The next session was presented by Jason Henderson who just started with Purdue after being with the Federal Reserve Bank of Kansas City.
He presented a series of maps showing farmland values from 1900 to the 1980s using constant current dollars. In 1900, there were no counties that had average farmland values exceeding $3,000. Some counties went over this mark during the 1910s and 1950s and 1960s, but it was not until the 1970s that almost all counties exceeded this level.
This caused the "wealth effect" to hit farmers leading them to increasing investment in additional land and machinery, not using income, but rather the wealth they had accumulated. Well, we know what happened in the 1980s to this wealth. It basically disappeared.
Jason is concerned that if current high farmland values continue for another two or three years that farmers will use their current wealth to fund asset purchases instead of cash flows. This could lead to a duplication of the 1980s but we are long ways from that scenario, but caution is warranted.