Respected Publication Tackles Potential Farmland Bubble

Published on: 17:09PM Apr 25, 2011

Mike Walsten

The respected British publication The Economist has chimed in on the current rocket-ride in cropland values and concerns a bubble may be forming. It hits the key facts -- values are rising due to high commodity prices, low interest rates and low supply. And it warns of what could happen if (when) commodity prices fall and interest rates rise. Their main angle appears to be that bank regulators are not doing enough to slow the run-up in land values. But they do not offer a solution. Much of the land purchased has been done with equity and limited financing so threatening banks to watch what they lend seems problematic. Meanwhile what do farmers and bankers do while the Federal Reserve continues to keep interest rates low, fuel the money supply and weaken the dollar -- the main culprits behind the run-up in land values?

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