Monday, May 13, 2013

Farmland - is there value?

The farmland rental rate has slowed over the last 12 months with the decline corn prices. The rental rate is still moving upward but momentum is down so the frenzy of the last two years has fallen. This comes from an Iowa State survey which showed a 7% increase in the last year versus 18% in 2012 and 16% in 2011. 

Still there is talk of a farmland bubble 


Robert Shiller, professor at Yale, and the master of bubble research has also commented that farmland may be in or facing a price bubble. The supply is tight and low interest rates have allowed for more speculative behavior.  If there is a strong decline corn prices this year, we could see farmland price fall this year. This is an llliquid asset, so investors should be cautious about purchases at this time. Value could be limited.

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