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Another Perspective
The Farmers’ Silver Lining
Buying back land from recession-hit developers and turning it into exports.
By the time the housing bubble was reaching its peak in mid-2006, developers were gobbling up farm land to build subdivision houses at the rate of nearly four million acres a year. When the bubble burst, the housing market collapsed and the developers were left holding acreage for which they had paid top dollar.
In time this led to foreclosures and bankruptcies — another chapter in the nation’s recession. Whoa. This chapter has a happy ending. Since 2007, the nation’s farm acreage has held steady and is today probably increasing slightly. The reason is not hard to figure out, though it has received little attention by the news media which concentrate on unemployment figures, the nation’s soaring debt and the Obama Administration’s over-the-top spending.
The reason for the changing dynamic in farm land? In many cases, farmers are buying back the land they sold to developers and putting it back into production. With the high demand and high prices for such commodities as cotton, corn and wine grapes, farmers who have purchased acreage from defunct developers are reaping profits two ways. In most cases, they re-purchased the land at a fraction of what the developers had paid them for it. Now, they have expanded production of crops that will bring them strong market prices.
An example: the Wall Street Journal recently related the experience of a group of soybean and corn farmers about 50 miles south of Chicago who purchased 650 acres from the bank that had foreclosed on the property. Developers had bought this “exurban” land to build houses for Chicago commuters. They paid up to $20,000 an acre for it. The farmers who bought it from the bank paid $8,000 an acre. The broker who handled the transaction opined that up to 20 years would pass before there would be a market for residential development in that area.
In California’s Central Valley a grower of nut trees and raisin grapes recently paid $27,600 an acre for 326 acres on which he will grow wine grapes and walnuts. That’s about one-fourth of what the bankrupt developer had paid for it a few years earlier. That developer had planned to build 1,500 homes and a shopping center on this farm land. Now, the new farmer owner expects to net a profit of about $1 million a year from his new plantings.
Demand is fueling this dynamic in many states. Prices for corn are at near-record highs. China’s insatiable demand for it means record shipments across the Pacific. As the Chinese middle class grows, its members eat more and more pork and want the enhanced flavor of corn-fed pork, so pork producers are non-stop buyers of U.S. corn. Here at home, the mandated requirement for the use in vehicle gasoline of that misbegotten fuel, ethanol, means demand for it is steady, thus keeping the pressure on corn production. Meanwhile wine production continues to grow as does the demand (and price) for cotton.
The moral of the story: the developer’s woe is the farmer’s silver lining. Even recessions have them.
Mr. Hannaford’s latest book, Reagan’s Roots: The People and Places Who Shaped his Character. is being published this week by Images From the Past, Inc.
About the Author
Peter Hannaford was closely associated for a number of years with the late President Reagan, beginning in the California Governor’s office. His latest book is Presidential Retreats.
Letter to the Editor View all comments (18) | Leave a comment
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Moe Blotz| 11.29.11 @ 6:25AM
So why do we still have an Agriculture Department paying subsidies to farmers? Will the land speculators who bundled for Barry receive bailouts?
c. j. acworth| 11.29.11 @ 6:36AM
Probably depends on what happens next November.
Joe March| 11.29.11 @ 7:13AM
The story of one government government program (Ethanol) trumping another (Housing.)
Timothy L. Pennell| 11.29.11 @ 9:04AM
Thank You MOE.
I would love to feel good about this story, but I'm looking through my Mail Box, and I can't seem to find MY Subsidy Check. I'm a VETERAN, and I can't even use the VA, because my Wife and I make more than $23,000 a year. Yet these MILLIONAIRE Farmers, are getting LOTTO Checks, for their Votes in every Election. Apparently, if you're a VETERAN, it's okay to Means Test for your PROMISED Benefits. Everybody else gets the Cash.
Now, you tell me, how that's right.
Yancey| 11.29.11 @ 9:37AM
I'd like to feel good about this story. But just not sure. Sorry, too much makes me skeptical of all right now. Meanwhile, while I'm chewing on this new information, I'm thinking, "Great....more demand for wine grapes. Means we got a more pickled population." That bodes well for us? Or am I to understand that the Chinese are buying these wine grapes, too?
