USA | iadirt - 1/24/2026 16:05
Coup,
I just can’t understand borrowing money at ~6% to purchase an asset that returns ~2%. Seems like a high priced game of musical chairs. The only way it makes sense is if the value continues to climb at a rate of 5%+.
The value of land is completely divorced from the income it generates in many cases. The bankers I talk to say it doesn’t make sense but they are still loaning money.
Where does it all end?
I feel sorry for the young farmers trying to acquire a land base in this market.
From what I am seeing currently things are not good when it comes to liquidity and that agriculture is in the beginning stages of a liquidity crisis.
Every time ground is purchased even with cash, working capitol is being destroyed. Purchases with borrowed money is worse . Know of two situations were ground was purchased this past year. One has to subsidize the int and principal from the the total acres farmed @ $100 above $400 cash rent on the purchased ground other $200 acre. Plus income tax amount required to pay principal and Re taxes. Using 2000 total acres farmed , one operation has to create an extra $200,000 year more than way they have been doing, the other $400,000 year plus extra income tax and Re tax.
Edited by coup 1/24/2026 19:52
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The land price is correct because...
