From Reuters:
The charts are interactive, follow the link for more
If there is an epicenter of the nation's farmland boom, it can be found here amid the rolling hills of northwest Iowa.
A fortune is being plowed into the dirt of
Sioux County, where well-heeled farmers and wealthy investors compete
fiercely for some of the most fertile land in the Corn Belt. While
farmland prices across Iowa have been among the heartland's fastest
growing - up 261 percent since 2000 - they've more than tripled in Sioux
County, rising faster than most of the state.
Locals could not be more pleased about such prosperity - or more nervous.
Like
many people across the Midwest, they're increasingly anxious of a
potential pull-back in values, despite stark economic differences with
the 1980s farm crisis.
But their
greatest fear is that if this boom turns to bust, as the housing market
did last decade, people may well trace one of the key causes to this
corner of the Hawkeye State -- and blame local farmers and investors for
creating an artificially inflated benchmark for the Midwest.
In
what has been termed the "Iowa effect," farmers and ranchers across the
nation now routinely look to this 768-square-mile county as a benchmark
for America's 408 million acres of crop land. Record-setting land deals
in this corner of the state are quickly deemed the new high-water mark
for surrounding states.
"I hear
people talk and it's not in a good way," said Bill Tentinger,
president-elect of the Iowa Pork Producers Association, who runs his
family's hog farm in Les Mars, Iowa, in south Sioux County. "People see
these prices and think, 'Well, if land in Iowa sells for $20,000 an
acre, then why can't my farm in Illinois or Minnesota or Nebraska sell
for that much?'"
Locals here will
tell you exactly why: rich soil, favorable weather trends, a high
concentration of livestock and biofuel operations, and an intensely
competitive farming culture.
Those
are some of the reasons state records have been shattered time and again
at local auction halls and barnyard gatherings. Sioux County bidders
cracked $13,000 an acre for crop land two years ago. Last fall, the
price tag on a farm field jumped to $16,750 an acre. In December:
$18,250. Then: $20,000.
That
run-up, warn economists, is fueling a potentially dangerous axiom in the
minds of investors: that there is plenty of profit to mine from U.S.
cropland, even if prices continue to reach once unimaginable highs.
"Not
all dirt is the same. Some dirt is astonishing, compared to other
dirt," said Jim Rogers, the billionaire commodities investor and author.
"But it ultimately comes down to economics: How much does that land
cost, what crop can you grow on that land, what price you can get for
that crop, and how much it costs you to produce that crop?"...MORE
HT:
Felix Salmon
