Originally Posted by Old_Toot
Originally Posted by There_Ya_Go
Originally Posted by Dutch


This is absolutely true, but it clearly shows how horrible farming is as a use of capital. Were someone to sell and invest that $5.4 million at the average rate for the last 100 years (which is over 11%), it would create an income of more than $500,000 per year. Few, if any, farms realize that net, or come even close to half that, meaning the farmers, in effect, are paying $300,000 or more per year for the privilege to farm.

I know, I know, that's an over simplification, ignoring value gains of the farms among others, but it's still too close to the truth to be comfortable.


It's going to be less than $5.4 million after taxes. But, what you're saying is what is happening in some places, especially where towns are expanding out to swallow up farms for housing. Even then, a lot of farmers run the money through 1031 exchanges and buy more farm land farther out in order to avoid the tax bite.

If you buy a stock, do you expect the dividends to pay for it? No. Part of the calculation is the expected appreciation of the stock price. Same with land, be it farm, timberland, or your house and lot. Also, land is somewhat like gold, a store of value. In JoeBob's example, the land went from $900 to $9,000 in 40 years. That's about a 6% return without taking into account the annual income from the farm.



Annual income from the farm is quite an assumption. There’s also the distinct possibility of annual losses,


Boy that is a fact! With unstable fuel prices and a broken crystal ball how are you going to make a budget. My Uncle who eventually became wealthy farming dryland wheat felt breaking even was a hell of a task.

Dog I rescued in January

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