The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
Brent Gloy from Purdue University spoke on What's Ahead for Young Farmer. One observation was the expectation by most farmers is that corn prices will range from $5 to $7 per bushel for the next five years. What happens if this number is $2 lower on average. How would your farm react to this.
He has expectations that we are entering a bubble period, but like everyone cannot tell when it will pop.
Young farmers need to invest in management excellence before jumping on the next piece of land. Be ready for the time period when nobody wants to buy a farm.
Brent thinks the "cash" buyers maybe tapped out in this market and the leverage buyers may come next. He hopes that this will not happen. Lenders are getting pressure to up their borrowing capacity. If this loosens the bubble will bubble even more. Credit is there for good times but can be pulled in bad times.
Farmers need to make sure not to misallocate scarce capital. Do not overpay for fixed assets or buy at any cost. Does it make more sense to custom farming. Also don't bank on the next five years being as profitable as the last five.
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