Posted by NY 986 on December 18, 2012 at 05:32:35 from (67.142.178.23):
In Reply to: Farm land bubble posted by Jon L on December 17, 2012 at 22:29:56:
You are right. The Symptoms are different than the 1980's but the outcome will be the same. There is a very strong chance if there is a new farm bill that it will be very weak in supporting commercial agriculture. The agricultural universities always figured if that happened values could be reduced by a third. As a group the older farmers who survived the lean times and built up cash on hand plus equity were the big instigators of big dollar moves in purchasing ground. As the older well heeled farmers die off (which is happening) the younger less financially secure farmers will offer bids closer to what cash flow (versus cash on hand) allows. I think any tax package passed in Washington will call for higher tax rates on top earners reducing money available to bid on land. Bad years with yields or prices will force farmers who are in a mediocre financial position to sell land which will increase the inventory for sale which will create downward pressure. A seldom talked about scenario is a local tax on wealthy citizens to make up for local budget shortcomings.
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