Why would inflation* cause people to spend less? Or are PCE and DPI adjusted by CPI? If stuff costs more wouldn't people tend to spend more for the same stuff until their spending habits adjusted?
*here meaning an increase in consumer prices, not an expansion in the monetary supply.
University of Michigan Consumer Confidence Survey up to 63. Hey its still one of the lowest prints in 10 years but hey its up and thats good news and more reason to be buying.
Thank you Mr. Knuckles - that article WAS FUNNY - have you ever been to Sioux City? As you can imagine... I have... maybe only a couple hundred times (last week being the last time I was there though just a rapid drive by)...
I was struck by the strong response to the Q2 GDP number yesterday. One major component apparently was inventory building. Another was due to favorable exchange rates - following an improvement in exchange rates, there will be a surge of demand. And the rest the stimulus checks.
Inventory builds have to be drained.
Exchange rates worsen. The surge of demand will abate even if exchange rates remain the same.
Sadly, haven't been to Sioux City, although a friend keeps on trying to get me out that way - says the mountain biking is primo in the Black Hills.
Ummm you are aware that Sioux City is a little bit of a drive from the Black Hills... only about 400 miles [but the Badlands are in between which will break up the monotony - sort of]...
But 'yes' I would imagine the BH are ass kick for biking - lots of forest roads wandering all over & my understanding is the restrictions on access are not too severe [not as many riders as say So Cal or Utah or Arizona, etc.]...
Please tell us if there really are more parking spots at this location than other Olive Gardens.
Mr. McKnuckles | 08.29.08 - 10:23 am | #
Will do - however the pick up trucks are so damned big out there it probably won't matter... still won't find room to park UNLESS you are riding your bike...
This is nothing to worry about. Who cares if people are growing poorer. GDP is up, Decider says "It's just a slowdown" and Sebestian and O-Joe don't see any problems from the bottoms of the wells in which they dwell.
The fix is in - buy an overprices house today with money you don't have to help keep 'merika strong!
"That means that the initial rate is set no lower than 3.00% for the first year, and increased each year by no more than 1.00% per year, until it hits the Freddie Mac survey rate (which was 6.50% at the time FDIC published)"
Isn't this just prolonging the inevitable correction. We help keep someone in their home while keeping a buyer priced out of the market. Am i Missing something??????
Real incomes last time I check are falling yet we artificiality prop up house prices
No one wants to be part of McCain...so the only person who has no clue was Sarah.
McCain will be president in 08'. Not because he is the better candidate but because of the traditional Democrats will stay home and Obama cannot win over the red states.
"McCain will be president in 08'. Not because he is the better candidate but because of the traditional Democrats will stay home and Obama cannot win over the red states."
Nice to see the indexes get clobbered - and if things keep up, quality of volume.
But the XLF is relatively strongest - the SPX, INDU, NDX (haha!), RUT - have all broken down past their initial drop/bounce point this morning, while the financials are off as of 12:20 by 0.7%. This means either XLF wants to test the high volume 10-minute/hourly bar 21.45, or its going to p u k e soon.
All in all, this is very bad actions for the bools who thought yesterday's move meant we'd take out the August highs.
Have you got an opinion on the recent runup in midwest farmland prices?
IMO, this does not look as if it's going to end well.
mp | 08.29.08 - 12:27 pm | #
Am here now - my opinion is farm prices are doing the same thing they did circa 1980-1990... exploded in price based on unsustainable speculation then crashed HARD.
Many of these transactions are highly levered (as speculation usually is)... and was around 1980.
Once commodity prices fall (and they always do - just a question of how far, maybe not to sub-dollar per bushel corn prices like 1985 but fall they will)... then we'll see farm crisis redux.
I hope Willie Nelson & John Cougar aren't too old to 'save us' again...
"Sadly, haven't been to Sioux City, although a friend keeps on trying to get me out that way - says the mountain biking is primo in the Black Hills."
Dang, I wanted to say that when you get to Sioux City, your just half way to the Black Hills and it doesn't matter where you started.... but some body beat me to it.
The bubble in the ag community is going to end badly. Costs are exploding with many inputs double for 2008, and now commodity prices back down. Lots of farmers with tight shorts about now. The inflation has been so severe that I quit taking inflation on land to my balance sheet about two years ago. Just stand back and watch this baby pop, and when you're screwing around with the food supply, it ain't going to be a pretty sight. (By the way the Chinese are buying grain elevators in the Midwest.) Aren't asset bubbles fun, serial bubble blowers like Greenspan (aka Bernanke) seems to think so.
