Will this boom turn into a bust as all others have? There have basically been two boom bust cycles in agriculture. The first was during the 1910s that resulted from sharply rising export demand during World War I. Farm incomes surged and farmland prices increased significantly. That soon turned into a bust.

During the 1970s, exports took off rapidly and triggered another sharp spike in farm incomes and farmland values. Starting in 1981, that boom turned into a bust with a financial crisis that bottomed in 1985.

Some characteristics have driven all three boom cycles: primarily strong global demand and tight supplies. But this particular boom is different than those in the past. I think there are three obvious differences in this boom:

The bottom line: While cycles always exist in commodities and agriculture, this particular cycle is quite different than any other that we have experienced. There will likely be a downward turn in this cycle. But the landing will be soft and much different than those in the past.

There are risks. As mentioned above, cycles in commodities will always exist and during this timeframe that particular factor will not change. The risk of this boom continuing or turning into a downturn will likely focus in three areas:

In summary, this boom/bust cycle is quite different. There will be a downturn at some point, and we could see a softening of farmland values and cash rents. There will inevitably be someone, although I think a relatively few, who will get stuck at the top with high rents and high input prices and little sold at high prices—resulting in an economic squeeze. The percent of those people, however, will be small and thus the impact on agricultural land prices will also be small. Like in the economy, recessions are sometimes necessary to cool things down. Something will happen to cool this boom down but the bust will be small.