A lot of the return comes in land value appreciation. At least that's what this gal is betting on.

http://money.cnn.com/2009/06/08/retirement/betting_the_farm.fortune/index.htm?postversion=2009061112

Funny thing is that I remember Terry K. saying once that he thought that for a well managed farm, there were higher returns to capital allocated for equipment (and therefore expansion via rented ground) than capital allocated to land purchases.

Land prices will never pencil. But I think that lady's going to find out the same thing that Malthus did... We're not going to starve to death. Somebody needs to give her a lesson on the elasticities of commodity goods in ag... Then show her what all those acres that she doesn't believe in, in the Russion bloc countries & Africa can do should they all be operated efficiently.

I've got an uncle that's been pretty successful farming, and I was down helping them last fall prior to a land sale. Neighbor pulled up and said "So XXXX you going to buy that?" Uncle commented that he'd be at the sale, but wasn't too interested. "Well why not? They don't make any more of it." My uncle's reply, "Yeah, I've heard that BS before too."

It's cyclical. We're at a high point right now.