Well Gee, Maybe I Should Have Been a Farmer
Gee, I wonder if this rise in farmland prices has anything to do with the fact that we burn food as fuel:
Farmland values in the Corn Belt are rising as fast as anytime in the past 35 years, but may be showing some indication of deceleration. Bankers throughout the five-state region in the Chicago Federal Reserve District report a 22% increase in the value of good farmland over the course of 2011. But in the seven-state Kansas City Fed District, the value of farmland rose 25% in the past year.
What on Earth could be causing such explosive growth in farmland values? While the first suspect might be whorishly loose monetary policy, we'd have to see that kind of "growth" in other areas to make such an uninformed assumption. Though my grocery bills are steadily climbing, I certainly wouldn't say they are up 25% in a year.
There was no surprise what [Chicago Fed economist David] Oppedahl says was fueling the higher land prices. He cited USDA’s reports on higher farm income in 2011 and expectations for 2012.
He said in the Chicago Fed District and across the Corn Belt, corn and soybean operations were key drivers of profitability. But he says along with the profitability is volatility that warrants caution by agricultural decision-makers, “During the past two years, average corn prices ranged between $3.41 per bushel in June 2010 and $6.88 per bushel in August 2011.
Similarly, monthly soybean prices averaged $9.39 per bushel in March 2010 and peaked at $13.40 per bushel in August 2011. These wide swings in prices make risk-management strategies even more vital for agricultural enterprises, whether or not there is a higher level for agricultural prices in the era ahead.”
The obvious culprit here should be clear (and no, it's not Bernanke for once, although he surely has a part in this too):
On the strength of huge gains in its seeds and genomics and agricultural productivity businesses, Monsanto (MON) posted $2.44 billion in revenue in the first quarter of its 2012 fiscal year, a 33% rise over the same period a year earlier. In contrast to Mosaic (MOS), which has forecasted lower phosphate prices and sales for its coming quarter, Monsanto expects sales to pick up stream over the same period.
So... the obvious question here is: are higher farmland values a benefit for the actual farmers or is someone else making off with the "profit"?