Lotsa millionaires in Iowa

While the US struggles to come out of the deepest recession since the great depression, farmers have been having a pretty great ride.  Corn, soybean and wheat prices have been at (or near) historic highs for several years.  I don't begrudge them... not at all.  I grew up on a farm so my thought is that is about frickin' time that the people who feed the world get a decent pay.

Check out how much the price of farmland per acre has increased IN JUST ONE YEAR:

I'm not sure why this looks so bad on this blog.  Try clicking on the original here.  The bottom line is that most of Iowa saw farmland going up in value 17-35%.

Non-Iowans (and probably many Iowans) would wonder why land in the southern part of the state is worth less than half of the land in the northern part of the state.  Racism.  We just don't like southerners.  The northern half of Iowa was covered by glaciers and the land is more fertile.

A couple of years ago - when land values were half of what they are now - I joked with Dad that he was a millionaire.  In typical Iowa fashion he shrugged it off.  Last spring he contacted us kids to get permission to buy a $3000 used van.

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Switching hats from "Iowan" to "Economist-wannabe" - Farmland doubling in value in 5 years sounds like a bubble.  It is what happened with housing a decade ago, right?

I don't think this is the same.  First, the farmland in Iowa is being bought by fellow Iowans.  It has not become the speculation buy of those nasty east and west coasters.  Second, the increase in the price of corn and soybeans is here to stay.  Farmers are getting 3x the price of corn they were getting 10 years ago and almost 2x the price for soybeans.  Poor people around the world are getting a little richer.  As they have more money they want meat and fish.  Corn and soybeans feed those cows and fish farms.

I so wish I had a chance to teach economics again.

Update:  I've never liked the ice age theory to explain fertile soil.  It may be part of the reason but as this website explains, the northern parts of Iowa and the Mississippi/Missouri river valleys had grasses with deep roots.  Over time they built a much more rich soil.