Now, I'm hearing that average cropland in Illinois is going for $4,500+/acre.
I'm hearing 200 bu/acre basis in central Illinois is more like $6K/acre. Nebraska might be $4K/acre but unless its irrigated its a drought risk [and irrigation increases yield but also cost - energy cost to pump from a dropping Ogalala Aquifer increases each year].
How anyone would enter this market as a blind spec blows me away. I wouldn't buy farm land unless I lived in the county for a decade, had access to production & rainfall records AND THEN ONLY IF I GOT MY PRICE. Land is NOT all the same. One size does not fit all.
No argument there, I'm just playing with averages. The $6,000 figure I hadn't heard.
mp | 08.29.08 - 1:47 pm | #
Along the I 74 to I 39 'Crescent' say from Rockford to Champaign... very good land, very flat, consistently high yield & plentiful rain year after year. Valuable assets but NOT worth $6K/acre IMHO.
I was there last spring and the buzz was that farms were moving quickly in the $6K an acre ball park. Closer in to the cities they might get as high as $10K an acre - CR had an article on that a few months back where remote exurban developments were going back to farm land at about $10K an acre... that was in the Joliet Dekalb area. I believe it.
Around me in SE Minnesota & W Wisc $4K is pretty typical & the land isn't that good. Farther west say where I 35 & I 90 cross (Iowa & Minnesota border country)... much better land but still, $4K/ac is too much UNLESS we see a lot of inflation & even I have troubles envisioning THAT much inflation.
We are on track for another debt default driven 'Farm Crisis' in 2-3 years. We'll all be saying 'whocoodanode'...
How bad do think this is going to be?
mp | 08.29.08 - 1:54 pm | #
Depends on inflation.
If little or no inflation REAL BAD for leveraged farmers... if a lot of inflation REAL BAD for the rest of us [$20 Happy Meals] but farmers pay off debts.
I think there will be some inflation but not enough to save farmers or their lenders... it will be a mid-80s redux just at somewhat higher dollar amounts.
Look at what happened in the county where I went to HS [MN-IA border]... say mid-70s land at ~$1000/acre & beans at like $5/bu... then Earl Butz & fence row to fence row... beans go to $10/bu... land starts to take off in price.
By early 80s land is >$3K/acre even though beans are falling in price... remember interest rates were something like 12-15%!!! Brutal mix.
Farms fail all over the Midwest as commodity prices fall & farmers default. J Deere in Waterloo goes from something like 20,000 employees to less than 6,000... that was their flag ship location too.
IH fails as a business - it was BIGGER than Deere prior to 1980! Current IH is the liquidated shadow of IH from back then.
Funny thing is only 1/4 to 1/3 of farmers at the time were heavily distressed... almost half had little or no debt... yet the land market collapsed as bumper crops & strong dollar blew out commodity prices for 3 straight years.
That was when Brazil first came in as a major ag export factor too - their cost to produce was half of US due to lower land capitalization cost. That has narrowed some now...
By mid 1980s corn was selling for under a dollar a bushel at elevators near me... the land in my county had fallen to $400/acre!! Later (say 1993) it was back up to $1000 - back where it was in the 70s... now its $4000.
I doubt we'll see $400 again but $1500? I'd bet on it - just a matter of when. JMHO.
Cropland values in Ohio increased 8.4 percent from $3,920 per acre on Jan. 1, 2007, to $4,250 per acre on Jan. 1. Since 2004, the average value of Ohio's cropland has gone up 44.6 percent. Pasture land in Ohio on Jan. 1 averaged $3,400 per acre, up 20.6 percent from Jan. 1, 2007. Since 2004, the average value of pasture land has increased 61.9 percent in Ohio
Overall inflation on a year to year basis is at 5.6%. When it got that high, as I recall, Nixon instituted price controls. Of course if you "adjust" the figure, as the government likes to do, and leave out those items that have gone up a lot, it seems more moderate. I am sure that is what will be done.
In Nebraska that I knew well, the surge in farmland prices came in 1979-1980 and the collapse came by 1984 after Volker raised interest rates drastically. I recall going to farmland auctions in 1984 when lots of places were being sold at foreclosure.
We are on track for another debt default driven 'Farm Crisis' in 2-3 years. We'll all be saying 'whocoodanode'...
