By Kirk Weih, AFM, Kirk Manker, Merrill Swanson, ARA and Allan Worrell, AFM, ALC
The farmland market begins 2014 in a much different situation than a year ago. The start of 2013 saw the market catching its breath following a dynamic surge in the wake of record corn and soybean prices in the Midwest and net farm incomes throughout the United States. This year, farmland owners and operators are adjusting to lower commodity prices. The change in price outlook has brought a shift in market dynamics as well. The result is a farmland market that is in transition. The following are observations from farmland professionals in the areas of valuation, sales and acquisitions.
Merrill E. Swanson, ARA, Valbridge Property Advisors / Dugger, Canaday, Grafe, Inc., San Antonio, Texas believes the Texas rural land markets are led by a strong Texas economy. Texas is a business friendly state with high consumer confidence. The Texas economy recovered probably sooner after the Great Recession than most states with a strong energy sector led by the discovery of the Eagle Ford Shale in South Texas.
The booming energy industry in Texas is anticipated to continue. The various shale plays including Eagle Ford and others are injecting billions of dollars into the Texas economy. Most Texas cities are thriving because of the energy business. Many energy related investors are buyers of farms and ranches. Rural land prices in most areas of Texas are on the increase. Conversely, pricing of rural land heavily impacted by oil and gas production in the shale or other oil and gas plays may not be measurably increasing.
Steve Runyan, ARA, Runyan Appraisal Service, Bakersfield, California indicates that land values have generally increased at least 50% in the last five years in areas that do not have urban expansion pressure. There have been similar increases in value for most permanent crops. The exception to this is the intermountain valleys where land values have been stable for several years. Land values in areas affected by urban expansion pressure have fluctuated because of the housing market, but are generally increasing in the last two years.
Land values in the Imperial Valley have steadily increased over the last five years with an increase in the range of 40%. Land values in the Coachella Valley declined in the range of 70% between 2007 and 2010 as a result of the decline in the California housing market. The market appeared to stabilize from 2010 through 2013. There were nearly 2,000 acres put on the market in 2013 and prices softened somewhat. By the end of 2013 prices had started to increase again.
The overall situation in California is limited property for sale and an abundance of buyers. The majority of the San Joaquin Valley is expecting to receive zero water allocation from irrigation districts in 2014. This should have a detrimental effect on land values, but sales most likely will just cease for a period of time.
Kirk Manker, Farm Credit Services of America, Omaha, Nebraska leads the FCS appraisal team consisting of nearly 70 full time appraisers across a four state area. Their recent update of Benchmark Land Values indicates demand for Midwest farmland remains strong while prices show signs of leveling off. Land prices and demand continue to be strong across the four-state area of Iowa, Nebraska, South Dakota, and Wyoming, but the latest data aggregated by Farm Credit Services of America (FCSAmerica) suggest the market for crop production farmland could be leveling off or in some cases softening.
The semi-annual update of the Benchmark Land Values in which the lender tracts the values of 65 farms based on an analysis of more than 3,500 agricultural real estate sales transactions in all four states in 2013 indicate the following trends:
Average Change in Benchmark Farmland Values as of January 1, 2014
|State||Six Month||One Year||Five Year||Ten Year|
|South Dakota (23):||7.2%||17.6%||109.3%||332.7%|
After years of a steady rise led by lower than average U.S. yields, strong domestic and international demand for commodities, low interest rates and solid profit margins, the rate of price increase is leveling off for farmland in some areas.
Land prices and demand for farmland continue to be strong in the four-state area, but buyer sentiment could be adjusting with decreased commodity prices that will reduce record profit margins experienced the past few years.
Allan Worrell, AFM, ALC, Worrell-Leka Land Services, Jacksonville, Illinois believes the land market in Western Illinois has become erratic. During the first half of 2013 the market was universally strong with excellent soils selling for $15,000 to $16,000 per acre. Once the price of corn/soybeans began to deteriorate we saw some softening, which has carried into early 2014.
The excellent soils are still in strong demand with a limited supply available. The market appears to have retreated on the good and fair soils. In some cases we see sales that appear to be off 10% or more.
There is little doubt that the driving force to unstable prices has been the decline in commodity prices. This uncertainty has resulted in buyers becoming more conservative in their approach to buying land.
