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66 comments on POLL: CLV08 blew past $100...so, in the next 60 days, the front month price of CL will...

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memmel on September 23, 2008 - 11:50am Permalink | Subthread | Parent | Comments top

I disagree with your statement that farmland is hard to steal its trivial to steal just set the taxes higher then the profit margin on your product and pretty soon the state owns all the land.

Stealing of good farmland by the rich and powerful is a time honored profession probably the second oldest one.

Next as far as I can tell a lot of farmland is in a pricing bubble right now from the corn ethanol squeeze and at least in the US we have more than enough farmland to supply our population with food and enough for export.

Given that industrial agricultural will eventually get squeezed to the point that profit margins are lost as fuel and fertilizer prices increase we can expect a glut of formally good farmland laced with chemicals on the market.

Leaving all this fallow and reverting it back to sustainable agriculture will take some time but most importantly the land itself will have to be very cheap for quite some time to support reverting back to long fallow periods.

And last but not least on of the big drivers in land prices has been suburban expansion as this wanes land in general will revert back to being inline with its productive value.

And finally in the US at least the distribution of productive farmland and population is heavily distorted and abnormal with the larger cities located in some of the least productive regions. As transportation costs climb local but poorer land may well become more valuable then distant richer farmland.

And finally of course the distortion effect of subsidies.
http://query.nytimes.com/gst/fullpage.html?res=9C01E0DC173EF935A15751C1A...

Thus as a serious investment farmland does not look all that good to me it should lose 75-50% of its current price if not more.

I often get a lot of flack for making these statements but right now and for some time in the future investing in farmland for monetary gain is probably foolish. If you can afford to write off most of the money you put into farmland now and simply want the asset for its productive value then fine but its should not be treated as a good investment. At some point the rich that have bought up a lot of the farmland will dump the holding to raise cash and when they do farmland prices will plummet.

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Aniya on September 24, 2008 - 10:53pm Permalink | Subthread | Parent | Comments top

Hi memmel,

So...

1) What do you think *is* a good investment - (if anything)?

2) An anecdote from a recent National Geographic article
(http://ngm.nationalgeographic.com/2008/09/soil/mann-text/6)
involving a different version of the "improve land and lose it" story,

about farmer named Yacouba Sawadogo in Burkina Faso(excerpts):

"Sawadogo, too, laid cordons pierreux across his fields. But during the dry season he also hacked thousands of foot-deep holes in his fields—zaï, as they are called, a technique he had heard about from his parents. Sawadogo salted each pit with manure, which attracted termites. The termites digested the organic matter, making its nutrients more readily available to plants. Equally important, the insects dug channels in the soil. When the rains came, water trickled through the termite holes into the ground. In each hole Sawadogo planted trees. "Without trees, no soil," he says. The trees thrived in the looser, wetter soil in each zai. Stone by stone, hole by hole, Sawadogo turned 50 acres of wasteland into the biggest private forest for hundreds of miles.

Surveyors went through the property, slicing it into tenth-of-an-acre parcels marked by heavy stakes. As the original owner, Sawadogo will be allotted one parcel; his older children will also each receive land. Everything else will be sold off, probably next year. He watched helplessly as city officials pounded a stake in his bedroom floor. Another lot line cut through his father's grave. Today Yacouba Sawadogo is trying to find enough money to buy the forest in which he has invested his life. Because he has made the land so valuable, the price is impossibly high: about $20,000."

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66 comments on POLL: CLV08 blew past $100...so, in the next 60 days, the front month price of CL will...

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