Wednesday, October 28, 2009

Investing in Nevada Irrigated Farm and Ranch Land with Water Rights

When most people think of farm land and ranch property, they think open ranges, hay fields, cattle and cowboys riding horses.

Wall Street seems like a far off place in another world. A fast paced place driven by profit and greed.

It seems the classic contradiction, slower paced, straight talking, down to earth folks making their living off the land verses the Bernie Madoff and George Soros types.

Truth is, the story I am about to tell you just may be a little sad, because Wall Street is buying up the farm. Over the past few years investment power houses like BlackRock, and retirement plan giants like TIAA-CREF has been plowing money into farmland. In Nevada farm land generally means land with water rights, due to the arid climate.
These are smart people who are motivated by money and profit.

Here is the deal; the fundamentals are in place for a long term boom in prices for everything AG-related. Consider this; in 1960 there were 1.1 acres of arable farmland per person globally, according to data from the United Nations. By 2000 that number had fallen to .6 acres. Over the next 40 years the world population is projected to grow from 6 billion to 9 billion.

According to Joachim von Braun, director general of the International Food Policy Research Institute, “Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050”. “With limited land and water resources, this will automatically lead to increased valuations of productive land.” Von Braun goes on to say, “It goes hand in hand with water, Water scarcity will probably increase even more than land.”
Water in Nevada is today in short supply and clearly demand will outpace supply as they continue to close basins to new permits. Water rights in Nevada have another issue facing the dwindling supply, the demographic shift of the baby boomers to the more tax favorable warmer climate. Choices, decisions, are being made today, do we use the water for agriculture and food production, or do we pipe to Las Vegas for culinary use.

Farmers and ranchers want to stay in the business, but millions of dollars waved under their noses make it tough to say no to the sale. Many will stay on and lease to continue to live the lifestyle they love. These lease payments are cash flow on the investments. Could it be a win-win situation?

Commodities guru Jim Rogers says, “I’m convinced that farmland is going to be one of the best investments of our time.”

Meanwhile, B.L. Harris, acting director of the Texas Water Resource Institute, knows well the problems of the Ogallala system. “The one big issue with regard to the Ogallala is the fact that the annual recharge is much, much lower than the extraction rate that we are putting on the aquifer at the present time. The aquifer is over-drafted to a substantial extent.” The Ogallala is one of the world’s largest aquifers covering 174,000 square miles; it runs from South Dakota to Texas. Some estimates say it will dry up in as little as 25 years.
Farmers are smart and they talk, they may wear overalls and talk funny, but farming is older than Wall Street. Water and food are the sources of life for the planet, demand is guaranteed to grow. There are few guarantees on Wall Street. Farming is a difficult business, but it is a fine tuned machine, executed right it is a profit opportunity.

Nevada cattle ranches as large as 34,000 acres including rangeland leases, listed and available for sale. For information about Nevada farm and ranch land with water rights.

Chris W. Miller
Vegas Grand Realty and Property Management

Nevada Water Rights

Land in Nevada

Nevada Ranch Properties

Lincoln County Land Market

Mesquite NV Real Estate Market

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