Land Prices: August 2019

I have been traveling around Missouri the last several weeks and have seen a lot of crop acres not planted, some crops not looking very good and some that look pretty darn good. I have also been reading a lot of articles on the current farm economy which include prices and tariffs.

My grandmother inherited her 240+/- acre farm easily over 100 years ago and I could not even begin to think of what her dad paid for it. She was orphaned at 2 and she kept the farm in tact thru depression, wars and everything else that could be brought on. She was a tough woman and not many people dare cross her and loyalty to her faith, her family, her farm and her country. We all were amazed how someone could go to church every Sunday and be capable of threatening someone that crossed her. It had to be her past and how she survived. Everyone new that she would kill if anyone threatened any of these loves. I remember driving around country roads when I was a kid looking at farms with Grandma and Dad probably in the 1960s and maybe 70’s and you could buy the best farms for $325+/- per acre and they kept passing because they thought the prices were ridiculous.

Well fast forward I bought my first farm in 1981 with a small farmers loan from FHA. It was a 654 acre farm and I paid $500 per acre. It was a big purchase back then and especially for a newly married young couple with a baby. Well everyone told me that I was the smartest person in the world and I was on the way to becoming rich. Then our president started to mess around with Russia and embargos then interest rates went to 20% and then in 1985 my farm was worth or valued by FHA at $50 or maybe $100 per acre. Talk about stress and being helpless.

The government did come up with many plans, no free money just money put on the back end of your loans with interest. They also came up with a program called CRP or conservation reserve program which took marginal land out of production and paid cash to the farmer for idling his ground. This was to cut down on the soil erosion which was caused by everyone farming every inch of their ground when the times were good and to keep the small towns in business. The problem is that the people in the city heard about this and they ended up buying all the CRP contracts which included the ground. The farmers were left high and dry with no land to farm and the towns did eventually die. It is called staying power.

Well again fast forward and there are so many of the same problems today as was back then just different numbers. The farmers I talk to today are in a very tight cash flow position. The expenses are out of sight and China which took years to build as our main buyer has been kicked to the corner. These markets took years to build. I remember vividly the soybean association and their push to get China to purchase our ag products and the cattle mans “Where is the Beef” promotions. It is the same story as in the 1980’s.

The farmers have been buying most of the farm land and it will be interesting to see if history will repeats itself as most times it does. Will it be as bad as in the 1980’s no one knows but anything that goes up as fast as the land market went up surely will get tested again and their will be land corrections and their will be buyers who sat on the sidelines waiting for this correction. It will take years to get back our markets and the government cant bail everyone out with new programs or cash. I had an auctioneer tell me one time that people go to auctioneers to sell because they don’t want to miss the highs and they will go back to the realtors because they don’t want the lows. We as a realtor have started to get very busy.