Additional rural land market information may be referenced at:
1. Texas Real Estate Center website at http://recenter.tamu.edu/data/rland/
2. California Land Trends at http://www.calasfmra.com/trends.php
3. Illinois Land Trends www.ispfmra.org
4. Iowa State University Land Value Survey http://www.extension.iastate.edu/topic/landvalue
5. Federal Reserve Bank of Kansas City http://www.kc.frb.org/
At long last…the nation’s 17th farm bill
The Kiplinger Agriculture Letter – The latest in a line of such legislation going back to ’33. Three years in the making, the new bill sets game plans for farm and nutrition programs, including food stamps, through ’18. Its expected cost: Nearly $1 trillion. That amount, not adjusted for inflation, is 34% more than projected spending in the farm bill passed in ’08. So what’s new? Rejiggered? The same? Copyright 2014. The Washington Kiplinger Editors, Inc. Login to Member Resources to download the latest edition and read more.
Is There a Change Ahead for Commodity Prices?
LandOwner Newsletter The upswing in commodity prices in the early 2000s due to the downgrade of the U.S. dollar launched the upturn in farmland prices during that decade. Prices crashed in late 2008 on the credit freeze, but quickly rebounded as the federal government flooded the financial system with cash. Farmland values surged as well. Login to Member Resources with the above link and download the latest edition.
Make sure you are taking advantage of these important member benefits:
- LandOwner Newsletter – Twice a month
- The Kiplinger Agriculture Letter – Every other week
- LandsofAmerica.com listing discount
- AgWare Software
- AgriData and other mapping software
Get complete information on these benefits on Members Resources: http://portal.asfmra.org/Scripts/4Disapi.dll/4DCGI/cms/review.html?Action=CMS_Document&DocID=27&Time=820983562&SessionID=62057594yhofx712z58m6ib178uofz4n8xa01t8fypx92ywdh85706r0j6bv566f&MenuKey=123
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.
- Stephen Armstead with Omega Appraisals in Midland, TX (Texas Chapter)
- Angela Bickford with E.K.S., Inc. Appraisal Svc. In Pickering, MO (Iowa & Missouri Chapters)
- Adam Bradshaw with Dept of Interior/OTS/OVS in Portland, OR (Oregon Chapter)
- John Broberg with American AgCredit in Salina,KS (Kansas Chapter)
- Justin Clevenger in Crook, CO (Colorado Chapter)
- Craig Cruickshank with C2 Capital Group, Inc. in Sacramento, CA (California Chapter)
- Nicholas Dame in Lexington, KY (Kentucky Chapter)
- William Davis with Brown Land & Farm Management LLC. In Rayville, LA(Mid-South Chapter)
- Brent Duey with Farm Credit Services of America in Newton, IA (Iowa Chapter)
- Yale Epler with Brett W. Berger, Inc. in Mount Carmel, IL (Illinois Chapter)
- Karen Fredenburg with Farm Credit Mid-America in Anderson, IN (Indiana Chapter)
- Michael Garcia with Farm Credit West in Atascadero, CA (California Chapter)
- Joshua Garton with Rabo AgriFinance in West Richland, WA (Washington Chapter)
- David Grams with DLG Inc. in Gibbon, NE (Nebraska Chapter)
- Bruce Hahn with Landmark Valuation in Walnut Creek, CA (California Chapter)
- John Harris with Harris Real Estate Company in Palestine, TX (Texas Chapter)
- Lindsay Henderson with Henderson Appraisal Services in Pittsfield, IL (Illinois Chapter)
- Eric Jostes with Yuma County Abstract Company in Wray, CO (Colorado Chapter)
- Jeffrey Kelley with Kelley Real Estate Appraisers, Inc. in Idaho Falls, ID (Idaho-Utah Chapter)
- Kyle Kelly in Lexington, KY (Kentucky Chapter)
- Adam Kestner with Farmers National Company in Camp Point, IL (Illinois Chapter)
- Brandon Kirk in Balaton, MN (Minnesota Chapter)
- Jacquelyn Lahn with LAHN APPRAISAL in Osseo, WI (Wisconsin Chapter)
- Andrew Landolt with U.S. Department of the Interior in Portland, OR (Oregon Chapter)
- Joseph Lang in Eminence, KY (Kentucky Chapter)
- R. Mike Lansford with Farmers National Company in Ft. Worth, TX (Texas Chapter)
- Kim Larson with Farm Credit Services of America in Pierre, SD (South Dakota Chapter)
- Dana Long with American AgCredit in Great Bend, KS (Kansas Chapter)
- Jason Monroe with American AgCredit in Greeley, CO (Colorado Chapter)
- Susan Morris with S.T. Morris, LLC in Shepherd, TX (Texas Chapter)
- Matthew Moxley with AgGeorgia Farm Credit in Perry, GA (Georgia Chapter)
- Charles Must in Lexington, KY (Kentucky Chapter)
- Joshua Palmer with James G. Palmer Appraisals Inc. in Fresno, CA (California Chapter)
- Bryon Parman with Mississippi State University in Mississippi State, MS (Mid-South Chapter)
- William Peasley in Black River Falls, WI (Wisconsin Chapter)
- Bessie Richmond with Farm Credit Midsouth in Jonesboro, AR (Mid-South Chapter)
- Francisco Rivera with Farm Credit New Mexico in Las Cruces, NM (New Mexico Chapter)
- Gary Robinson with Robinson Appraisal Services, LLC in Winnsboro, LA (Mid-South Chapter)
- Joshua Robinson with Office of Valuation Services, US DOI in Portland, OR (Oregon Chapter)
