A Mystery to Me

[Hamloc]

A real surprise to me this winter is the rise in land rent in my area. A couple years ago guys fighting over land were at 80-85 dollars an acre. This year after our shitty fall and less than stellar crop prices I thought the price would go down. Man was I wrong. More than one deal inked at 90 from what I am hearing. Now related to that trying to figure out what to grow. My 2 most profitable crops this year were canola and peas. I have grown malt barley for 5 years. First year it worked out great since then Mother Nature has been kicking my ass on malt. Wheat, grew CPS, it was a decent crop but the price hasn't been great and looks like the world is awash in wheat. So am I missing a something? What are your crop suggestions and where is the justification for rent going up and up?

[SASKFARMER3]

I will go back to the theory to study history.

In the early 80s land went nuts in our area from low in early 70s of 10 to 25 a quarter to 80s at 160 and beyond. Then the interest rate crash and Americans and Europe went full bore into subsidies and we lost a hell of a lot of great good farmers. Land rent etc dropped to 35 to 55 to 75 a quarter and held their for almost 15 years or more. Then the new Canadians dumping money into Canada buying property. Americans experienced it a few years earlier but we got going quick. Then Pension plans bought and that was where it peaked. Now farmers trying to compete with Canada Pension and Chinese.
So the USA land has dropped and rent has dropped but in Canada its going higher. Old theory were two years behind and crash will come. Or study history and lots will change in next two to five years. If soy goes to 7 like they say thats 9 canola. Wheat at 4 yea things could turn out bad. Interest rate increase and wow most are sunk.

[farmaholic]

Land prices are getting out of hand here as far as I'm concerned. Not driven by the average farmer either...speculators and people looking for a "safe" place to park money. To me it feels like the beginning of the eighties again except this time on steroids....

A nearly impossible scenario for young unbacked farmers to enter....

Cheaper to "rent if you want to farm".....

[fjlip]

30% will soon retire, certainly great for some of us.

[wmoebis]

Land prices are getting out of hand here as far as I'm concerned. Not driven by the average farmer either...speculators and people looking for a "safe" place to park money. To me it feels like the beginning of the eighties again except this time on steroids....

A nearly impossible scenario for young unbacked farmers to enter....

Cheaper to "rent if you want to farm".....

At equipment/input costs and grain prices how many young unbacked guys could/would start even if land rent and prices dropped? Would bet that it would be the biggesy guys that would be picking it up.

[SASKFARMER3]

Time will tell on Rent I for one am not going to pay 80 to 100 for Redlands to Ontario Teachers Pension Fund.
F$%K them.
One guy did do a deal on extreme south land and paid lots for long term lease.
Yes retirement is looking better each day if Im wrong and this continues.

But again watch history it always repeats and some of the Dads of young Bucks weren't farming when the last implosion happened and then throw in a good old fashion drought for alberta and west sask and south and lets see how the big boys do. Its easy to farm in perfect growing conditions and Miracles of November but really was it just a lucky break.

Time will tell on this file.

[hobbyfrmr]

Recent cash rent auction "good" land rented for $149.00/acre top price. The entire farm averaged $128.00/acre, the lowest price was $90.00/acre on a smaller less desireable quarter.
This is good for land owners. You want the value to go up. Compare your owned land to a stocks portfolio /retirement mechanism. I have never heard a person say "I wish my retirement nest egg would collapse/implode" .
You also have to realize the big farmig buyers are working towards a retirement. These guys are more sophisticated than just crop growers. They use managenemt time looking for land investors, and resale opportunities. There is a lot of consecutive canola rotations. They have far more wealth than we assume.

[farmaholic]

I sure enjoyed the recent appreciation in land values yet doubt I will ever be able to fully realize the benefit.....have to hand it over on a silver platter and lay gold bricks for everyone else to walk on....>:-(

But I do see it as a huge barrier for the "average" farmer.

[ajl]

Q: Why do farmers farm? A: Nothing else to do. I think this is just a symptom that we are in uncharted territory in AB where there is little to no other opportunity elsewhere for the first time in history so people are prepared to farm for free rather than be on the unemployment list. Lots of oil workers back on the farm these days. Mind you without seeing the deals it is hard to know what is all in them and land values are steady in Canuckistan because everyone expects an interest rate cut any time now.

[sofa king]

I fear a crash is coming hope Im wrong though but i think it may be much worse than the eighties. the problems in my opinion started when leasing new equip became the way to go because guys that cant afford new lease it. with this mindset the manufacturers can charge the max amount the market will bear and it makes it real tough for the guys who want to buy and own equip. back in the eighties i bought a new spra coupe for less than 20000 now i see jd has a sale on for 550000 you can have a new high clearance sprayer. I know that old coupe wasnt as nice to drive as my high clearance but it was simple and trouble free and I know where that coupe is today and it is still going strong. If the ag economy does go to shit i know of some who cant even change oil on their equip it will be interesting to see if they can learn to fix a few things on their own. I hate to say this but i think the way to fix the economy is to have a 4 or 5 percent jump in interest rates, there will be pain but left unchecked we will go the way of the u.s. housing boom. easy money and low interest rates seem to be a symptom of the entitled generation who deserve everything for nothing . its like that old song (money for nothing and the chics for free)

[hobbyfrmr]

I fear a crash is coming hope Im wrong though but i think it may be much worse than the eighties. the problems in my opinion started when leasing new equip became the way to go because guys that cant afford new lease it. with this mindset the manufacturers can charge the max amount the market will bear and it makes it real tough for the guys who want to buy and own equip. back in the eighties i bought a new spra coupe for less than 20000 now i see jd has a sale on for 550000 you can have a new high clearance sprayer. I know that old coupe wasnt as nice to drive as my high clearance but it was simple and trouble free and I know where that coupe is today and it is still going strong. If the ag economy does go to shit i know of some who cant even change oil on their equip it will be interesting to see if they can learn to fix a few things on their own. I hate to say this but i think the way to fix the economy is to have a 4 or 5 percent jump in interest rates, there will be pain but left unchecked we will go the way of the u.s. housing boom. easy money and low interest rates seem to be a symptom of the entitled generation who deserve everything for nothing . its like that old song (money for nothing and the chics for free)

I dont see the farmer buyers as getting the properties for nothing. They are paying the market for land and to rent land. I agree interest rates are low and that may change. This could create some discomfort in the future but we cannot predict the future.
New Machinery costs are stupid, but on some farms they are a necessary evil. Why does a person own a depreciating asset when the can concentrate more money towards owing the land which should (in theory) appreciate. It really boils down to the old saying "to each their own".

[sofa king]

i agree hobby nobody is buying land for nothing but owning it is a very good investment. The point i was trying to make is that most people (not just farmers) see something and want it so they finance it nobody saves any more. I know guys that look like they are wealthy by their stuff but they finance everything from campers snoemobiles atvs boats and even big screen tvs. Too many people like this and if they miss one paycheck they are in trouble.

[chuckChuck]

If you are worried about bird losses better add windows, power lines, highways, cats, pesticides, and loss of habitat to the list of dangerous things for birds. Windmills will be far down the list of problems.

[blackpowder]

Go ask the people of Germany how they feel about turbines now.