While visiting the family in Southwest Minnesota two weeks ago, I was amazed to hear a claim that some farmland in not-too-distant Sioux County, Iowa, had sold for $16,000/acre (that's over INR 19 lakhs/hectare). Sure, corn is near its all-time high and yes, this was a bumper year for all crops in Northwest Iowa (guessing around 200bu/acre for corn) but $16,000 for one acre of farmland? If true, that's crazy.
Apparently I'm not the only one to think so. The October 17-23, 2011 issue of Bloomberg Businessweek featured an article titled "Black Swan of the Prairie" (read it here) describing the worries of the Federal Reserve and banking regulators. In short, they're concerned that the prices of Midwest farmland--like those of housing and commercial real estate before it--is a bubble.
I remember the previous farmland bubble of the late 1970s--I handled the foreclosure of several farms when I practiced law in Wisconsin (and Wisconsin didn't have nearly the bubble as states like Iowa and Illinois). Given that the Midwest in general is about the only region of the U.S. that is currently enjoying boom times, I would hate to see the negative reverberations if it too was to founder.
Apparently I'm not the only one to think so. The October 17-23, 2011 issue of Bloomberg Businessweek featured an article titled "Black Swan of the Prairie" (read it here) describing the worries of the Federal Reserve and banking regulators. In short, they're concerned that the prices of Midwest farmland--like those of housing and commercial real estate before it--is a bubble.
I remember the previous farmland bubble of the late 1970s--I handled the foreclosure of several farms when I practiced law in Wisconsin (and Wisconsin didn't have nearly the bubble as states like Iowa and Illinois). Given that the Midwest in general is about the only region of the U.S. that is currently enjoying boom times, I would hate to see the negative reverberations if it too was to founder.
Thanks for posting this! Good food for thought. I've been thinking, living here in NW Iowa, that it seems amazingly insulated from the economic troubles of the rest of the country (and world).
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