The Rabobank International Food and Agribusiness Research and Advisory group released a global agribusiness marketplace report – which says agriculture land value rates are not a speculative bubble. U.S. ag land prices have increased steadily during the past 10 years. The report says the factors in the crop land value increase since 2005 have been a combination of increased commodity prices, low interest rates and limited supply of available land. Though these don’t lead to a bubble – FAR says they could drive a moderate decrease in land values over the next 10 years.
This decrease wouldn’t result in a crash – according to FAR Vice President Sterling Liddell – because current trends in the nation are driven by fundamental economics. He says the increasing presence of farmers on the buyer side of ag land along with a tight land supply provides significant evidence a speculator-fueled bubble doesn’t exist right now. With another year of strong margins and continued tight supplies – Liddell says land prices should be driven higher for at least one to two more years. The largest risk factors that may affect land prices include interest rates, global commodity supply and demand, water availability and biofuels policy – among other factors.