Interesting story from down in the heartland: Farmland is the “new gold.”
Farmland value has doubled over the past 10 years – out-performing real estate as an investment, attracting all sort of outside money.
What’s driving the appreciation is exports. Hmm. Corporate Ag uses subsidized water to grow sometimes subsidized crops and sells them to China. The drive to plant high-value crops is a significant factor in the water wars. Seeing the profits to be made from exports, south-Valley farmers such as those in the Westlands planted orchards when they are legally entitled to water only in the wettest years.
This risky decision — permanent crops, intermittent water supply – created the impetus behind the emphasis on “reliable” water. And the drive toward a Peripheral Something-or-Other. The appreciation of land is a bet by investors that Big Ag ultimately will succeed in hardwiring the system to its benefit. Meaning construction of a Peripheral Tunnel and (unfairly) enhanced water rights. It’s not a bubble, it’s a wager. A risky wager.