The AgEconMT crew is joined by Dr. Todd Kuethe, an clinical assistant professor of land economics in the Department of Agricultural and Consumer Economics and the TIAA Center for Farm Land Research at the University of Illinois. Todd’s research and outreach focuses on analyzing agricultural land markets and agricultural lending. Anton and Eric chat with Todd about current issues in agricultural lending, factors affecting land values, and even how trade policies that open U.S. agricultural products to other countries (such as the recent agreement to export more U.S. beef to China) affect the value of the largest asset class in the production agriculture sector. Here is a brief outline and specific clips. Or listen to the whole episode above.
1:45: A brief overview of how land values are formed and change with fluctuations in commodity market prices.
3:50: How have current price fluctuations and price declines worked themselves into the credit and land markets? Are we seeing higher volatility? Rapid declines?
5:40: How have land values and their impacts on credit markets affected farmers’ decisions to take on more debt?
7:40: Are there parallels of the current price collapse to what happened in the 1980s financial crisis? Have lessons been learned?
9:10: How has crop insurance “changed the playing field” in financial and credit markets? Is there evidence that crop insurance reduced the risks of seeing another 1980s financial crisis? What’s the link between crop insurance and short-term credit?
11:25: What, if any, changes have occurred in how land owners lease land to farmers and how do those agreements fluctuate with commodity markets?
12:20: Market uncertainty is high. What makes some farmers more financially stable in such periods? What are some key elements to understanding decisions that can lead to stronger financial positions?
16:20: What has made ag land such a “safe” investment? That is, what are some reasons that ag land maintains its value while other assets fluctuate?
18:35: Recently, China and the United States have strengthened their trade agreements for beef and poultry products. Eric provides some background about the potential impacts on northern Great Plains cattle markets and Todd explains how this and other policies can impact land values.
25:20: How have banking regulations affected credit markets? Why do they exist and are smaller, rural banks affected disproportionately to larger banks?
29:25: What’s the role of government-based credit services in agricultural markets? Do they fill a necessary void during periods when farmers are unable to get credit from private banks? But, do government enterprises also crowd out private banks?
33:15: What else is Todd working on? How does it relate to your interests and questions?
(Intro and outro music by Trevor Sensor)
