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Land Prices
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white shadow
Posted 5/30/2023 21:53 (#10250163 - in reply to #10249701)
Subject: three quick parameters for land price...... Supply and demand driven



East Central South Dakota
Today there is just way too much cash in too many hands for land to come down much. The burn rate of excess cash is what will make it come down and not only Agricultural cash but investor cash also. Some parameters I see affecting the burn rate.

1. Governmental policy on all fronts is easily the number one parameter that could affect land prices. Direct payments, crop insurance premium subsidy, support of agriculture renewable fuel, land regulation and trade export policies. See how easy it is to name just a few. Agriculture has harnessed itself ALMOST EXCLUSIVELY to the Government.

2. Have interest rates plateaued and can the economy come out of an inflationary period without going into recession?? Affects non-farm cash more than farm cash.

3. Will world supplies of grain ever go to burdensome levels again? We have been living hand to mouth from southern hemisphere harvest to northern hemisphere harvest for quite a few years now. We used to have huge set-a-side programs to manage supply. How long has it been since you heard of the Government trying to manage supply by set-aside acres or even discussion of it. A lot of young people out there don't even know what the hell I am talking about. I can remember losing money or making very little year after year and basically just lived off of the Government program payments-----and not very well at that. Nobody had any money. Government bin storage payments on grain to keep it off the market. We have a tremendous amount of demand today for grain and supply has worked very hard to meet that demand-----what happens if tomorrow with the wave of a Governmental gavel, ethanol goes away. We have too much of everything in less than a year. Hard for land prices to stay high when you don't need the production off of those acres anymore. The lack of over production is a recent phenomenon while historically we were always trying to manage excess supply. WE LIVE IN A MORE FRAGILE WORLD THEN WE EVEN WANT TO THINK ABOUT, and a lot of that fragility is directly caused by number one above---Governmental policy.

Edited by white shadow 5/30/2023 21:58
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