A few months back, my older brother called to pat me on the back (he’s always good like that). He had just watched a very positive segment on CNN about farmers making bank locally and abroad. Knowing that I was in negotiations for a big dirt patch, he was happy for me.
He then related a story about a young farmer in the mid-west that sold his farm and moved operations to Brazil. The move promised to nearly double his returns. My rather pessimistic response to that story was, “good luck to him in controlling the political risk.” My bro said, “yeah, I wondered about that too.”
Lo and behold! Look what Argentina did! That 44% export tax on ag goods pretty much gobbles up any extraordinary profits. Granted, this is only one country, but if I were that kid in the mid-west, I’d start executing my exit strategy. Here’s my guess, if he was rash enough to sell the farm in the U.S. to invest in property elsewhere, he doesn’t have an exit strategy.
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