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Central Missouri | There are several winds blowing for production grain agriculture that are concerning:
1. Countries around the world are printing currency
2. The fed came out last week and indicated that they are targeting for higher inflation
3. M1 money growth has gone vertical
4. The spread between haves and have nots is widening because of the above
5. The economy in big cities is not ever going to revert back to the way it was 6 months ago
6. City people who think different than us are migrating our direction
So how will this affect us in production grain ag?
Just my thoughts, currency devaluation will cause input costs to rise including machinery. Land prices will continue to rise. We will move toward turning crops into cash into inputs much quicker each year.
Increased land values will result in higher property taxes as local govt looks to funding sources.
Commodity fund indexes will gain in value relative to stock indexes. Precious metals being a part of that may benefit more in relation to other commodities. We in general will overproduce grain commodities causing the gap between cost of production and income per acre to shrink. Interest rates should remain low or go negative to try and keep the economy going which will fuel other asset prices. Commercial real estate in the cities is probably in trouble for a long time as people shop on line and work from home. The govt will continue to inject stimulus into the economy no matter what party is in power. We in agriculture will face more and more regulation from the fed,state, and local level.
Paper currency will continue to go down in value relative to commodity assets and land.
As a business owner how does one protect against this? That is what each of us should consider and institute a plan for. Consider also that my assumptions are 100% wrong. We have to seek out the opportunities not focus on the problems.
Just some thoughts. | |
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Looking to the future
