Predictions and Observations

[blackpowder]

Land sales here went up again this year. $1.2M/quarter regardless of sloughs. BUT. The % x fmv equation for rent no longer works. Finally.
Landlords will have to blink eventually.

[ajl]

Just read through the predictions and looks like the only one that came true was the one about grain prices this past year. (and the one about government hating western farmers but that has always been the case) The bank of canuckistan is very involved in propping up the failing regime so interest rates went down fast and so did the loon which is helping the land market stay supported for the time being. Cattle prices held and I think cattle will continue to do well, mainly due to feed prices coming down as I think cattle prices have topped, as long as the industry can derail Bovaer. (cattle anti fart potion) A neighbor to one of my rental parcels actually seeded >100 acres of new alfalfa this past year getting ahead of that curve as grain prices will remain in a slump. Will be interesting how long the younger farmers will continue in the face of no income this time around. Still some equity to burn. Fake it till you make it. Most people, myself included, would rather do time than serve a sentence in the canuckistanian job market.

[LEP]

Many, many moons ago I did my thesis in University on the relationship between land prices to grain prices.

80 years of data, I believe.

There was a 2 year lag in land prices from grain prices. That lag may stretch alittle longer because of the recent good years that strengthened balance sheets.

[blackpowder]

Curious if done today would the ratios be the same?
Assume inflation counted.
1971 $100. 1981 $1000. 1991 $500
2002 $1000. 2017 $4500. 2024 $7500. Our numbers here.
Rent another thing altogether.

71 1/3 gross. 81- 1/3 net or $35
2001 (1/3 fert chem only, out) or $50/acre
2017 1/4 gross or $75-90/ (one actually double the $ rent over the other)
2024 2.?% x fmv. $115-$160 cash.
(Ranges shown not related to each other for any given year. As if pulled from the air)
Last years %xfmv equation will definitely not be repeated for any new contracts in this area.
Guessing.....$160/ the new peak. Here.
How many years will the record hold?

[blackpowder]

So if the 50 yr rule applies.
$4000/ac by 2030-40

[farmaholic]

I've been wrong-wrong-wrong on the price level Sask farmland rose to, I don't think I'm going to try and guess when or how far it might fall.

Landholder's age and whether or not there are any farming children or non-farming "estate beneficiaries", all determine whether to cash out or hold it. If you don't want to pay capital gains taxes.... just bequeath/defer that burden to the next generation...lol.

Tax laws are tricky when the direct lineage back to the farming family get broken! DOYDD!