Farm News & Views - August 16, 2022
An ACCUweather forecast for this fall is predicting that for most of the country, temperatures will remain warmer than normal, except for a portion of the southwest that includes the Four Corners and areas north and south of the Region. But those cooler temperatures may be brought on by severe weather outbreaks that might leave some precipitation, but is unlikely to bring any significant drought relief to farmers and ranchers in the area.
The USDA reports the value of the nation’s cropland in 2022 is up an average of 14% over 2021. All of the Midwestern farm states registered from 11% to 24% farmland value increases, with pasture values averaging $1,650 per acre, an increase of $170 per acre or 11.5% more than in 2021. Overall farm real estate value, a measurement of the value of all land and buildings on farms, averaged $3,800 per acre for 2022, up $420 per acre or 12% from 2021. These increasing farmland values concerns Purdue University agricultural economists who warn that the rapid increase in farmland prices is potentially a signal that those values are entering a speculative bubble, which occurs when the price of an asset exceeds a value that can be justified by the returns that an asset can produce for owners. Economists see similarities in what’s happening today with the buildup to the 1980s land price crash, which brought on an agricultural debt crisis that lasted for 13 years. During the run up to the crisis, increasing land values encouraged lenders to loan farmers money to purchase more land and new farm machinery, even though interest rates were climbing and farm commodity prices were decreasing. The fallout from this bubble caused thousands of farm families to lose their homes and farm businesses, which in turn, ruined the economy of many small rural communities. By 1984, farm liquidation auctions were common occurrences in rural communities.
If we are now witnessing the development of a farmland price bubble, I wonder what part will non-farmer ownership of this land play if the bubble bursts as it did in the 1980s? According to the American Farmland trust, at least 40% of US. farmland is not owned by farmers, and there’s a gold rush mentality concerning investing in farmland by many investment firms like Acre Trader, Farmfolio and FarmFundr, that tout the promises of wealth that can be derived from farmland investments. There are also wealthy individuals, like Bill Gates, who owns 272,000 acres of farm ground, and is now the largest landowner in the country. Foreign investments in U.S. farmland is also increasing. From 2009-2019, the amount of farmland owned by non-U.S ownership increased by 60%, and in 2020 alone, over 2.4 million acres of land was bought by foreign investors.
On a brighter note, for gardeners, August in the Four Corners means ripe tomatoes. We often think that the best tomatoes are those that are ripened on the vine, but crop scientists suggest that we should harvest tomatoes just as they change color from green to red or orange and allow them to ripen in a shaded location with plenty of air circulation at around 70 F, which will maintain the flavor, quality and nutrition of our tomatoes, and we won’t have to compete with birds and other critters for them.
British Journalist Miles Kington wrote “Knowledge is knowing that a tomato is a fruit, wisdom is not putting it in a fruit salad.”