Otis Cribblecoblis| 11.29.11 @ 12:56PM
Your logic is not so fancy,Yancey. Not everyone who enjoys a glass of wine does so to excess. California wines are exported around the world and are considered to be among the best. As populations grow, demand for wine has done so as well. You may have been right by half with your Chinese assumption, but I would suggest that the Chinese becoming more affluent, they can afford a dram of wine to accompany their pork.
Yancey| 11.29.11 @ 3:15PM
Sometimes you have to look in the mirror and truly see what is there. Maybe? Otis?
Everybody wants their crutch. Everybody wants their "coping mechanism." Everyone says, "Hey, I just need a little something to get me through...." Alcohol is one very prevalent item that fulfills this, this incessant urge.
It is a sad day for any society when, given an economic depression, the elements that lead to alcohol making are doing well. Maybe thriving?
I don't know where you are located but here I keep seeing news stories about new wineries, new distilleries, weekend wine excursions, new micro beer (whatever that is) products on the market....
Many a man lies to himself and says, "No worries. No need to be concerned. I can handle this...."
My view: If given and graced the resources to produce, good. Go produce. But produce something that enhances the lives of humans and the human condition. Not something disguised as fancy, dressed up poison.
Derek Leaberry| 11.29.11 @ 11:06AM
Great news that farmers are getting the better of developers for once. Even better, the land is conserved from ugly developments largely built by illegal immigrants from Mexico and Central America. Developers are among the least conservative members of any community. They profit from destroying nature and the organic community.
aware| 11.29.11 @ 4:42PM
Excellent comment. I would only add that, around here, developers drive about 85% of the corruption of local government. The mayor of the nearby town is one and some and their stooges have been commissioners. The other silver lining, there's a lot fewer of them now. Crooks, the lot of them.
Binx Bolling| 11.29.11 @ 5:34PM
They have a lock on the Republican County Commissioners in my home county of Queen Anne's, Maryland. The Republican Party of Queen Anne's is run by Mr. Mareen Waterman of Waterman Realty. His son and daughter-in-law sit on the Republican Central Committee of Queen Anne's County. County Commission Chair Steven Arentz is a realtor. Another commissioner, Phil Dumenil, is an insurance agent whose wife is a realtor. Essentially, they wish to turn farmland into big-box stores. Fortunately, with the economy the way it is, their wishes to pave the county have failed dismally.
aware| 11.29.11 @ 7:35PM
Yeah, land speculators have a long and seedy history in this country. Always with the full aid of that vast criminal gang called government.
cicero| 11.29.11 @ 1:22PM
Great time to end all ag subsidies. In that virtually all went to corn, wheat, soy, cotton, sugar, and rice, the taxpayer should be off the hook. Our farm population is no longer named Goad.
Derek Leaberry| 11.29.11 @ 1:25PM
You are correct. Most subsidies go to the biggest agribusinesses, many of which are beholden to Democrats. Most farmers do not receive subsidies.
Sam Vaughn| 11.29.11 @ 6:56PM
Good catch Peter!
Lawrence of Lutz| 11.29.11 @ 8:33PM
Misbegotten ethanol is correct. It damages fuel gauges, flexable hoses; it gives less miles per gallon and increases engine repairs. For small engines like lawnmowers, boat motors and the like it is very destructive.
POST American| 11.29.11 @ 11:11PM
--------------Chicken feed DIS-traction----------------
------------------------ALERT!----------------------------
And BTW, anytime for that FIRST unflinching
look at the Monsanto GMO stealth saturation
of the food chain.
-----------------------------------ANY TIME
Could be| 11.30.11 @ 12:42AM
Maybe Post American is onto something: Monsanto stuff/Agra-business. More, vastly more Americans/Canadians with dementia issues. Early ages for folks diagnosed. Men now in their mid to late 50's. Dementia. Alzheimers. There are no cures. This is now a huge medical issue here in N. America, W. Europe.
POST American| 11.30.11 @ 10:58PM
"WE shall use diet, water, injunctions,
---and the needle to control populations,
and engineer the kind of subjects we want."
-LORD Bertand Russell
1955
----------------HUAC/ Nuremberg 2012---------------
-------------------------------NO KIDDING