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NW Iowa land auction, $20000 an acre!
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timis
Posted 12/8/2011 10:46 (#2091402 - in reply to #2089588)
Subject: Putting it into perspective


Iowa		Very interesting, seriously doubt that its completely free and clear - maybe he "paid cash" for it but he really only "paid cash" if he has no other notes - and not to many farmers let alone dairy guys can do that. (just cause the massive amounts of capital needed - if he did good for him) My understanding is dairy has been real tough the last few years. Do like the guys point that if he owns the rest it'd be the same as 5k / ac for the beginning guy - so very doable. I do believe we're headed into uncharted territory - we could very easily have an inflationary scenerio and have land go to 50K / ac - but the rest of the economy is deflationary - thats why there printing so much money - so who'll win out is yet to be told. One thing I'd like to point out to us guys in NW iowa is yes we are seeing a large runup in land prices - but we are basing it off the last 5-10 years of production - historically NW iowa didnt produce the yields (compared to the rest of the state) that we are today, (neither were our land prices almost 2x the rest of the state) as rainfall patterns have moved we have benefited greatly. (EX look at yields in SD) One thing we do know is climate patterns are cyclical therefore we could easily revert back to the norms of having lower yields than the guys on the CNW soil assoc. Not saying its wrong but historically NW Iowa is in the middle for yields for the state of IA - the last 2 - 10 year periods we've been towards the top. You dont have to be but 10 miles from this farm to find 120BPA corn this year cause it ran out of water. (proof that GMO and hybrids will help but not eliminate loss during water shortage) Not saying anybodys right or wrong - just saying the last 10 years have been our best compared to the rest of the cornbelt - IF we get back to historical norms for rainfall (assuming those norms for the last 140 years are correct as thats all the data we have) we will see yields moderate in comparison to others - that means either thier land values go up or ours go down. I dont remember how many times I've come on here and thought "wow God looked out for us this time" the last few years most other areas of the cornbelt have had problems - either too wet, too dry or major storms - NW Iowa pretty well missed most of it. Was at an ISU meeting 7-8 years ago and they said water was our yield limiting factor on most soils in Iowa to the west of 71 not enough- to the east of 71 too much - well since then we've gotten enough water and guys to the east have been swimming. Probably gonna get flamed but history will repeat itself so either guys to the east are coming up or were going down - sorry cant just throw out 130+ years of statistics. Not that its a reason to buy or not to buy at current levels - (or that 20k was good or bad) just find it very interesting just how profitable the last few years have been and how it affects the value of land so quickly at todays levels.
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