H.R. 2751 and its Effect on Land Supply
H.R.2751, also known as the FDA Food Safety Modernization Act, passed the senate before the holiday and was recently signed by President Obama. You might be asking why I'm writing about a food safety bill on a real estate blog? The answer lays in the actual text of the bill (soon to be law).
One of the tenets of the bill will require farm and food manufacturers to prepare safety reports for their food during many stages of production. Proponents of the bill argue this will be an economic boon for most farmland states adding jobs and boosting the economy. Those who propose the bill say that even doubling the amount of food inspectors won't do much to add safety in our food distribution system.
No matter which way you shake it, some manufacturers will likely need to add facilities to keep up with the new regulations. Until technology improves, cutting crop size to make room for new buildings is not an option because that would reduce crop yield. That means expanding into new territory, which could mean purchasing new tracts of land, development deals, and new construction contracts.
With some luck, real estate agents and brokers in the farm scape may see an economic boon to their businesses soon too!
Photo credit: dbking via Flickr.
Comments (4)
More regs on farmers, especially burdensome on the small farmer, drives me crazy. Nevertheless, it should drive costs up, and possibly land, too. China demand for beef, and other traditionally western foods, will also drive food and farm land prices.
Jon Klaus, over 13 years ago
Keep us posted. If you have any case studies, I know I would be fascinated to hear more.
Kevin Kaczmarek, over 13 years ago
We've done some transactions with farmland brokers (sales agents) and that seems to be the recent trend Kevin. Legislation like the one mentioned in the post can certainly heighten the effects of the supply/demand curve too. It's going to be an interesting next couple of years, that's for sure.
Craig Grella, over 13 years ago
great insight Craig. having this type of forward looking forecast is the right approach to investing. I have heard that farm based land is still increasing in value because of the scarcity of it. Have you heard or seen the same thing?
Kevin Kaczmarek, over 13 years ago