CPP

[fjlip]

Till it goes higher...agree land is CHEAP compare to iron and inputs, not to mention transportation. Too much grain in the world, correction please.

[furrowtickler]

In time it will sort itself out, we are already seeing first hand "investment" groups getting their ass handed to them over the past two years.
Paying 3-4% of $150,000 is a far cry from 3-4% of $350,000 plus. Someone is going to get skinned, whether it be the farmer or "investor" sooner or later.
People have short memories - there was a lot of good land just a few years ago that could not get rented for tax's - I can see that coming again. You cant farm for free just to make others a good ROI. Your only fooling yourself if you think you can. If a farmers buys the dirt , there is only one hand in his pocket he may be able to make it work, but there is no room for two hands in the pocket for the returns needed to cover risks involved.
Yes land is "cheaper" in Sask than many other places but we carry the highest risks and are held ransom in transportation costs and timely movement being so far from ports/ markets - it's all relative.
Is land a good investment - ya , long term. The problem is that it went up too far too fast and the primary producers risk protection has stayed too flat, and current expectations for short term ROI are far too lofty.
I am not saying investors should not be able to buy land , I just think at the end of the day they will not get the ROI they dream of and will have a tough time finding renters and most will implode like Broadacre/One Earth.
I cant see land prices in Sask moving up much at all in the next ten years. There has been a steep run up in land prices and it will stay flat at best for a while now, JMO, shoot away.

[TOM4CWB]

Bucket,

In ALberta for sure... young guys have NEVER had an easier time getting financing to buy farm land.

In farm family operations... the transfer from generation to generation has never been easier.

We are very blessed to have interest under 3 percent on 5 year money, 4.75 on 20 years.

Half of what it was just a few years ago.

[furrowtickler]

Interest rates are in half but land has gone up 2-3 times - me thinks we are no better off just deeper in debt ..

[furrowtickler]

Oh and machinery has basically doubled in that time as well - but ya it "was" easy to get money at low int rates but I think that easy money from banks is about to cool off. I could be wrong.

[phoenix64]

Agree bucket, can't see this ending well. Seems that us fed is very likely to begin increasing interest rates 25 basis points per quarter starting in June. How does the land investor extract more rent from a tenant to match increasing rates in t-bills? Simple answer is they can't and will be forced to put the dirt on the market in the future, ah yes, history once again proves to repeat itself.

[iceman]

Justin bruch is now doing the land management for CPP. Are retirement is in good hands people! Lol.
The beginning of the end ghost riders!!

Out

[ajl]

There is a simple solution to this problem: stop printing money and allow interest rates to rise. Problem solved. Land is only a good investment during periods of loose monetary policy which has been the case for most of the last 40 yrs. The 1980's being the exception. The next decade or more of Japan style debt deflation will make land to be not as good of an investment as it has been. I saw a chart of Japanese commercial property in the Tokyo region and it has pretty much declined since 1990 (with a few blips along the way). Farmland will do the same under debt deflation.

[tmyrfield]

Young Guy wants to farm. Buys land now has to pay for it. Oh its capital, paid with after tax dollars. Self employed farmer gets to also contribute 9.9% to the VERY. SAME. CPP. THAT IS DIRECTLY COMPETING WITH HIM ON THAT LAND!