Down on the Farm: Does the Recent Downturn in Farm Income Portend a Fall in Farmland Values?
Charlie McNairy, managing partner at International Farming Corp., answers this month’s reader’s question: “Does a recent downturn in farm income portend a fall in farmland values?”
Astute long-term investors routinely monitor a dashboard of economic indicators to determine when to invest in specific asset classes. Ideally, investors desire to make an investment near the beginning of a secular trend so that as the world unfolds according to their worldview, the investment rises in value.
In the case of farmland, much has been written about the factors contributing to its secular rise: namely, an inability of global supply to keep up with global demand for farm products, dwindling farmland and water resources, growing populations, declining global year-over-year yield productivity gains, and historically low inventory levels and debt levels.
So the question could be: Is the recent downturn in U.S. farm income the end of U.S. farmland’s current s