Yeah, I recall wise people saying in 1979 that when net yields on farmland got down below 1% things were out of hand and to get out. Not many did, and they deeply regretted in a few years later.
jim writes:
In Nebraska that I knew well, the surge in farmland prices came in 1979-1980 and the collapse came by 1984 after Volker raised interest rates drastically. I recall going to farmland auctions in 1984 when lots of places were being sold at foreclosure.
jim | 08.29.08 - 2:39 pm | #
Center Pivot irrigation opened up a lot of Nebraska land too around that time... I knew guys who worked for Lindsay Mfg who bought land for $30/acre... put $30K pivots on quarter sections and saw sand produce 150bu/acre yields... that went on all over the 'Ogalala'... until the water table dropped so much pumping costs ate the additional profit.
But if you got in early you made a killing... last guys in got slaughtered. Same as it always is.
The PCE data reinforce in part yesterday's GDP findings that any real increas in GDP was due to increased inventories or exports--because Americans weren't buying as much.
The best farm land on the Canterbury Plains in New Zealand is going for $NZ5,000 an acre.
In $US this is $3,500
The most profitable use for this land is dairying. The price would include installed irrigation and supporting water rights.
Some points; There are no farm subsidies in the NZ, farmers must also pay a tax to fund "industry good" research. A substantial source of farm finance is the Dutch rural finance co-operative Rabobank. They have an AAA rating so their funding costs allows them to be very competitive against other rural financiers.
Too bad markets are closed. I always like to see how they are going to react to the latest whipsaw.
I thought everyone got a 3.3% raise last quarter!
Was I the furst to get it?
Oh, what the heck.
First.
OK, third.
And why do I have time to be third, first, or any other? Because I got laid off in a cost-cutting purge at work.
So, if anyone asks, MY personal income and outlays are going WAY down, right now.
I'm buying drinks at the Olive Garden!!
Who is with me?!
Toldya oil would rally... Well at least get back what it lost yesterday.
82 visitors? Are we all enthralled by Vice President Sarah?
It looks like June and July combined to wipe out nearly all of the stimulus money in May. I wonder what OPEC plans on doing with it.
Chicago PMI rocking at 57.9!!! averaged only 54 last year. This is more awesome news. Should be a post on this CR.
82 visitors? Are we all enthralled by Vice President Sarah?
Before today, I knew nothing about her. Now, I'm smitten.
Anyone else?
I wonder what OPEC plans on doing with it.
build a bridge to heaven?
Awesome article on Olive Garden:
http://www.siouxcityjournal.com/articles/2006/12/10/news/top/1a9d8ff1419deaac862572400014bc81.txt
Why would inflation* cause people to spend less? Or are PCE and DPI adjusted by CPI? If stuff costs more wouldn't people tend to spend more for the same stuff until their spending habits adjusted?
*here meaning an increase in consumer prices, not an expansion in the monetary supply.
XRegul8r writes:
And why do I have time to be third, first, or any other? Because I got laid off in a cost-cutting purge at work.
So, if anyone asks, MY personal income and outlays are going WAY down, right now.
XRegul8r | 08.29.08 - 9:38 am | #
Become self-employed then you can 'work' & 'post'... not sure the income thing will improve that much tho...
shorting the british pound has been a good trade over the last two weeks All hail the quee
University of Michigan Consumer Confidence Survey up to 63. Hey its still one of the lowest prints in 10 years but hey its up and thats good news and more reason to be buying.
Great Olive Garden article. Music to my arteries
"It was the chance of a lifetime
Thank you Mr. Knuckles - that article WAS FUNNY - have you ever been to Sioux City? As you can imagine... I have... maybe only a couple hundred times (last week being the last time I was there though just a rapid drive by)...
I'll stop next time and um... report.
Dryfly-
Sadly, haven't been to Sioux City, although a friend keeps on trying to get me out that way - says the mountain biking is primo in the Black Hills.
Please tell us if there really are more parking spots at this location than other Olive Gardens.
I like the Olive Garden, so shoot me.
There are really good Italian restaurants, but they aren't always where I am.
On Topic:
I was struck by the strong response to the Q2 GDP number yesterday. One major component apparently was inventory building. Another was due to favorable exchange rates - following an improvement in exchange rates, there will be a surge of demand. And the rest the stimulus checks.
Inventory builds have to be drained.
