It Finally Matters - Wall Street Journal Print Edition Front Page: Heartland Sees Boom With Grains in Demand

In a shocker to blog readers, there appears to be a farming boom out there! Wall Street Journal says so! :) I am wondering if this means we have reached a short term top - by the time we start seeing it on the cover of Business Week or page 1 of the Wall Street Journal it migh be time to flee (temporarily) to the hills. But I just wanted to point this out in case you missed the last 6 months of blog entries repeating the same thing weekly ;)

I was going to write a piece later today about the "regional recession" - this only supports exactly what I was going to write (the part about Albion, NE)

• The U.S. economy may be teetering on the brink of recession. But there's a bountiful harvest down on the farm.
• Grain prices are surging to historic levels. Spring wheat, a variety often used in bread, hit a record $18.53 per bushel yesterday. Corn is trading above $5 and soybeans are bringing in more than $13, all 25% or more above their year-ago prices.
• Net farm income is expected to hit $92.3 billion in 2008 -- a 51% increase over the 10-year average of $61.1 billion. Across much of the Great Plains, unemployment rates are well below national figures and housing markets remain robust. Robert Moskow, a food industry analyst at Credit Suisse, has proclaimed this the "golden age" of agriculture.
• With inventories strained, "We're not going to go back to $2.10 per bushel corn," says Mike Helmar, director of industry services at Moody's Economy.com.
• While the boom is reversing decades of decline in U.S. rural areas at an otherwise vulnerable time, it's also pushing global food costs higher. International wheat prices in January were up by 83% from a year ago, according to a new report from the Food and Agriculture Organization of the United Nations. Scarce and costly grains -- especially staples like rice, wheat and corn -- have caused riots in poor nations such as Senegal and Mexico, says the group.
• Here in Albion, a central Nebraska farm town of fewer than 2,000, such problems seem worlds away. People are building new, outsized homes or renovating existing ones. A new ethanol plant has created 55 jobs and a full-time dentist is on the way. A fine-jewelry store moved here in November and a coffee shop run by farmers' wives -- charging Starbucks prices in a town where coffee used to come in a Styrofoam cup -- just celebrated its first anniversary.
• Although he now faces higher rents for land and higher prices for seed, fertilizer and fuel, he's still turning a profit.
• "Farmers have a lot of money to spend," says Jerry Carder, a 49-year-old Albion corn and soybean farmer who recently bought a $40,000 2008 Mercedes-Benz ML350. Business for Mr. Carder has been steady in the past but has spiked in the past two years as grain prices have risen.
• Still, rural America remains such a small slice of the U.S. population -- and agricultural production just a sliver of the country's output -- that the strong farm economy can't do much to offset weakness in the broader economy.
• Many farmers are finding more money in their pockets at the same time that federal subsidies -- historically a main source of their income -- have remained largely in place.
• Mr. Beckwith and his wife bought a 4,000-square-foot house in August for $339,000. Since buying it, they've converted a bedroom into a formal dining room, finished the spacious basement to include a full kitchen and bar and installed a flagstone patio and hot tub. The finishing touch: a 65-inch television.
• Good times haven't sprouted for all farmers. Steep crop prices have made life more difficult for livestock farmers who must buy corn and other grains to fatten their cows and pigs.
• Kent Stowell, who grows soybeans, corn, wheat and alfalfa outside Vliets, Kan., says a lot of people in his area are buying new tractors and combines. He just purchased his first new washing machine in 30 years and is about to buy a 2008 Ford pickup, his first new vehicle in six years.
• Corey Lee, a Chevrolet dealer in Frankfort, Kan., population 900, sold 10 cars in December, compared with three in December 2006. And the first 2008 Corvette he sold went to a farmer. "The rest of the economy isn't doing well but it doesn't seem to bother these guys much."
• On a hill overlooking Albion, new McMansions are sprouting up. In town, older homes are being renovated and expanded.

I'll have a fun piece on this soon.... but folks, get your kids into farming school - we're going old school - back to America of the 1920s - farming and mining! :)