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  1. #1 The Next Real Estate Bubble: Farmland 
    PORCUS MAXIMUS Rockntractor's Avatar
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    By Blake Hurst Friday, March 29, 2013


    Farmers have been taking on mounting debt, creating an unsustainable increase in land prices and risking a crash that would ripple through our economy.
    Eeyore should have been a farmer. It’s almost impossible to find a farmer happy about his situation. The weather’s too hot, cold, wet, or dry, and prices are too low or too high, depending on whether we’re buying or selling. We can’t, at least in front of our peers, admit to prosperity or even the chance of prosperity. Although we’d never admit it at the local coffee shop, the last few years have been good, at least for Midwestern grain farmers. Prices have been strong — strong enough to make up for much of the production lost to last year’s drought. That’s terrible news for livestock producers, who’ve been faced with drought-damaged pastures and high feed costs, but for farmers producing corn and soybeans, it has been a profitable few years.

    Farmers have cash, and nowhere to invest it but farmland. Farmers largely ignore equities, as they tend to balance the inherent risk in farming by investing in what they perceive as less risky places. We aren’t dumb, however, and have figured out that it's a losing game to invest in bonds or CDs at rates less than inflation while we’re in tax brackets we never even knew existed.
    http://www.american.com/archive/2013...ubble-farmland

    When a farm in Iowa sells for $21,900 per acre either the dollar is terribly inflated or land prices are, I guess both.
    The difference between pigs and people is that when they tell you you're cured it isn't a good thing.
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    Senior Member DumbAss Tanker's Avatar
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    As long as we continue to promote and incentivize use of our petrochemicals to grow food just to burn that food for fuel, and at about a zero net-net energy-wise, and pretend it's wondrous 'Green energy,' the crop farmers will still be doing well. They'll be screwed if that gravy train ever pulls into the station for maintenance, though.

    eta - The writer is certainly correct about that 22K per acre. Here in the rocky, hilly southern MO Ozarks where all we can really farm on any large scale is livestock, that would be an astronomical price, and a farm complete with house and outbuildings a hundred times that size would cost only ten times as much as that single acre. Of course, you wouldn't be able to grow corn or soybeans on it, just cattle, goats, hay, etc.
    Last edited by DumbAss Tanker; 03-31-2013 at 11:20 AM.
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  3. #3  
    Senior Member TVDOC's Avatar
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    Quote Originally Posted by DumbAss Tanker View Post
    As long as we continue to promote and incentivize use of our petrochemicals to grow food just to burn that food for fuel, and at about a zero net-net energy-wise, and pretend it's wondrous 'Green energy,' the crop farmers will still be doing well. They'll be screwed if that gravy train ever pulls into the station for maintenance, though.
    It's far worse than "zero net-net".......ethanol (when all factors are entered into the equation), requires three times as much energy to produce than it yields in use........it's a lousy fuel, low specific heat (40% reduction in per/gal fuel economy), non-competitive in the retail market (even with subsidies), requires substantial re-engineering of components to use, is corrosive, and generally a waste of time.......it's only advantage is that in small quantities, it absorbs water, burning it in the combustion process, eliminating fuel contamination by water.

    doc
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    Senior Member DumbAss Tanker's Avatar
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    Quote Originally Posted by TVDOC View Post
    It's far worse than "zero net-net".......ethanol (when all factors are entered into the equation), requires three times as much energy to produce than it yields in use........it's a lousy fuel, low specific heat (40% reduction in per/gal fuel economy), non-competitive in the retail market (even with subsidies), requires substantial re-engineering of components to use, is corrosive, and generally a waste of time.......it's only advantage is that in small quantities, it absorbs water, burning it in the combustion process, eliminating fuel contamination by water.
    doc
    You may have better data, the last thing I read on it was that best case it was only about a 1.1:1 swap, best case. It has worked okay in Brazil where (At least officially) the energy swap is 8:1 because they use sugar cane instead of cereal grains. You're absolutely on target about all the negatives of ethanol, it's really something that's only suitable for internal combustion engines in the sort of wartime dire straits faced by WW2 China and Germany, or an SF post-apocalyptic world.
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    Senior Member TVDOC's Avatar
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    Quote Originally Posted by DumbAss Tanker View Post
    You may have better data, the last thing I read on it was that best case it was only about a 1.1:1 swap, best case. It has worked okay in Brazil where (At least officially) the energy swap is 8:1 because they use sugar cane instead of cereal grains. You're absolutely on target about all the negatives of ethanol, it's really something that's only suitable for internal combustion engines in the sort of wartime dire straits faced by WW2 China and Germany, or an SF post-apocalyptic world.
    If you study the fine print (and the bias of the sources), studies that claim a 1/1 energy quotient fail to include such essentials as:

    .......The cost and energy consumption required to actually produce a crop (diesel/gasoline, lubricants, equipment depreciation, fertilizer, herbicides, pesticides), all of which require huge amounts of petrochemicals and production energy to manufacture. They assume that these would be used in normal food-crop production anyway.......however, they are part of the cost structure.

    ........The fact that typically ethanol production facilities require HUGE amounts of electricity, and are normally small (eliminating "economies of scale"), and located in rural areas where the relative costs of electricity are high.

    .........Ethanol is not usually produced in areas (or in quantities) where economical rail transportation is available, leaving transportation costs significantly higher.

    .........The additional cost and energy requirement at the gasoline refinery level to produce a "special blend" of gasoline that will accomodate up to 85% ethanol (and maintain the needed "octane" rating for use). And since the demand is so small, the relative cost of refining is considerably higher.

    Usually data of this type only considers the price of grain going into the ethanol plant compared with the total production cost of what comes out of the pipe and goes into the truck.........

    doc

    On Edit: I forgot to mention that Brazil has only approximately 25,000 total motor vehicles, compared to 10,505,000 in the US...........it would require a HELL of a lot of sugar cane to replace gasoline here. Simply not practical.

    http://query.nytimes.com/gst/abstrac...DA405B828EF1D3
    Last edited by TVDOC; 03-31-2013 at 12:44 PM.
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  6. #6  
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    Quote Originally Posted by Rockntractor View Post
    When a farm in Iowa sells for $21,900 per acre either the dollar is terribly inflated or land prices are, I guess both.
    All depends on what it's being bought for. There are "farms" in Maryland owned by rich people which grow Christmas trees or some other BS to maintain ag zoning and reduced taxes. You buy a 100 acre farm, pretend it's your manorial estate for ten or twenty years, and then sell it for $200,000 an acre when it starts needing major improvements. Richland American buys it and turns it into a suburban McGhetto.
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  7. #7  
    Senior Member DumbAss Tanker's Avatar
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    Quote Originally Posted by TVDOC View Post
    On Edit: I forgot to mention that Brazil has only approximately 25,000 total motor vehicles, compared to 10,505,000 in the US...........it would require a HELL of a lot of sugar cane to replace gasoline here. Simply not practical.
    http://query.nytimes.com/gst/abstrac...DA405B828EF1D3
    Yeah, I was not meaning that it would work for us, just that it only works for them since it's based on an input crop we can only produce in very marginal quantities due to us being outside the tropics. Even at anywhere near 1:1, there just is no sane reason to enter into such a Rube Goldberg arrangement to get fuel, all it does is add steps, involve more people who have to be paid in the production process, and consume additional resources. The entire thing is ridiculous.
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