Exchange rates worsen. The surge of demand will abate even if exchange rates remain the same.
Stimulus checks have to be repaid.
Back all those out and what do you have?
I beieve it is time in this politically charged atmosphere to make a statement of my core beliefs.
LEFTYS SUPPORTS BIG LIQUOR,
Thank you.
Eric: Back all those out and what do you have?
Bibildy bobbledy boo!
Dryfly writes:
Become self-employed then you can 'work' & 'post'
Yes, good suggestion, and one which, fortunately for me, is not beyond the realm of possibility.
However, I always found it easier to avoid "working" (so as to maximize "posting" or other activities) when at work, than when on my own.
Sadly, haven't been to Sioux City, although a friend keeps on trying to get me out that way - says the mountain biking is primo in the Black Hills.
Ummm you are aware that Sioux City is a little bit of a drive from the Black Hills... only about 400 miles [but the Badlands are in between which will break up the monotony - sort of]...
But 'yes' I would imagine the BH are ass kick for biking - lots of forest roads wandering all over & my understanding is the restrictions on access are not too severe [not as many riders as say So Cal or Utah or Arizona, etc.]...
Please tell us if there really are more parking spots at this location than other Olive Gardens.
Mr. McKnuckles | 08.29.08 - 10:23 am | #
Will do - however the pick up trucks are so damned big out there it probably won't matter... still won't find room to park UNLESS you are riding your bike...
The Q3 and Q4 GDP numbers will be sweet, and the new unemployment number will prove the economy is headed to the moon! To the moon!!
Market Factors: Scoop!! Q3 & Q4 2008 GDP Results
Market Factors: Scoop #2!! New Government Unemployment Measure to be Unveiled Before November
I just had to write about, what a sham the 3.3% GDP number is. Unbelieveable.
This is nothing to worry about. Who cares if people are growing poorer. GDP is up, Decider says "It's just a slowdown" and Sebestian and O-Joe don't see any problems from the bottoms of the wells in which they dwell.
The fix is in - buy an overprices house today with money you don't have to help keep 'merika strong!
Rob Dawg writes:
Are we all enthralled by Vice President Sarah?
I've been out (like paying attention to nothing) for the last 24 hours - please tell me McCain didn't nominate Sarah Jessica Parker.
No, Sarah McCaughlin the singer/animal activist.
Sarah brightma
No one wants to be part of McCain...so the only person who has no clue was Sarah.
"That means that the initial rate is set no lower than 3.00% for the first year, and increased each year by no more than 1.00% per year, until it hits the Freddie Mac survey rate (which was 6.50% at the time FDIC published)"
Isn't this just prolonging the inevitable correction. We help keep someone in their home while keeping a buyer priced out of the market. Am i Missing something??????
Real incomes last time I check are falling yet we artificiality prop up house prices
No one wants to be part of McCain...so the only person who has no clue was Sarah.
McCain will be president in 08'. Not because he is the better candidate but because of the traditional Democrats will stay home and Obama cannot win over the red states.
"McCain will be president in 08'. Not because he is the better candidate but because of the traditional Democrats will stay home and Obama cannot win over the red states."
Good point!
WTF are all the comments?
Last saw Sarah in a huge white pickup truck outside an Olive Garden restaurant.
Dryfly, you out there?
Have you got an opinion on the recent runup in midwest farmland prices?
IMO, this does not look as if it's going to end well.
Some market thoughts:
Nice to see the indexes get clobbered - and if things keep up, quality of volume.
But the XLF is relatively strongest - the SPX, INDU, NDX (haha!), RUT - have all broken down past their initial drop/bounce point this morning, while the financials are off as of 12:20 by 0.7%. This means either XLF wants to test the high volume 10-minute/hourly bar 21.45, or its going to p u k e soon.
All in all, this is very bad actions for the bools who thought yesterday's move meant we'd take out the August highs.
one other forecast: I think SPX currently at 1285 can drop another 13 points to its 50dma and the opening August price; nice smack in the face
But wait, GDP is on fire, isn't it?
OT - Air Canada shaves fuel costs by eliminating life-jackets - Boing Boing
"Air Canada shaves fuel costs by eliminating life-jackets"
Once again, I have trouble discerning real news from that of the Onion.
Great comments at the bottom of that Sioux City Olive Garden article.Speaking of bottom,it looks like that OG opened in Dec. 06 and is now closed!
Lionel,
Passengers are encouraged to use bloated corpses as personal flotation devices.