- Lee Schramer with The National Bank & Trust Company in Sycamore, IL (Illinois Chapter)
- William Sellwood with Office of the Secretary/OVS in Bloomington, MN (Minnesota Chapter)
- Shirley Smith with Shirley Smith Appraisal Services, LLC in West Plains, MO (Missouri Chapter)
- Lynn Souza with Yosemite Farm Credit, ACA in Merced, CA (California Chapter)
- Charles Wilson with Farmers National Company in Ft. Worth, TX (Texas Chapter)
Marketing and Communications Director
Last week Jaleen Edwards joined ASFMRA staff as our Director of Marketing and Communications. Jaleen comes to us with a wealth of experience in for-profit and non-profit marketing and communications including several years with the Financial Planning Association. Join us in welcoming Jaleen. She can be reached at email@example.com or 303-692-1227.
By Brian Stockman, EVP/CEO - This January, as every January for the past 7 years, we conducted an annual membership survey. The purpose of this survey is to provide guidance for the Executive Council and Staff as they work on plans for the coming year. This year we had just under 500 responses with a lot of great information about what is working and where we can grow.
What do we see in the results which total over 500 pages? We see that we still have very strong support for our networking opportunities as well as the very high appreciation for our education. There is a lot of interest in our continuing to have more and more technology sessions offered. Members are looking for simple things like apps for the profession as well as more complex things like new tools and software to better automate parts of their work. The bottom line you will discover in reviewing our results is that we have a very good organization. Members like it and believe in it. They feel we have a very bright future.
Who Responded The state with the largest number of contributors was Illinois which is no surprise since they are the largest chapter, and California was second with Iowa right on their heels. It is important to note that some smaller chapters also had very strong support of the survey like the Mid-South Chapter which came in at number four in total number of responses.
Trends The ASFMRA continues to get younger. This is a trend that has been with us for about four years and one to be proud of for sure. 23% of those responding noted that they have been a member less than five years. You can see in the chart below the steady progress in the number of members under the age of 40.
When asked about words that best describe ASFMRA the top ranking words were: Respected with over 90% agreeing or strongly agreeing followed by Relevant with 87%, Member Focused with 78%, Inviting with 76% and Collaborative with 74%. Those words ranking on the lower end but still strong were: Unique, Forward Thinking, and Cutting Edge.
When relating member’s personal experience with ASFMRA, the results bear out the real value seen in the membership and the education ASFMRA offers. See the top ranking percentages of those that agree or strongly agree with the following statements: 89% “Through ASFMRA, I have established lasting friendships with colleagues in the industry. “ 86% “I walk away from ed sessions with new information that makes a difference in my business.” 85% “I am better at what I do because of my membership in ASFMRA. ” 81% “ASFMRA educational sessions are applicable to my specific situation and location.” 77% “ASFMRA education has kept current with today’s issues, challenges and opportunities.” 71% “ASFMRA offers professional growth opportunities I cannot get anywhere else. “ 67% “If I could only belong to one organization it would be ASFMRA” 67% “I have seen positive changes in the association over the past five years.” 64% “I place greater value on my membership than when I first joined.” 62% “I rely on the information and news resources that I receive from ASFMRA.” 55% “educational sessions are held at times of the year that are convenient for me to attend” 54% “Educational sessions are held at locations that are convenient and affordable for me” 48% “I frequently talk with other ASFMRA colleagues across the country” 26% I take advantage of the various vendor partnership discounts as a member”
Looking Forward: Membership generally feels very positive about the outlook for the appraisal, management and consulting futures. The results point out that many are willing to help recruit. And since we know membership growth works best by a member asking another member, this is good news. With completion in the professions and for membership organizations like ours this is good news. Percentages below indicate the amount of members responding that either agree or strongly agree with the statement.
- 85% “The long-term outlook for the Rural Appraisal profession is positive”
- 73% “I see continued growth for my business over the next five years.”
