Is Crop Ground the Next Shoe to Fall?

That is actually a topic that I have been wondering about lately (especially sense I purchased land towards the top ... although ours isn't good row crop ground). Yesterday I was checking out Allan Nation's blog and ran across his thoughts on the farmland price run up and the possible run down. Take the link above and scroll down to the post titled, "Is Farmland the Next Asset to Collapse?" from October, 13th.

Basically Mr. Nation writes that the cash rent will actually be the first to go because of the falling grain prices (he mentions $3.50 and $8.00 for corn and beans respectively at the moment, which is about or slightly less than the farmers would get for selling right now). If those lower prices hold (really no telling what it will do, but if the markets stay down than they might also) then it is going to make it a little difficult at times to pay the current cash rent prices with the income you make from an acre of corn/beans.

Mr. Nation theorizes that then we could see a drop in land prices in around 2010 or 2011... I'm not sure where I land on all of this, but I know that I have talked with quite a few people about it from time to time trying to get a handle on the subject. On one hand many of the farmers that I talk with don't think there will be quite the bubble burst as there was in the 80's farm crisis because there is a bit more capital behind some of the purchases today. But, on the other hand there is beginning to be a sense that $8,000 an acre and up for crop land might be a little too high in the long run.

I know what I would like to see happen ... I wouldn't mind seeing things just kind of hold steady and then bottom out in about ten years. That would give us some time to gain a little equity and savings and then swipe up a little more land when the price is right! But, I'm not holding my breath on that one :)

Offer Made ... Offer Accepted!

Well, this is pretty big news for us ... This past Friday my wife and I made an offer on a 40 acre piece of land it was accepted! Of course there are still plenty of details to work out, but barring any major problems or unforeseen things we should be able to get it. This has been in the works for over a month now, but because of various reasons we weren't really telling people about it. Plus, I don't like to get my hopes up too much until things are more certain so I didn't want to be blogging about and thinking about it more than I needed to. But, now that the offer has been made and accepted we are pretty excited to talk about the land.

Let me tell you about the land we are buying. As I mentioned it is 40 acres (well, really 38 if you want to be picky) about 6 miles outside of the town where we now live and where I work. In fact it is on the same side of town as the church and the high school so that is pretty handy. Twenty-six acres of the land is pasture that is a very strong stand of switchgrass right now and the remainder is timber. I think that is a very nice ration for the amount of land that we have. With land prices the way they are now this was as big as a parcel as we could afford, so we like how it is divided up as far as timber and pasture is concerned. Most of the pasture is on a gradual South facing slope which means the snow should melt quickly and it will warm up nicely when the sun comes out. The timber area is at the bottom of the hill and then it starts to rise again as it hits the Southern edge of the property.

We really like the location of the farm as it isn't too far out of town, but it is fairly secluded on a road with only two houses past us before it turns to a low maintenance dirt road. We shouldn't have much traffic, but we are in an area that also will be plowed out in the winter. Also, it is easily accessible from Des Moines and the by-pass South of our town. I think that will be a plus when it comes to marketing. In fact only a couple of miles away there is a brand new vineyard and we are near many of the farms I visited on the Farm Crawl last year.

As with any purchase there are a few downsides. First of all, there are no buildings on the place ... and there never has been. That means we will be starting from scratch in every sense of the word, but a blank slate is nice sometimes. Secondly, there is no fence along the road (this property is on a corner). And finally, the 26 acres of pasture and another 5.5 acres are all in the Conservation Reserve Program (CRP) right now. That means we will have to buy out the land in order to use it, and we plan on buying out the pasture acres.

One last piece of good news. Yesterday at our church annual meeting (I'm the youth pastor) the congregation voted to allow the board to sell the parsonage we live in. That means that we will be able to move to the land! We were ready to buy the land just to have a place to farm, but had really hoped that we could live there also and now that looks like that will be a reality. We are so thankful for the approval of the congregation and the blessings that we have at this church!

But, with that good news comes the daunting task of making a place to live! I will share a little more about some of our ideas along those lines tomorrow...

The first picture above is the aerial shot of the land ... The next picture is a shot of a little bit of the pasture area ... And, the final picture shows some of the woods when we walked around the land for the first time.