Here's a very nice summary of what's going on and from a small-town paper.
The Wellington Advertiser - Column Detail
mp writes:
Dryfly, you out there?
Have you got an opinion on the recent runup in midwest farmland prices?
IMO, this does not look as if it's going to end well.
mp | 08.29.08 - 12:27 pm | #
Am here now - my opinion is farm prices are doing the same thing they did circa 1980-1990... exploded in price based on unsustainable speculation then crashed HARD.
Many of these transactions are highly levered (as speculation usually is)... and was around 1980.
Once commodity prices fall (and they always do - just a question of how far, maybe not to sub-dollar per bushel corn prices like 1985 but fall they will)... then we'll see farm crisis redux.
I hope Willie Nelson & John Cougar aren't too old to 'save us' again...
Does that answer your question?
Charlie Rose - Sarah Palin
funny this focus on national security without (realizing?) the financial crisis is a major breach
@dryfly
I thought that's what you'd say, but wanted to be sure.
There is an interest article in WaPo talking about Nebraska; they cited $4,000/acre.
Now, I'm hearing that average cropland in Illinois is going for $4,500+/acre.
Evidently, these guys didn't get the memo.
Meant to say "interesting article."
"Sadly, haven't been to Sioux City, although a friend keeps on trying to get me out that way - says the mountain biking is primo in the Black Hills."
Dang, I wanted to say that when you get to Sioux City, your just half way to the Black Hills and it doesn't matter where you started.... but some body beat me to it.
The bubble in the ag community is going to end badly. Costs are exploding with many inputs double for 2008, and now commodity prices back down. Lots of farmers with tight shorts about now. The inflation has been so severe that I quit taking inflation on land to my balance sheet about two years ago. Just stand back and watch this baby pop, and when you're screwing around with the food supply, it ain't going to be a pretty sight. (By the way the Chinese are buying grain elevators in the Midwest.) Aren't asset bubbles fun, serial bubble blowers like Greenspan (aka Bernanke) seems to think so.
@farmera1
Please, if you'll take a few minutes, educate me.
Also, can you direct me to anything to read?
Now, I'm hearing that average cropland in Illinois is going for $4,500+/acre.
I'm hearing 200 bu/acre basis in central Illinois is more like $6K/acre. Nebraska might be $4K/acre but unless its irrigated its a drought risk [and irrigation increases yield but also cost - energy cost to pump from a dropping Ogalala Aquifer increases each year].
How anyone would enter this market as a blind spec blows me away. I wouldn't buy farm land unless I lived in the county for a decade, had access to production & rainfall records AND THEN ONLY IF I GOT MY PRICE. Land is NOT all the same. One size does not fit all.
"Land is NOT all the same. One size does not fit all."
No argument there, I'm just playing with averages. The $6,000 figure I hadn't heard.
@dryfly, farmera1
How bad do think this is going to be?
No argument there, I'm just playing with averages. The $6,000 figure I hadn't heard.
mp | 08.29.08 - 1:47 pm | #
Along the I 74 to I 39 'Crescent' say from Rockford to Champaign... very good land, very flat, consistently high yield & plentiful rain year after year. Valuable assets but NOT worth $6K/acre IMHO.
I was there last spring and the buzz was that farms were moving quickly in the $6K an acre ball park. Closer in to the cities they might get as high as $10K an acre - CR had an article on that a few months back where remote exurban developments were going back to farm land at about $10K an acre... that was in the Joliet Dekalb area. I believe it.
Around me in SE Minnesota & W Wisc $4K is pretty typical & the land isn't that good. Farther west say where I 35 & I 90 cross (Iowa & Minnesota border country)... much better land but still, $4K/ac is too much UNLESS we see a lot of inflation & even I have troubles envisioning THAT much inflation.
We are on track for another debt default driven 'Farm Crisis' in 2-3 years. We'll all be saying 'whocoodanode'...
I quit taking inflation on land to my balance sheet about two years ago.
Do you mean you stopped adding to your estimated value?
"By the way the Chinese are buying grain elevators in the Midwest."
Curious, can anyone provide more details about it. What firms are buying and who provides loans, if any?
"Do you mean you stopped adding to your estimated value?"
DaddieMac, yes, I think that's what farmera1 is saying.
He's not "marking to market" because he doesn't want to inflate his balance sheet any further, which would give him a false sense of his net worth.
