Agricultural News
U.S. Not in a Land Bubble At This Point says Vice President at Rabobank International
Tue, 15 Nov 2011 15:10:32 CST
The U.S. agriculture land prices have been increasing steadily over the past five to ten years, which has left farmers and ranchers wondering if these high land values are really sustainable. Ron Hays talked with Sterling Liddell, Vice President for the Food and Agribusiness Research and Advisory department of Rabobank International, recently at the National Association of Farm Broadcasters annual convention in Kansas City about the possibility of a land value bubble and China's impact on U.S. agriculture.
Click on the LISTEN bar below to hear their complete conversation on land values and demand for U.S. products.
When it comes right down to it, Liddell simply states that we are not in a land value bubble, which Rabobank defines as a commodity or an asset that is not supported by its fundamental value. One reason for this Liddell explains is because of the high commodity prices and low interest rates, which he says fundamentally suppport the value of the land where it is.
Another reason Liddell says they are hesitant to call this a land bubble is that the land value has been strengthened and is very strong in areas that have experienced the highest commodity prices, such as the Midwest, North and South Dakota, Iowa, and Illinois. Corn is very prevalent in these areas and has been leading the commodity charts over the past five years says Liddell.
One of the factors driving these commodity prices is the fact that China over the past five years has been in an economic lift-off period and it has been the steepest lift-off period of time that China has experienced gross domestic product growth says Liddell. Ultimately, China is a huge consumer and there is potential for China to be an even bigger consumer of exports says Liddell.
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