Ag News, April 15, 2014

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Survey Finds 5.4% Decline in Iowa Farmland Values

LandOwner – The value of Iowa farmland dipped 5.4% during the six-month period ending in March, according to a survey of land professionals conducted by the Iowa REALTORS® Land Institute. Download the latest edition and read more.

California agriculture has bright future, despite drought

Dennis Pollock – Western Farm Press – Most of the major California crops are facing a rosy future, thanks in large part to exports and despite drought that could cut production.

That was the consensus as major players in the tree fruit, grape, citrus, nut and dairy industries gathered in Fresno to give presentations for the Outlook 2014 Agribusiness Conference sponsored by the California Chapter of the American Society of Farm Managers and Rural Appraisers.
Continue reading on the Western Farm Press: http://westernfarmpress.com/tree-nuts/california-agriculture-has-bright-future-despite-drought?NL=WFP-01&Issue=WFP-01_20140401_WFP-01_849&YM_RID=bethseq02%40hotmail.com&YM_MID=1458058&sfvc4enews=42&cl=article_1

California Land Prices Continue to Increase

From Federal Produce Policy: A recent study showed that land and lease values in California continue to increase primarily due to increased profitability from crops and scarce land for sale. Read more: http://federalproducepolicy.com/news2014/apr_10_2014-calandprices.html

Faster method to detect farm problems takes flight

By Cary Blake, Western Farm Press – A group of Arizona growers were like ‘kids in a toy store’ last fall during a precision agriculture remote helicopter field demonstration at a cotton field.

The growers watched as Jared Siegler placed video-display goggles over his eyes, picked up a remote controller-transmitter, and guided a quadcopter outfitted with two cameras across a cotton field searching for crop problems.
Continue reading: http://westernfarmpress.com/equipment/faster-method-detect-farm-problems-takes-flight?NL=WFP-01&Issue=WFP-01_20140408_WFP-01_20&YM_RID=sgruba@asfmra.org&YM_MID=1459313&sfvc4enews=42&cl=article_1

A Member’s Thoughts on Land Values in the Delta

By Tim W. Pepper, ARA
Former Yazoo County Agricultural Agent
Louisville, MS 39339

Recently, a residential appraiser friend asked me about an article printed in our statewide newspaper on January 23rd.  He said the article indicated farmland prices in Mississippi had gone up $500 per acre in 2013 to an average price of $4,500 per acre.  When I told him that was not right, he brought me a copy of the paper.  That article certainly spurred my interest in finding out why the writer of that article thought the land prices had gone up so much.

The information presented in the article was based on a survey conducted by Farmers National Company, a very reputable land management and real estate sales company that deals in agricultural lands across some 17 states in the mid-western and southern regions of United States.  After going to their website and studying their survey, I did find some discrepancies in the way the paper had interpreted the survey.  The newspaper article said these were the average prices for Mississippi farmland, but the Farmer’s National survey indicated these were the top-of-the-line properties found mostly in the Mississippi Delta, not an average.

Now that our new Farm Bill has been approved by the U.S. House and Senate and only lacks the President’s signature, I think it is important for the public to clearly understand what is happening in Mississippi agriculture that is affecting land prices.  I researched the National Agricultural Statistics Service (NASS) on the Internet for 2013 and found that the average price of farm real estate in Mississippi was $2,140 per acre in 2013.  Though many of the farm states are seeing increases in land values – Mississippi and Alabama experienced no change (NC) since 2012.  Nationwide the average price of land was $2,900 per acre – a 9.4% increase since last year.

What is happening to land values in Mississippi and why? To answer those questions, we need go back in history just a little.  In 1998, Congress passed the “Freedom to Farm” farm bill.  Up until that time, the Mississippi Delta was a somewhat “closed” farm society.  Producers grew cotton and rice with farm subsidies and a few other crops with limited government support.  These farm subsidies were based on target prices that helped producers remain competitive with other producers in the world.

