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Jim Rogers: High Profits Ahead for Farmers

March 1, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
money
  

If farmers aren’t rich yet, they will be. That’s the prediction from internationally known investor and business author Jim Rogers.

JimRogersRogers has been a fan of farmers and agricultural commodities for many years. "I am extremely optimistic about agriculture. First people thought I was nuts when I first started telling people to buy farmland, then they thought I was nuts, now they are trying to buy it too."

He believes that even though commodity prices have reached historic levels the past few years, they will continue going up, at least for a while.

"Even though demand has been going up for a long time, we are still consuming as much as we are producing," he says. "The 3 billion people in Asia have seen TV how we live in the U.S. and want to live that way now. Before this is over, prices of all agricultural products around the world will go higher."

Rogers, who was raised in Alabama, now lives in Singapore. He predicts Asian countries, such as China, will be the global economic leaders in the future.

He also believes they will hold the best investment options. "I don’t want to have many assets in the U.S. I am a U.S. citizen, but I think in the future there may be laws that keep you from taking money in or out of the U.S."

Huge Money-Making Potential

Rogers says, if you are going to keep assets in the U.S., farmland is the best option. "Farmland is a great way to preserve your wealth and increase your wealth, if you can stay with it."

Even with farmland sales topping $20,000 per acre, he doesn’t believe the market is in a bubble. But, you won't see him at Midwestern land auctions dropping that kind of cash.

Instead, he says there are greater profits to be made buying land in other parts of the world, such as Paraguay, Africa and other developing nations. "Percentage gains will be higher in other countries than the U.S., he says.

Rogers says if the U.S. continues to have large debt issues, which is likely, agriculture will become more and important. "When a currency declines, the people who have real assets are the ones that make money. If the dollar collapses, one of the few ways you’ll be able to reserve you wealth, and even make money, is through productive farmland."

An Aging Workforce

Rogers says the only reason he is nervous about agriculture’s outlook is that America’s farmers are growing older. Currently, the average age of U.S. farmers is 57, a number that has been steadily rising for two decades.

Even with technological advancements, Rogers is worried about the future. "Somebody has to be in the fields, even if it is a robot driving your tractor," he says. "Someone has to tell the tractor what to do. Unless we do something about getting manpower into agriculture, eventually we run out of food."

He encourages young people to consider a career in farming, if for no other reason, the money-making potential. "The stock brokers are going to be the ones driving taxis in the future, and the farmers are going to be the ones driving Lamborghinis."

Learn more about Rogers’ life and investment advice in this interview with Forbes:

 

For More Information
Read about Roger's connection to Farm Journal: A Lifetime Connection to Agriculture



 

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RELATED TOPICS: Farm Business, Marketing, Land, Economy

 
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COMMENTS (6 Comments)

RODNEY - KEWASKUM, WI
To cornhusker............... What are you going to do if you can't make money milking cows or feeding cattle do to the HIGH price of commodity's? It sounds like YOU would purchase the high price commodity's and loose money every day? If you can't make a profit why would you do it? You also forgot to talk about the rise in prices in consumer food items that contain CORN SWEETNERS! I think WE ALL KNOW how much grain is in a loaf of bread or a box of cereal, and how much it costs (they only been preaching this for the last 20 years)!! Also when beans hit the highs last summer the local feed mills were selling beans to go over seas and not to be fed to livestock. One mill went from 1 semi load of bean meal per day to 2 semi loads per month during that price rally period. And switched to a cheaper source of protein.
12:43 AM Apr 2nd
 
farmeruth - El Reno, OK
I predit more farmers will go bankrupt because of greed and good old mother nature drying them up. Water is the new GOLD. If it rains it works if it doesn't look out . Prices meant nothing if You cannot raise it. I farm in an area that has had over 4 years of dry dry weather and it is very hard to survive... If you farm debt free to me you are a TOP PRODUCER!
10:21 AM Mar 31st
 
Cornhusker - NE
Fade Jimmy Rogers at your own peril. The man is notorious for being right on commodities. Also, the only farmers buying $20k per/acre land, can afford it. That land value is also slightly skewed, because chances are, it was a bidding war between two large farmers that really wanted the land. There are some young people farming, but most have gotten into the industry through a relative. I have many contacts that have started farming within the last 3-7 years, and ZERO of them have paid anywhere near $10k an acre for land, let alone $20k. The industry that is severely hard to draw youth to, is the livestock industry. The average age is definitely getting higher over there. It's work! Nobody wants to do hard work anymore. Corn and wheat are both still above $7, and beans pushing back up toward $15. Demand hit the skids and forced prices lower? To a degree, until we needed to ration more. Soybean exports have blown the USDA's projections out of the water, while corn has undermined it's projection. Yet, corn exports only make up 10% of our demand. Who's going to buy high price commodities? Everyone that needs them. If you have cattle on feed, and no corn purchased, what are you going to do? If you have a certain quota of ethanol to produce, and no corn to produce it? What are you going to do? If you need to feed the ever-growing population of the world? What are you going to do? Everyone that needs the supply is willing to pay more for it, and it rations out the ones that don't. That creates more supply at the end than expected. It's called "supply and demand". That's how we get through tight supplies. I doubt you've even noticed a price change in groceries over the last 12 months, except perhaps in meat and milk. It takes 1 bushel of corn ($7.30) to make approximately 69 boxes of corn flakes, or 1 bushel of wheat ($7.30) to make 69 (1 lb.) loaves of bread. That's 10 cents per box of cereal or per loaf of bread. And in contrast to "LOWER" ($4.50 corn and wheat) prices, it's only 3 cents per item. If you want to point the finger at someone, point it at the retailer. Why would he want to sell six steaks for a $1 a piece profit, when he can sell 1 for $6? Why would the retailer(or the manufacturer) only raise the price of cereal by 3 cents a box, when he can blame ethanol and then raise it 50?
3:10 PM Mar 26th
 
Ricker Family Farm - Sussex, NJ
I also think this Rogers fellow is dreaming. I was born and raised on a farm and I remember everytime we wanted to do something we had to borrow for we didn't have the money to pay for something when you had major expenses. I also married a farmer and we did make monies in the early eighties, but thats it. We had a disaster and it almost wiped us out. If you buy alot of farmland you have to be able to maintain it and pay your taxes. Where are you going to get that kind of money if your deeply in debt to creditors?
12:21 PM Mar 3rd
 
RODNEY - KEWASKUM, WI
What is this guy smoking? This past summer when beans were at all time highs demand hit the skids and forced prices lower. Who is going to buy the HIGH PRICED commodity's? There are dairies and feedlots closing their doors daily in this country do to a lack of profitability caused by HIGH commodity prices. Also I don't see the American consumer wanting to pay more for groceries while more people are loosing there jobs every day!!!!

9:28 PM Mar 2nd
 
Bob Milligan -
In interpreting the farmer age issue, do not forget that this is the average age of the principal operator, usually the senior partner. As farm get larger with more multiple generation farms, the age of the principal operator becomes a less reliable estimate of the age of all farmers.
3:54 PM Mar 1st
 



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