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Farm policy & farmland ownership
Is policy the answer to the many questions posed by today's struggling economy?
Dr. Barry Flinchbaugh is positive on the economy in general, but says something needs to be done soon, if not now.
“The American economy is growing at 3%. In an historical context, it’s certainly not good. But then again, neither are we going negative,” says Flinchbaugh, a longtime Kansas State University ag economist and farm policy author and analyst.
“Inflation is at 2.3% and unemployment at 7.8%. This is not an economy that is in recession or depression,” says Flinchbaugh, “It is not economic uncertainty, it is political uncertainty.”
The economy can be fixed by enacting sound policy, Flinchbaugh says. He noted in a recent discussion with farm managers, ag lenders and other farmland market members at the Land Investment Expo in West Des Moines, Iowa, the only years in the recent past in which the U.S. budget was positive was during Bill Clinton’s presidency. He then posed the question to the crowd "What do we remember about Bill Clinton?" alluding to Clinton’s impeachment due to his affair. "But yet most of us wouldn’t recall his ability to pull the budget up into the positive region," Flinchbaugh added.
Flinchbaugh says the 2013 farm bill is essentially a can that has been kicked down the road, but adds he's confident a new bill will be passed by this fall before the expiration of the current bill's extension.
So, what's that policy snarl got to do with farmland investment?
“You hold more cash then you ever have. What is there to do than buy Iowa farmland?” Flinchbaugh says. “Do you know what your taxes will be or you energy costs will be? Health care cost? Do you know what rules and regulations D.C. will come up with? No, you don’t.”
Flinchbaugh doesn’t say investing in farmland is a bad idea, but does suggest being extra cautious. Another sector to watch, he says, is crop insurance. When government spending is being cut, there will be an issue with crop insurance. Flinchbaugh says the government needs to be asking itself how much risk should be protected in order to come to a decision.
“If we don’t get our fiscal house in order we are in deep trouble,” said Flinchbaugh.