{"id":899,"date":"2021-08-24T21:53:49","date_gmt":"2021-08-25T01:53:49","guid":{"rendered":"http:\/\/blogs.bu.edu\/zagorsky\/?page_id=899"},"modified":"2021-08-24T21:54:29","modified_gmt":"2021-08-25T01:54:29","slug":"are-silicon-valley-and-wall-street-tycoons-ruining-montanas-cattle-business","status":"publish","type":"page","link":"https:\/\/blogs.bu.edu\/zagorsky\/day-by-day-trip-log\/are-silicon-valley-and-wall-street-tycoons-ruining-montanas-cattle-business\/","title":{"rendered":"Are Silicon Valley and Wall Street tycoons ruining Montana\u2019s cattle business?"},"content":{"rendered":"
\n

I was having dinner in a bar a few days\u00a0 ago.\u00a0 In Eastern Montana bars double as restaurants since most small towns cannot support both. \u00a0 I always eat dinner sitting at the actual bar, not at a table, because the bar is a place where there is a chance to talk to other people.<\/p>\n

I started chatting with a rancher who was there to have a few drinks.\u00a0 He looked exactly like what central casting from a movie would have ordered.\u00a0 He had a large white cowboy hat, a big bushy mustache, nice boots and a big laugh.<\/p>\n

I bought him a beer since that is an easy way to keep a conversation going.\u00a0 He told me about his life ranching and hunting.\u00a0 He asked about me and my trip.\u00a0 Hearing that I teach in a business school he was keen to explain the problems raising Angus beef, which is the specialty of that area.<\/p>\n

His story was clear and simple.\u00a0 Small ranches and farms were no longer profitable.\u00a0 Only large ranches and farms could economically make it in today\u2019s world.<\/p>\n

The problem was that outsiders, with lots of money, like Silicon Valley and Wall Street tycoons were interested in buying large ranches as trophy properties.\u00a0 He said they were willing to pay ten times the actual value.\u00a0 This was boosting land prices and preventing future generations, like his children, from being able to go into ranching.\u00a0 In this part of the world they call it shifting property from agricultural to recreational use.<\/p>\n

He didn\u2019t say this but if his complaint was true then the end result for beef eaters would be bad news.\u00a0 Less property to raise cows would mean grass feed Angus beef prices in the future would go steadily upward.<\/p>\n

I thought about his complaint for the next few days.\u00a0 It made perfect sense from a theoretical perspective.\u00a0 However, I had one small nagging issue.\u00a0 I didn\u2019t see any evidence of well-to-do outsiders.\u00a0 On a bike you are very attuned to cars and trucks that pass you.\u00a0 In the past week, I have not seen a single Mercedes, BMW, or Tesla.\u00a0\u00a0 The only planes at the airports I pass are small prop planes, not personal jets.\u00a0 The bars don\u2019t stock high end liquor for the occasional rich person.<\/p>\n

I saw just one instance of the very rich.\u00a0 Outside of Missoula, which is in Western Montana, not Eastern, I passed by a ranch that specialized in glamping, called Paws Up<\/a>.\u00a0 Glamping is glamour camping, which means you sleep in a luxury tent and have a high end experience.\u00a0 Their website said rates were $800 a night per tent.\u00a0 However, this ranch was catering to very rich outsides who only wanted to experience Montana\u2019s great outdoors for a few days, with all the creature comforts that are possible.<\/p>\n

Today, I had enough time to bring up some data to look into the rancher\u2019s complaint.\u00a0 The\u00a0 US Department of Agriculture has been doing a survey since the late 1990s of cash rents.\u00a0 The survey contacts about a quarter-of-a-million farmers and ranchers.\u00a0 It asks them questions about the price it costs to rent land.\u00a0 More details on the survey are found by clicking here<\/a>.<\/p>\n

Sure enough the price to rent land in Montana has increased a lot, just like my rancher friend stated.\u00a0 In 1998 you could rent an acre of land for one year in Montana for about $22.\u00a0 In 2017 the price was about $32.\u00a0 You can see the full series in the next picture.<\/p>\n

\"Montana<\/p>\n

However, as I remind my students, unless you adjust for inflation long term comparisons are meaningless.\u00a0 The next picture shows the inflation adjusted price, in 2017 terms.<\/p>\n

\"Montana<\/p>\n

After adjusting for inflation the price to rent an acre of land for ranching or farming in Montana is about the same in 2017 as in 1998.<\/p>\n

What does this mean?\u00a0 Rich people might be converting agricultural land to recreational use.\u00a0 However, not enough land is disappearing to push the price up over time.\u00a0 We came blame Silicon Valley and Wall Street tycoons for many things.\u00a0 One thing it doesn\u2019t look like they are guilty of is making it tougher for a new generation of ranchers and farmers to get into the business in Montana.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

I was having dinner in a bar a few days\u00a0 ago.\u00a0 In Eastern Montana bars double as restaurants since most small towns cannot support both. \u00a0 I always eat dinner sitting at the actual bar, not at a table, because the bar is a place where there is a chance to talk to other people. … Continue reading Are Silicon Valley and Wall Street tycoons ruining Montana\u2019s cattle business?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":5335,"featured_media":0,"parent":766,"menu_order":17,"comment_status":"closed","ping_status":"closed","template":"","meta":[],"_links":{"self":[{"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/pages\/899"}],"collection":[{"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/users\/5335"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/comments?post=899"}],"version-history":[{"count":1,"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/pages\/899\/revisions"}],"predecessor-version":[{"id":900,"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/pages\/899\/revisions\/900"}],"up":[{"embeddable":true,"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/pages\/766"}],"wp:attachment":[{"href":"https:\/\/blogs.bu.edu\/zagorsky\/wp-json\/wp\/v2\/media?parent=899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}