In January 2009 when I wrote about farming being named as one of the hottest green jobs for the next decade, I imagined that more children would decide to stay in the family farming business instead of pursuing a different career. However, a recent article from the Associated Press is opening my eyes to a new type of farmer, the gentleman farmer.
Bernard Condon introduces readers to Braden Janowski, a 33 year-old software executive that spent $4 million on 430 acres of cornfields last year. Although Janowski’s purchase surprised other farmers in the area, it may be a sign of things to come.
“A new breed of gentleman farmer is shaking up the American heartland. Rich investors with no ties to farming, no dirt under their nails, are confident enough to wager big on a patch of earth — betting that it's a smart investment because food will only get more expensive around the world.” Source: MSNBC
The surge in farm values is actually cause for concern. According to Condon, farmers are switching to today’s “hot” crop, those with the highest prices, and the result could be bubble-like. Condon cites a recent 8 percent two-day drop in corn prices after the government announced that this is the second-largest crop in 70 years.
Investors are starting to show up at farmland auctions with more frequency these days. Condon’s story reminded me of the housing market boom of a few years ago. Housing values soared, people stretched their budgets to get a house with the help of creative financing and investors swooped in to help drive up the market. We all know how that turned out – the bubble burst and a record number of homes went into foreclosure.
Is a farmland bubble burst in the future? I don’t have a crystal ball so I can’t tell you but the FDIC is concerned that the nation might be in the middle of another farm bubble. The organization recently held an educational session for farm lenders to warn them about over lending.
What do you think? Will the growing demand for food support the steep rise in farmland prices or is this another bubble waiting to burst?