Record Farm Profits: Will Uncle Sam Take It Away?
Created on Wednesday, 02 November 2011 07:00 Written by Andrew Snyder, Editorial Director, Inside Investing Daily Hits: 64
Farmers are having a record year. It's a global trend that has the potential to spawn a fresh breed of millionaires.
My mom visited the other day. When I greeted her at the base of our porch steps, she made an observation. "There sure are a lot of nice trucks around here," she said.
We live in farm country. And these days, my neighbors are rich.
You won't see too many Mercedes or Audis roaming our dusty roads -- they're too flashy. But you find plenty of $50,000 and $60,000 trucks.
And, if you spent the night with us over the past two weeks, you would have heard the humming of massive half-million-dollar combines working through the night as the next generation of millionaires worked to transform cornstalks into dollar bills.
Farming is big business.
As I will show my Safe Haven Investor subscribers in their next issue, farming is about to create a fresh wave of wealth. But it may come even faster than even I imagined.
Get this... a report from Nebraska says farm profits will hit $5.5 billion this year. It is the most agricultural income the state has ever seen.
But this is far from a local phenomenon.
The ag folks in Washington say farming will lead to $103.6 billion in income across the nation this year -- another fresh record.
The reason for this quiet ag boom is simple. We celebrated it on Monday... the birth of our seven billionth neighbor.
As the world's population grows, we need more food. And with higher demand comes higher prices. Corn and cotton prices are up 50% over the past year, while wheat has added over 25%.
The great thing about food demand -- and a perfect reason to invest in the sector -- is once it starts, it doesn't stop. We need three meals today. We need three meals tomorrow. And we'll need three meals a decade from now.
Rich farmers getting even richer is a trend that's here to stay...
"We are extrapolating one of the most prosperous times in agriculture over the next 10 years," said Daryll Ray of the University of Tennessee.
Again, this is not a localized phenomenon. It's global.
As I'll show my subscribers in the next issue, farmland has become the "essential resource." If a country doesn't have adequate farmland, it's in big trouble. Even resource-rich countries like Saudi Arabia and Qatar have fallen victim.
In a story rarely mentioned, Saudi Arabia will no longer grow any of its own wheat starting in 2016.
The world's oil baron was once entirely self-sufficient. But now, as its main aquifer runs dry, its wheat production has been cut in half. That means it needs to import some 1.5 million tons of wheat this year.
Instead of relying on the open market, the Saudis are doing what many other hungry nations are doing. They are buying foreign farmland.
In fact, over the past couple of years, an area equal to 25% of Europe's farmland has gone into the hands of foreign investors -- some 20 million hectares. They're buying land all across the globe, from Africa to Russia to South America.
It is a trend that has created massive opportunities and will continue to spawn a new breed of flannel-clad millionaires.
But here's the fresh sidebar to this story...
Washington can't keep its hands out of the fray. Over the next three weeks, the idea of federal farm subsidies will hit the mainstream. As the "super committee" meets to discuss its spending cuts, some $23 billion in farm subsidies is on the line.
It's fine by me... but it's going to create some strong debate.
The good news for us is it will undoubtedly create a buying opportunity... or two. Anytime Uncle Sam gets involved, market distortions are bound to follow. We will gladly take advantage of them.
Farmers are having a record year. It's a global trend that has the potential to spawn a fresh breed of millionaires.
My mom visited the other day. When I greeted her at the base of our porch steps, she made an observation. "There sure are a lot of nice trucks around here," she said.
We live in farm country. And these days, my neighbors are rich.
You won't see too many Mercedes or Audis roaming our dusty roads -- they're too flashy. But you find plenty of $50,000 and $60,000 trucks.
And, if you spent the night with us over the past two weeks, you would have heard the humming of massive half-million-dollar combines working through the night as the next generation of millionaires worked to transform cornstalks into dollar bills.
Farming is big business.
As I will show my Safe Haven Investor subscribers in their next issue, farming is about to create a fresh wave of wealth. But it may come even faster than even I imagined.
Get this... a report from Nebraska says farm profits will hit $5.5 billion this year. It is the most agricultural income the state has ever seen.
But this is far from a local phenomenon.
The ag folks in Washington say farming will lead to $103.6 billion in income across the nation this year -- another fresh record.
The reason for this quiet ag boom is simple. We celebrated it on Monday... the birth of our seven billionth neighbor.
As the world's population grows, we need more food. And with higher demand comes higher prices. Corn and cotton prices are up 50% over the past year, while wheat has added over 25%.
The great thing about food demand -- and a perfect reason to invest in the sector -- is once it starts, it doesn't stop. We need three meals today. We need three meals tomorrow. And we'll need three meals a decade from now.
Rich farmers getting even richer is a trend that's here to stay...
"We are extrapolating one of the most prosperous times in agriculture over the next 10 years," said Daryll Ray of the University of Tennessee.
Again, this is not a localized phenomenon. It's global.
As I'll show my subscribers in the next issue, farmland has become the "essential resource." If a country doesn't have adequate farmland, it's in big trouble. Even resource-rich countries like Saudi Arabia and Qatar have fallen victim.
In a story rarely mentioned, Saudi Arabia will no longer grow any of its own wheat starting in 2016.
The world's oil baron was once entirely self-sufficient. But now, as its main aquifer runs dry, its wheat production has been cut in half. That means it needs to import some 1.5 million tons of wheat this year.
Instead of relying on the open market, the Saudis are doing what many other hungry nations are doing. They are buying foreign farmland.
In fact, over the past couple of years, an area equal to 25% of Europe's farmland has gone into the hands of foreign investors -- some 20 million hectares. They're buying land all across the globe, from Africa to Russia to South America.
It is a trend that has created massive opportunities and will continue to spawn a new breed of flannel-clad millionaires.
But here's the fresh sidebar to this story...
Washington can't keep its hands out of the fray. Over the next three weeks, the idea of federal farm subsidies will hit the mainstream. As the "super committee" meets to discuss its spending cuts, some $23 billion in farm subsidies is on the line.
It's fine by me... but it's going to create some strong debate.
The good news for us is it will undoubtedly create a buying opportunity... or two. Anytime Uncle Sam gets involved, market distortions are bound to follow. We will gladly take advantage of them.
