We've been harping on this topic for years, here's a version from 2017:
Our standard boilerplate:So last week when FT Alphaville's Brendan Greeley retweeted Sarah Taber PhD. on farming and slavery, I looked at her timeline and, lo and behold:
The thing to keep in mind about farmland: It is worth the cash flow it can produce which ultimately means commodity prices rule. If memory serves, U.S. farmland has outperformed prime London residential....The exception: (unless you're on the edge of a metro area and have some non-public zoning info)
Now whether the "worth" has any relation to what someone is willing to pay is another matter. And this article specifically talks about production we don't pay a lot of attention to, cattle and cotton. We are keeping an eye open for private equity to move into row crops and wheat but that's not happening in any big way, yet....
"Corn is a platform with both limitless purposes, and one purpose: to turn rural land into a dependable & infinitely fungible financial asset."Here's the thread:
...MORECorn is a platform with both limitless purposes, and one purpose:— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
to turn rural land into a dependable & infinitely fungible financial asset. https://t.co/Vc9sOuVFqaIf you want to understand US agriculture, you gotta understand one thing.— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
It's not even about making food.
It's a real estate hustle. pic.twitter.com/2gcPJKiVppCan I be honest for a second, as an ag person who's done most of their work in CA & the South?— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
Land in the Midwest ... isn't really good for much. Sure, the soil's real nice, but the growing season is too short for most globally-traded cash crops.Coffee.— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
The Midwest is exactly the kind of giant wet low-population area you'd want for cash crops. Except most of the big-money ones are tropical, & Midwest has a 3-6 month growing season. You're stuck with annual crops."Well what's wrong w wheat, flax, oats, rye, hemp, & other short-season cash crops?"— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
1) Hemp ain't been legal
2) We can't use an entire Midwest's worth of oats & rye
3) Wheat & flax grow nearly everywhere, including huge areas of arid US west. Too much competition to rely on.Enter maize & soybeans. Here's what they bring to table:— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
1) Short-lived enough to make use of Midwest growing season
2) Need lots of water- that cuts out competition from the US West
3) Humans can't eat them, but that's ok, they're just infinitely fungible starch & protein. pic.twitter.com/Gk4bemgYzJIf you're just growing raw sources of starch & protein, you can just handle market gluts by inventing a new use. That's harder to do with crops that make something less malleable like fiber, or (in case of wheat, oats, rye, & most grains) a mid-yield mix of starch & protein.— Dr Sarah Taber (@SarahTaber_bww) December 18, 2018
And here it is on Threadreader.
Additionally, her gift to the reader:
...MUCH MOREI absolutely guarantee you every meal you have eaten in the last 365 days has been made with corn.— SwiftOnSecurity (@SwiftOnSecurity) December 17, 2018
One more on the self-referential channel, this time from 2013:
US Farmland: Price Growth Slows, as Farm Profits Fall (corn now under $5.00)
Farmland is worth it's discounted cash flow. Period.
It may sell for more but at some point it returns to trend.
It can correct either in price or in time.
That's me, quoting myself.Yesterday we were urban:
"The Economics of Skyscraper Height (Part I)"
Tomorrow we'll look at land and corn.
Right now, land and development, urban econ. from Building the Skyline.org's Skynomics blog, Dec. 17: