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Farmland values may extend record, banker chief says

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Record-high U.S. farmland values may keep rising as global demand for agricultural products increases, according to S. Joe DeHaven, the chief executive of the Indiana Bankers Association.
Farmland will “continue to increase, but at a lesser percentage than what is has been the last few years,” DeHaven said in an interview at an agricultural-lending conference in Indianapolis Monday. “I’m always reminded by the old adage that they’re not making any more land.”

For the best farms, “there’s probably more dollars chasing that than there is land available,” he said.

The average value of an acre of U.S. farmland climbed to a record $2,350 in 2011, from $737 in 1980, according to Department of Agriculture data. Farmland values in Illinois, Iowa, Indiana, Michigan and Wisconsin rose 4 percent in the second quarter and 17 percent in the year ended June 30, the Federal Reserve Bank of Chicago said in a report Aug. 17.

The Federal Reserve said last week that the benchmark interest rate will remain near zero percent until at least the middle of 2013 if unemployment stays high and the inflation outlook is “subdued.” That means there aren’t many places for investors to put money that will “be secure,” DeHaven said.

Farmland may “be a great hedge against inflation at some point, a hedge against just not being able to get a return anywhere else,” he said.

Corn prices this year are averaging about $6.90 a bushel in the U.S., a record and more than double the average of the past decade. Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.

A “fair number” of community banks in Indiana and some larger banks are trying to expand their agriculture business, DeHaven said. Higher crop yields from improved technology and efficiency in farming, combined with high prices, have made agricultural lending “the best portfolio that any bank has today,” DeHaven said.

U.S. net-farm income will jump 31 percent this year to a record $103.6 billion, the Department of Agriculture forecast in a report on Aug. 30. The increase comes from higher crop and livestock prices, and rising receipts from sales of farm commodities.

Most bankers aren’t over-lending on land, so the risk of losses isn’t significant if prices drop to a “more normalized level,” DeHaven said.



 

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  1. In reality, Lilly is maintaining profit by cutting costs such as Indiana/US citizen IT workers by a significant amount with their Tata Indian consulting connection, increasing Indian H1B's at Lillys Indiana locations significantly and offshoring to India high paying Indiana jobs to cut costs and increase profit at the expense of U.S. workers.

  2. I think perhaps there is legal precedence here in that the laws were intended for family farms, not pig processing plants on a huge scale. There has to be a way to squash this judges judgment and overrule her dumb judgement. Perhaps she should be required to live in one of those neighbors houses for a month next to the farm to see how she likes it. She is there to protect the people, not the corporations.

  3. http://www.omafra.gov.on.ca/english/engineer/facts/03-111.htm Corporate farms are not farms, they are indeed factories on a huge scale. The amount of waste and unhealthy smells are environmentally unsafe. If they want to do this, they should be forced to buy a boundary around their farm at a premium price to the homeowners and landowners that have to eat, sleep, and live in a cesspool of pig smells. Imagine living in a house that smells like a restroom all the time. Does the state really believe they should take the side of these corporate farms and not protect Indiana citizens. Perhaps justifiable they should force all the management of the farms to live on the farm itself and not live probably far away from there. Would be interesting to investigate the housing locations of those working at and managing the corporate farms.

  4. downtown in the same area as O'malia's. 350 E New York. Not sure that another one could survive. I agree a Target is needed d'town. Downtown Philly even had a 3 story Kmart for its downtown residents.

  5. Indy-area residents... most of you have no idea how AMAZING Aurelio's is. South of Chicago was a cool pizza place... but it pales in comparison to the heavenly thin crust Aurelio's pizza. Their deep dish is pretty good too. My waistline is expanding just thinking about this!

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