The farmland bubble
To the editor:
Now that the first half deadline for paying your property tax bill is fast approaching, farmers need to answer this question, “Is their property over assessed?” Will the income from their farmland support the value that the assessor has placed on it? I say it will not! An inflated value is fine if you are selling but for most farmers they are not selling. They are trying to make a living working the farmland to raise a family. If their farmland is over assessed they will be paying more than their fair share of the community’s levies. Also, the area will lose valuable state aid because the tax capacity will have increased so much. This too will result in higher taxes and a greater burden for the agricultural community to be competitive in a highly competitive world.
We have all heard about the seemingly outrageous prices for farmland both here and in other states. How are such prices arrived at? Is it from the big egos at auction sales, the fear of currency debasement by the Federal Reserve, a drought price windfall, or the usual pyramid averaging by long established farmland owners? However it is done, the purchases must be subsidized from an outside source to pay for the substantial down payment and mortgage payments. Otherwise, the purchases will not cash flow at today’s commodity prices. This is the death knell for new farmers without family ties because the farmland purchases cannot stand on their own.
Roller coaster prices trends are not good for anyone as who can then make appropriate plans. Assessed values are supposed to be based on what a prudent buyer might do absent any speculative influences. Is this what we have today? Think about this when you are signing that check.