T. Marc Schober

Focusing on Precious Metals and Farmland

I really liked the article. It seems "stuff" will do pretty well if/when inflation rises. I agree with the author’s suggested investments as well; water, renewable energy sources, agriculture, and precious metals.

Gold is an interesting investment and it is proving it right now, but I like farmland too. It acts as a great inflation hedge, like gold, but it pays you to own it. Of course farmland holds some risks then. Commodity prices can affect it as well as weather and interest rates.

Commodities soared in 2008 and then decreased dramatically, while farmland decreased just over 1% nationally according to the USDA. Farmland is not as volatile as some may think.

Farmland has returned over 12.5% per year over the past 20 years on average in the US, by USDA statistics. A little over half of that 12.5% is from appreciation, while the other portion is from leasing out the land through cash rent, share cropping, or some other program.

Our blog, farmlandforecast.colvi.../, talks about agriculture and farmland. We write from an investor’s point of view at times as well.

Farmland Investment: Still Premature in this Weak Economy

Great article. It’s nice to see farmland values drop or stabilize right now for investors and I believe that means it is a great time invest in farmland. Like you said, farmland has only lost value twice in 100 years, so now is the 3rd time and wouldn’t that mean that people should take advantage of this opportunity to buy low, or at least stable prices?

So far in 2009, there hasn’t been an abundant amount of land sales to compare values to. Now that Fall is rolling in, I think that everyone will have a much better understanding of land values when some farms sell.

Commodity prices have been low, but look what happened yesterday, corn hit limit on frost concerns. More importantly, no one knows the exact correlation of commodity prices to farmland values. There is obviously some sort of correlation, but I think there are too many other factors that come into play, specifically demand.

Thanks for writing this article. It’s always interesting to see how states differ in land values, like on the chart above.

Here is a blog that highlights all sorts of agriculture and farmland stories. farmlandforecast.colvi.../

The Looming Threat of Peak Water, Part II

I like the article! I agree that supply and demand must change in order to battle this imbalance. I really like the author's chart comparing oil and water. There are scary similarities. If demand doesn't change, desalination companies could greatly benefit.

I wrote two articles on this same subject and my final one will come out in the near future. Check them out at farmlandforecast.colvi... and farmlandforecast.colvi...

Canadian Farmland: A Worthwhile Investment?

I really like your article! I’m glad more and more people are understanding why farmland is such a great investment. I’m looking forward to reading the report on US farmland in the future. I have done a lot of research on US farmland values and returns as well. Here’s my report on US farmland: farmlandforecast.colvi...

I found that US farmland has increased in value 6.7% per year over the past 20 years. It’s really interesting to then take into consideration what the overall value is of land including rents. US farmland has returned 12.5% including cash rents and value increases over the past 20 years. Since 1967, US farmland cash rents have yielded 5.9% alone.

Farmland also provides a margin of safety to investors, as stock prices can go to zero, but farmland will always have some value.

How to Invest in Water

Water is a very interesting investment. I really liked the article. I have brought the idea of water investments up to people and I have often gotten this response, "water has nowhere to go, if it evaporates, it still can't leave our planet because it will condense somewhere else." Does water get wasted by getting stuck in natural filtration systems like soil or the ocean? We're running out of it, but I'm confussed by how.

It's crazy to think that a gallon of "high quality spring water" is more exspensive than a gallon of milk, and way more than a gallon of gasoline.

Great first article

How the Impending Food Shortage Will Impact Agriculture Stocks

This morning, the USDA raised its 2009 corn acreage forecast by 2.0 million acres to 87.0 million acres and its forecast for soybean plantings by 1.5 million acres to 77.5 million acres. Grain prices were sharply lower (corn down almost 8% and triggered the daily trading limit of 30 cents) as the planted acres forecast was considerably higher than the consensus estimate. Also weather conditions have been favorable in the Midwest.

Despite the large increase in planted acres, supplies will still be constrained. I expect the market to now be focused on yields for the remainder of the summer.

Natural Gas: The Next Big Thing

Good article! Boone's Plan seems like a good idea to me. It might not be the exact solution, but it's on the right track. Something has to be done to solve the oil dependency. I wonder if more natural gas cars were available for purchase in the US, would it catch on and natural gas become more popular. I think now it would seem hard to drive a natural gas car too far from home because of the lack of fill up stations that carry it. If more cars are on the roads, stations will have to carry it.