The 1998 farm bill allowed producers to not only continue collecting allotted subsidy payments, but also to farm whatever crop offered the most profit. Delta farmers were pretty much confined to growing cotton and rice until that change was made. Farmers outside the delta were pretty much unfamiliar with cotton and rice and were hesitant to purchase farms in the delta region. With the changes in the farm bill allowing them to now grow crops they were familiar with like corn and soybeans and continue to collect subsidies, they became more interested in acquiring delta farms.  Commodity prices on corn and soybeans experienced price increases during this time frame and we also began to see an expansion of land improvements such as irrigation and land leveling. There was also an increase in grain storage facilities on farms. These increased prices and farm improvements continued to increase delta land values.

In the mid-2000s, fuel costs were escalating and the demand for ethanol increased.  Agricultural commodities began being traded like oil commodities.  As a result, rising prices encouraged landowners in the Mississippi Delta to further develop irrigation and storage facilities.  As less and less cotton was grown, gins began closing and cotton was no longer king in southern states like Mississippi.

People from across the globe began to look at land in the delta region as a lucrative investment.  As more delta land was precision leveled or land leveled for drainage and irrigation systems were installed, much of the risk was taken out of the production of more grain crops. On farm grain storage provided producers an alternative to better market their grain crops. In addition, there is no charge for irrigation water in the Mississippi delta as it is a more abundant resource here than in other areas of our nation.  New genetically improved varieties of crops also helped increase yields.  The increased yields coupled with strong prices further stirred the delta land market.

Interested buyers preferred and sought larger land tracts that improved their economies of scale. They wanted the more fertile soil types that were irrigated and precision leveled allowing them to water and drain the field as needed.  They looked for land that was 80-85% in crop production and with strong established crop bases and yields. Buyers were willing to pay good prices for land meeting these criteria.  Based on my observations and calculations of sale/resale records, Delta land with these types or similar criteria were seeing annual appreciation rates from 6 to 15 percent. An average 8-10 percent annual increase in value was typical for this type property.  

These new landowners were looking for a quicker turn-around on their investments and began to rent the land for a typical 5% return.  If the property was purchased for $4,000 per acre, they typically wanted to see a $200 per acre of cropland annual return.  This type of land management gave them an eight to ten percent growth in investment and a five per cent annual rent on investment and attracted out-of-state and international investors as well as investment groups.  The native delta farmer or producer was often limited to smaller tracts or renting in this investment atmosphere.

Will this increase in land prices continue? Much like the stock market, the continuance of these land prices it is not always easy to predict.  Investors have enjoyed significant growth and returns on the Mid-South delta lands for some 15 years now, but there are at least three factors landowners and investors should be watching closely.  

One major factor is the new 2014 farm bill. Direct payments have been cut out of the farm bill and replaced with a program that allows producers to “insure” yield and/or price.  This new “subsidy insurance” program will be watched closely to see how it impacts net return per acre.   Another important factor is interest rates.  The government has been printing money rapidly in order to keep interest rates low but this trend is beginning to weaken. If interest rates rise, land purchases may suffer. The third factor is grain prices. Corn prices were around $3.00 per bushel in 2006 and 2007 but rose to nearly $7.00 per bushel in 2012 and 2013.  Today, the price of corn is about $4.00 per bushel so net returns will most likely drop.

Land prices and rents have always been affected by the price and yield of the commodities and support payments.  With no direct payments and lower commodity prices we may see some resistance to higher rental rates.  If that resistance occurs, we most likely see the appreciation of land values slow.

The history and information presented above provides a different view of the paper’s interpretation of the Farmer’s National Company survey.  The information I have presented is based on my professional knowledge and experience as a practicing Accredited Rural Appraiser (ARA) with the American Society of Farm Managers and Rural Appraisers (ASFMRA) and 26 years of as a County Agent in Yazoo County, MS (the largest county in the delta region) working with delta farmers.

For the general public to have a good understanding and knowledge of land prices in the delta region and Mississippi, it is critical for the Farmer’s National Company survey data to be interpreted and reported correctly. If delta land prices have been going up, then some land values had to go down for the average price to remain unchanged as reported by NASS. I hope the information presented will cause readers to be aware that Mississippi and other delta states farm property is not the average for the state.  It has been recognized as a good productive investment in recent history.  This phenomenon should not be applied to rural land and farm land in general.

Please feel free to contact me at Pepper Appraisal Services through email at twpepper@gmail.com if you have any questions about my information.  You are welcome to share this information with the landowners and others who might have an interest.  

