Farmland values sustain strength entering 2023
COLUMBIA CITY, Indiana (March 23, 2023) -- Prices on commodities and farmland were up sharply again during 2022, but some variables on the horizon could exert downward pressure, according to R.D. Schrader, president of Schrader Real Estate and Auction Company.
"For two years now, a lot of pockets experienced the rare combination of very good yields and strong commodity prices. More broadly, the world and U.S. geopolitical atmosphere seems to bolster the desire for a 'safe haven' for investors. For a growing number, that 'safe haven' is investing in food production," he said. But rising interest rates, tensions in China relations, and variables around the Russia/Ukraine war could exert downward pressures on commodities and land.
Schrader's comments came during a recent series of four Farmers' Update sessions in Venice, Florida, Lancaster, Wisconsin, Lafayette, Indiana, and Fort Wayne, Indiana.
But Schrader also pointed out the often-forgotten link between food prices and energy, suggesting that some projections of solar and wind energy may create upward pressure on food prices and land values. A Bloomberg/Princeton University study found that increasing wind and solar by 10 percent per year until 2030 would require a land mass the size of South Dakota.
"To be carbon free by 2050, the U.S. may need up to four additional South Dakotas to meet the energy needs of all the electric vehicles, factories, etc.," Schrader added.
He cited Maximo Torero, chief economist of the Food and Agriculture Organization of the United Nations: "We talk about the changing energy mix for climate issues, but that will increase the price of energy, of natural gas, & that will increase the price of fertilizer. That is what really is putting at risk the next supply and could create a problem of food availability, as well as access."
Individuals seeking additional information about buying or selling in Schrader auctions my visit www.schraderauction.com or call 800-451-2709.