Keep it up T Boone Pickens.

Why Invest in Farmland?

Thanks for the great remarks.

I think land prices in rural Kansas will continue to rise. $5,000/acre ground is expensive, but the price can be justified in certain conditions. With all the factors that go into farmland values, and the changes happening globally, farmland values are poised for appreciation, although I don't see 300% changes occurring over the next 3 years.

When valuing farmland, I take the rental rate per acre divided by the price per acre to give me a yield. Currently I am looking to acquire any property yielding 4% or higher. I have seen quite a few top quality parcels yielding over 6%.

As yellowhoard said, land is not inexpensive right now. Reports are showing that farmland has hit a bottom and in my view, is the cheapest it is going to be. US farmland is different than other areas as well. Prices may be higher than the rest of the world, but farmland in the Midwest is some of the best in the world. You have different factors that play into each piece of land, compared to other places in the world, but it is all relative; values will rise.

Ergo, along with farmland values rising, ag companies will benefit. Although ag stocks have had a strong run over the last few months, they should benefit over the long-term from the global demand for grain. Now if you want to invest in farmland specifically, there are not many choices out there. I suggest you look closer at the blog I write for, or contact me.

ETF Update: The Independence of Agriculture

I can't agree with the author more about food demand rising. It's such a give in that rising population and emerging economies will result in a higher demand for food. What supplies this food? Agriculture companies and services do and they are bound to rise as well.

Almost all food can be traced back to farmland as well. I definitely think that many ag companies are a safe bet right now like CNH, POT, & MON. I believe that farmland is going to be even safer though. I cannot guarantee you that MON will be around in 50 years, but I am quite confident that a piece of rural farmland will be, and crops will be grown on it.

Jeff, you wrote a great report above, keep it up. Be sure to check out farmlandforecast.colvi.../ It's a blog that hits on agriculture investments as well.

Commodities: A Wise Long Term Investment

Great article! I agree with a lot of the points up there. Commodities are a great investment and I think more specifically agriculture. The world is changing and ag could see a lot of benefits. People have to eat.

Besides China needing so much fertilizer, they are renting out farmland in other countries to try to solve their food security dilemma. The Chinese diet is becoming more protein based instead of grain based. That being said, it takes 8-15lbs of grain to produce 1lb of meat. The demand for ag & other commodities will be growing exponentially.

This blog talks a lot about these issues as well. farmlandforecast.colvi.../ Great article though!

Agricultural Commodities a Great Opportunity - Marc Faber

You make a good point Jordan. I'm pretty sure yields are rising as well. You're right about the global demand for grains is growing at a faster pace though. Many Asian countries have developing middle classes. These classes used to eat a grain based diet and now they eat a protein based diet. That equates to 10-15lbs of grain to produce 1lb of meat!

I agree with Marc Faber, ag is a great place to invest. It almost always is. This blog talks about a lot of those factors on why ag is a good investment: farmlandforecast.colvi.../

Jim Rogers: U.S. About to Have a Currency Crisis

Jim Rogers has been huge on ag for a while now. It does show some great potential. Farmland could be a great hedge against inflation, especially with demands rising for it. Everyone needs to eat and farmland doesn't grow. There's only a limited amount. I think ag is a good buy right now. This blog always has good stuff on ag: farmlandforecast.colvi.../

Agriculture Stocks Still Make Sense, When Selected Wisely

Ag has tons of potential. Like the article said, Deere has seen sharp drops in equipment sales. Creighton University puts out a great monthly index of Rural Mainstreet. This last month showed that banks are finally giving out more loans in these small, agricultural based, communities. Also, it confirms farm equipment sales haven't risen much since last fall. The good news is that these towns have hope in the near future because their confidence index has finally risen.

Here's a link to a blog that talks about this Rural Mainstreet Index: farmlandforecast.colvi...

Stocks to Watch if Crude Oil Heats Up

I agree with a lot of this. POT might be due for a rise. Nice article

Why Jim Rogers Still Favors Commodities

Jim Rogers has some interesting input here. Good article. Here is another article from a blog that talks about Jim Rogers and his agriculture ideas. farmlandforecast.colvi...