Drought conditions worsen for most of Texas

Ron Smith – Southwest Farm Press – Drought conditions across Texas, with few exceptions, continue to worsen as winter gives way to spring and planting season. The latest Drought Monitor report from the Texas Water Development Board indicates that 25 percent of the state is now considered in extreme drought status — or worse. That’s twice as much of the state in upper tier drought categories as last week. Read more: http://southwestfarmpress.com/water-shortage/drought-conditions-worsen-most-texas?NL=SWFP-01&Issue=SWFP-01_20140404_SWFP-01_757&YM_RID=sgruba@asfmra.org&YM_MID=1458652&sfvc4enews=42&cl=article_1

Recognition of Long-Standing Members

We are recognizing long-standing members of the Society on an annual basis according to their anniversary month. The anniversaries are recognized in increments of five years. You may recognize your fellow peers in the list of Long Standing Members and we encourage you to extend your congratulations to them. Please note this list is for the time frame from January 1, 2014 to December 31, 2014.  Download the pdf with the complete list of member recognitions.

Suzanne Gruba is retiring!

Suzanne Gruba is retiring after five years with ASFMRA.  Many of you know Suzanne and have worked with her in various capacities during her tenure, but most of you know her as the face of Ag News and Legislative Action News.

Suzanne joined ASFMRA in February of 2009, and instantly put her mark on the Society, establishing our social media presence via Facebook, LinkedIn and Twitter.  She worked to improve our primary means of communication to our members including Ag News, Legislative Action News and Chapter News. She coordinated the Journal of the ASFMRA working with the Editorial Committee.

Suzanne has also helped organize ASFMRA’s presence in Washington, D.C. via the Leadership Institute, worked with the YPN group, transitioned our Annual Report to an electronic format, as well as put together the Executive Council meeting booklets and coordinated various meetings and events.

Suzanne is looking forward to retirement and plans to spend her time enjoying some of her favorite activities including hiking, gardening, taking her husband and Mini Cooper for longer drives and maybe even a fun part time job!  Please join us in wishing Suzanne the very best!

 Welcome New Members

Thank you for being a part of the ASFMRA! Help the ASFMRA welcome our new members. The ASFMRA appreciates every member for choosing the Society as the association you desire to affiliate with. The ASFMRA continues to make every effort to offer member services which will be of benefit to you professionally and personally.

We are recognizing new members of the Society on a monthly basis. You may recognize your fellow peers in the following list and we encourage you to welcome them into the membership of the ASFMRA.

New Members    
Joel Ambrose with Farmers National Company in Panora, IA (Iowa Chapter)
Daniel Barnett with Lone Star Ag Credit in Canton, TX (Texas Chapter)
Paul Burgener with Platte Valley Bank in Scottsbluff, NE (Nebraska and Wyoming Chapters)
Harold Carter, Jr. with AgGeorgia Farm Credit in Cordele, GA (Georgia Chapter)
Anna Coumes in San Luis Obispo, CA (California Chapter)
Charles Dewanz with Fairland Management Co. in Windom, MN (Minnesota Chapter)
Nolan Dodson in Greenfield, IA (Iowa chapter)
Mark Goforth with Integra Realty Resources Memphis in Memphis, TN (Mid-South Chapter)
Mandy Hoistad in Havana, ND (North Dakota and South Dakota Chapters)
Julian Lightle with Lightle Appraisal Company in Memphis, TN (Mid-South Chapter)
Emily Lucke with Farm Credit Services of America in Casper, WY (Wyoming Chapter)
Emily Ming with Alliance Appraisal/Alliance Ag in Bakersfield, CA (California Chapter)
Jacob Schlipf with Heartland Bank and Trust Co in Bloomington, IL (Illinois Chapter)
James Thomason with Idaho Transportation Department in Eagle, ID (Idaho-Utah Chapter)
Joshua Whetham with Farm Credit Services of America in Rapid City, SD (South Dakota Chapter)
Brad Wisener with Consolidated Appraisal Service Company in Wapakoneta, OH (Ohio Chapter)
David Wyss with Flanagan State Bank in Flanagan, IL (Illinois Chapter)

Join us on Friday, April 25th for a live update on the 2014 Farm Bill!