Smart thinking on his part, I might add.
In financial parlance, you might say he is "stressing" his financials.
How bad do think this is going to be?
mp | 08.29.08 - 1:54 pm | #
Depends on inflation.
If little or no inflation REAL BAD for leveraged farmers... if a lot of inflation REAL BAD for the rest of us [$20 Happy Meals] but farmers pay off debts.
I think there will be some inflation but not enough to save farmers or their lenders... it will be a mid-80s redux just at somewhat higher dollar amounts.
Look at what happened in the county where I went to HS [MN-IA border]... say mid-70s land at ~$1000/acre & beans at like $5/bu... then Earl Butz & fence row to fence row... beans go to $10/bu... land starts to take off in price.
By early 80s land is >$3K/acre even though beans are falling in price... remember interest rates were something like 12-15%!!! Brutal mix.
Farms fail all over the Midwest as commodity prices fall & farmers default. J Deere in Waterloo goes from something like 20,000 employees to less than 6,000... that was their flag ship location too.
IH fails as a business - it was BIGGER than Deere prior to 1980! Current IH is the liquidated shadow of IH from back then.
Funny thing is only 1/4 to 1/3 of farmers at the time were heavily distressed... almost half had little or no debt... yet the land market collapsed as bumper crops & strong dollar blew out commodity prices for 3 straight years.
That was when Brazil first came in as a major ag export factor too - their cost to produce was half of US due to lower land capitalization cost. That has narrowed some now...
By mid 1980s corn was selling for under a dollar a bushel at elevators near me... the land in my county had fallen to $400/acre!! Later (say 1993) it was back up to $1000 - back where it was in the 70s... now its $4000.
I doubt we'll see $400 again but $1500? I'd bet on it - just a matter of when. JMHO.
link
Cropland values in Ohio increased 8.4 percent from $3,920 per acre on Jan. 1, 2007, to $4,250 per acre on Jan. 1. Since 2004, the average value of Ohio's cropland has gone up 44.6 percent. Pasture land in Ohio on Jan. 1 averaged $3,400 per acre, up 20.6 percent from Jan. 1, 2007. Since 2004, the average value of pasture land has increased 61.9 percent in Ohio
Overall inflation on a year to year basis is at 5.6%. When it got that high, as I recall, Nixon instituted price controls. Of course if you "adjust" the figure, as the government likes to do, and leave out those items that have gone up a lot, it seems more moderate. I am sure that is what will be done.
In Nebraska that I knew well, the surge in farmland prices came in 1979-1980 and the collapse came by 1984 after Volker raised interest rates drastically. I recall going to farmland auctions in 1984 when lots of places were being sold at foreclosure.
We are on track for another debt default driven 'Farm Crisis' in 2-3 years. We'll all be saying 'whocoodanode'...
Yeah, I recall wise people saying in 1979 that when net yields on farmland got down below 1% things were out of hand and to get out. Not many did, and they deeply regretted in a few years later.
jim writes:
In Nebraska that I knew well, the surge in farmland prices came in 1979-1980 and the collapse came by 1984 after Volker raised interest rates drastically. I recall going to farmland auctions in 1984 when lots of places were being sold at foreclosure.
jim | 08.29.08 - 2:39 pm | #
Center Pivot irrigation opened up a lot of Nebraska land too around that time... I knew guys who worked for Lindsay Mfg who bought land for $30/acre... put $30K pivots on quarter sections and saw sand produce 150bu/acre yields... that went on all over the 'Ogalala'... until the water table dropped so much pumping costs ate the additional profit.
But if you got in early you made a killing... last guys in got slaughtered. Same as it always is.
Saw a lot of that back then.
"Toldya oil would rally... Well at least get back what it lost yesterday."
Otay
The PCE data reinforce in part yesterday's GDP findings that any real increas in GDP was due to increased inventories or exports--because Americans weren't buying as much.
The best farm land on the Canterbury Plains in New Zealand is going for $NZ5,000 an acre.
In $US this is $3,500
The most profitable use for this land is dairying. The price would include installed irrigation and supporting water rights.
Some points; There are no farm subsidies in the NZ, farmers must also pay a tax to fund "industry good" research. A substantial source of farm finance is the Dutch rural finance co-operative Rabobank. They have an AAA rating so their funding costs allows them to be very competitive against other rural financiers.
Thanks, all of you. It's going to take some time to absorb all of this very useful information.
Again, thanks.