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Farm debt and the farm real estate bubble

Farm debt and the farm real estate bubble

Arguments against the bubble view cite the current income generating ability of farmland, the hedge against inflation it provides as a real asset, and the reportedly lower debt loads currently held by farmers as compared to the period leading into the crisis of the 80s.

With farmland values increasing at rapid rates over the past five years, there has been growing concern over whether we are facing a farm real estate bubble.

The bubble view links current Fed policy and the resulting low interest rates to the increase in farmland investment activity, noting the similarities between today’s interest rate and commodity price environment and that of the period leading up to the 1980s farm crisis.

Arguments against the bubble view cite the current income generating ability of farmland, the hedge against inflation it provides as a real asset, and the reportedly lower debt loads currently held by farmers as compared to the period leading into the crisis of the 80s.

Read more at farmdocdaily

 

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