In keeping with ASFMRA’s goal of ensuring our members are up-to-date on legislation and regulations impacting the agricultural community we invite you to attend a live Webinar with Stephen Frerichs of AgVantage, LLC.

Stephen, a resident of Alexandria, Virginia and lobbyist for ASFMRA will provide his thoughts on the key provisions of the much-anticipated Agricultural Act of 2014. The Farm Bill was signed into law by President Obama earlier this year, and during this Webinar Stephen will provide a fresh perspective, looking at the Farm Bill from a Farm Manager or absentee landowner view.  This is your opportunity to ask hard questions and gain additional understanding of the areas of the Farm Bill that will impact you.

April 25, 2014 at 2 pm ET
Register by calling: Deanna Ilk at (303) 692-1222
Cost:  Member – $29/Non-Member $59
CE Credit:  1 hour of ASFMRA CE credit

Suzanne Gruba is Retiring!

Suzanne Gruba is retiring after five years with ASFMRA.  Many of you know Suzanne and have worked with her in various capacities during her tenure, but most of you know her as the face of Ag News and Legislative Action News.

Suzanne joined ASFMRA in February of 2009, and instantly put her mark on the Society, establishing our social media presence via Facebook, LinkedIn and Twitter.  She worked to improve our primary means of communication to our members including Ag News, Legislative Action News and Chapter News. She coordinated the Journal of the ASFMRA working with the Editorial Committee.

Suzanne has also helped organize ASFMRA’s presence in Washington, D.C. via the Leadership Institute, worked with the YPN group, transitioned our Annual Report to an electronic format, as well as put together the Executive Council meeting booklets and coordinated various meetings and events.

Suzanne is looking forward to retirement and plans to spend her time enjoying some of her favorite activities including hiking, gardening, taking her husband and Mini Cooper for longer drives and maybe even a fun part time job!  Please join us in wishing Suzanne the very best! Her last day is April 30.

News from The Appraisal Foundation

The next public meeting of the Appraisal Standards Board (ASB) is approaching. Please take the time to register for this meeting if you plan to attend.
Date/Time:
Friday, June 6, 2014
9:00 a.m. – 12:00 p.m.
Location:
Hyatt Regency Sacramento
1209 L Street
Sacramento, CA 95814
On February 21, 2014, the Appraisal Standards Board (ASB) held a public meeting to give a detailed overview of the First Exposure Draft of Proposed Changes for the 2016-17 edition of the Uniform Standards of Professional Appraisal Practice (USPAP).  The First Exposure Draft covered the following topics:  
•    Proposed Revision to the Definition of Report
•    Proposed Revision Related to the Communication of Assignment Results  
•    Proposed Revisions to STANDARD 3
•    Consideration of Retirement of all STATEMENTS ON APPRAISAL STANDARDS
•    Possible Topics for Subsequent 2016-17 Exposure Drafts
The ASB anticipates it will be publishing a Second Exposure Draft on these and possible other topics by the end of April 2014.
Please Note: In an effort to “go green,” The Appraisal Foundation (TAF) will be posting all pertinent meeting material on its website for downloading.  Registered meeting participants may print their own copies if desired.  Please do not rely on TAF to provide copies of all meeting information.
Lodging Accommodations:
You may make a reservation with the Hyatt Regency by contacting them directly at (916) 443-1234.  Please note that The Appraisal Foundation no longer reserves “room blocks” for meeting attendees.  Therefore, meeting attendees are responsible for making their own lodging arrangements at the best available rates.
Get complete information or register now: https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=EventDetail&evt_key=393a9211-551c-444b-974e-2e427bbcb99d

Please Note: If you plan to attend the meeting, please contact Emily Mann, Standards Administrator via e-mail at emily@appraisalfoundation.org, or by calling 202-624-3058 to confirm your attendance. This will ensure your electronic access to the meeting materials.

The Crucial Role of Women in Global Ag Development

Women in Agribusiness Summit, October 6-8, 2014, New Orleans, LA
Get complete info: http://www.cvent.com/events/women-in-agribusiness-summit-2014/event-summary-0f21da6aa9114141927656d1cb93b1b1.aspx