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By Robert Rapier on Mar 11, 2008 with no responses

Farm Prices Headed North

What prompted my previous essay on the vicious circle that has been started was this story:

Farmland prices continue to jump

The latest results mirror a trend noted by the U.S. Department of Agriculture in an earlier report. USDA officials found that the average value of an acre of Wisconsin farmland, about $2,250 in 2002, had jumped to $3,366 in 2006, the last year for which data is available. That’s a nearly 50 percent increase.

The appreciation was even more marked in the southwest corner of the state, where prices have increased fourfold in the last five years.

Prices are “going through the roof,” said Ed Kraisinger, a real estate agent who markets farmland in Grant, Iowa, Lafayette and Sauk counties. An acre there that might have sold for about $1,500 five years ago is now worth as much as $6,000, he said.

That’s great for farmers who owned land five years ago. A lot of millionaires have been created in Iowa (at least on paper). If only the government would now mandate that all of our incomes increase by fourfold, perhaps we could afford to buy some farmland.

Not surprisingly, a spokesman for the Farm Bureau doesn’t see any connection between any of this and ethanol mandates:

The trend is driven in part by record prices for commodities such as corn and soybeans, according to Paul Zimmerman, a spokesman for the Wisconsin Farm Bureau. Other factors include increased demand for land from people looking to build rural homes, as well as the need among dairy farmers for more land to comply with new state regulations limiting the amount of manure that can be spread over an area.

Ethanol, a biofuel made from corn, doesn’t seem to be a major factor in the increase of farmland values, Zimmerman said, because the demand for ethanol accounts for only a small portion of the price of a bushel of corn.

Keep telling yourself that, Mr. Zimmerman – that the trend is being driven by record corn and soybean prices, but that has little to do with ethanol mandates. As I said in the earlier essay, what we have done is put policies in place that have rewarded a select few – disproportionately in Iowa – while bringing consequences down upon us all.

Why don’t we create more wealth by mandating that everyone buy a new computer or a new Ford every 3 or 4 years? Wouldn’t that create wealth? Wouldn’t that create jobs? I am sure we can count on fans of ethanol mandates to support computer mandates. Heck, maybe we can make everyone wealthy with enough mandates.