other investors.. No problem there, though it may take more than one farmer to buy out the neighbor at today's prices. For myself I'm good purchased 3400ac of land before things got crazy and renting more from a neighbor and friend, what concerns me is the viability of smaller communities with rec facilities, schools etc, if the trend to absentee land owners and large farms renting 100 000ac or more sweeping through an area? who is this good for?

[farmaholic]

bucket, I understand your sentiment. We don't farm a pile, 16 quarters, all ours. If I didn't have someone else to pass the "burden"(lol) to(kid) I would maybe consider your advice.

Another thought, if everyone else, who isn't farming and trying to make a living on it, thinks its a good investment why isn't it for me too?

Ever compare renting versus purchasing? Everyone's numbers are different depending on how much you paid for the land, how much you put down on it, and what land in the area is renting for. I know a guy who bought land(before the run up) and is renting it out, his tenant is paying for his land, smart on the purchaser's part and ouch on the tenant's part.

[farmaholic]

Bucket, in this economic climate, I don't know if there are alot better places to have money invested. Cash out and invest where? Cotton?

[MBgrower]

I cant believe any farmer on here who owns land is complaining about the price of land going up. The value of your farms have gone up by millions of dollars in the last several years. I for one would love to see $10,000 per acre in my area. Afterall the end game is to build wealth, not buying depreciable assets and farming more and more land at break even costs.