- 72% “Member recruitment should be a top priority of ASFMRA”
- 68% “The long-term outlook for the Consulting profession is positive”
- 65% “The long-term outlook for the Real Estate Brokerage is positive”
- 64% “ASFMRA membership separates me from my competition that are not members of ASFMRA
- 57% “I would be willing to help recruit new members to the ASFMRA”
- 56% “The marketplace for rural property professionals like us is getting more competitive”
- 55% “there are significant opportunities for young people entering the Farm Management profession”
- 53% “There are significant opportunities for young people entering the Real Estate Brokerage “
- 52% “There are significant opportunities for young people entering the Consulting profession”
Positive View Of ASFMRA Education We know networking is still very important to the success not only of membership but of education as well. Percentages below indicate the percentage of respondents that agree or strongly agree with the statements.
- 85% “ASFMRA accreditation offers good return on the investment of time and money”
- 73% “I use the fact that I am accredited in my marketing and new client presentations”
- 64% “Being accredited by ASFMRA is a true difference maker in building my client portfolio”
- 55% “Once you become an ASFMRA member, you are expected to become accredited”
- 49% “The marketplace understands the value of doing business with an accredited professional’
- 47% “As a member my employer expects me to become accredited” 40% “ASFMRA does a good job in marketing the value of accreditation to the marketplace” 40% “ASFMRA gives its accredited members preferred treatment”
Willing to Help: We know the professions are doing well. They are excited and have a bright future. We know that many members say they are willing to help. In fact, just under half of the respondents replied to the question about how many hours a year they would donate to this cause. The average number of hours was nearly 16 hours per year! In 2013 we built new supportive materials to help members market to students and others wanting to jump into these bright careers. One of the best ways to get potential members to join is to invite them to a local chapter meeting. In fact 64% are willing to do just that. And 48% say they are willing to make a presentation to a college class. We have many great tools, and lots of great members willing to help, now it is up to us to just do it!
North Dakota Chapter Releases Annual Agricultural Land Price & Cash Rent Survey
January 27, 2014 – Fargo, ND – The North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA) has released their 17th Annual Agricultural Land Price and Cash Rent Survey.
Thirty-four land professionals across the great State of North Dakota contributed data to this year’s report, making it the most comprehensive report of its kind. This year’s report features some formatting changes and enhancements. Report readers are asked to keep in mind any assumptions made from the report could be misleading, especially given the wide variety of physical characteristics found in each county. Therefore, this report should never take the place of a well-trained land professional. Read more about the Survey. DOWNLOAD a copy of the results.
Help us send a big Thank You to the Idaho-Utah Chapter for their generous donation to the Education Foundation of $1,500. This donation along with others from members, other Chapters, and companies who have contributed to the Education Foundation of the ASFMRA make it possible for education development to continue.
For those unfamiliar with the Education Foundation of the ASFMRA, you may wonder how to or when to donate or even why to donate. Donations provide for continued maintenance, editing, and development of ASFMRA education such as the Management Education Modules, the modularization of our core Appraisal education, development of Seminars, and much more.
Have you benefited from the Education Foundation? If so, here is a chance to give back. Consider a contribution in one of the following areas:
- Donate an item to the Auction, participate in the Auction at the Annual Meeting, or place a bid online.
- Include a donation along with your dues invoice.
- Make an Annual gift or consider an Endowment.
- Encourage your Chapters to make a donation.
- Make a donation in Memory of or in Honor of a deceased fellow member.
These types of donations can be a great way to support the Education Foundation that has been beneficial to so many. Any expression of support is greatly appreciated, and as you know, your contribution is tax-deductible. Thank you!
Drought concerns persist for agriculture this year
By Sarah Gonzalez © Copyright Agri-Pulse Communications, Inc.
WASHINGTON, Jan. 28, 2014-Drought conditions in the western and southern plains regions of the country could merge together later this year, persisting harsh conditions for agriculture, said Drew Lerner, president and senior agricultural meteorologist of World Weather, Inc. Read more on the Agri-Pulse website: http://agri-pulse.com/Drought-concerns-persist-for-agriculture-this-year-01-28-2014.asp
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, February 21, 2014 9:00 a.m. – 12:00 p.m. Location: Embassy Suites International Drive/Convention Center 8978 International Drive Orlando, FL 32819 On July 19, 2013, the Appraisal Standards Board (ASB) held a public hearing in Chicago, Illinois, where a broad spectrum of stakeholders addressed the Board in a congressional-style hearing. The Board received testimony from state and federal regulators, users of appraisal services, practitioners and others, regarding areas of the Uniform Standards of Professional Appraisal Practice (USPAP) they believed should be reviewed for potential revisions. The ASB subsequently met on October 18, 2013, in Washington, DC to consider the input received and discussed the possible next steps towards developing the 2016-17 edition of USPAP. At the upcoming public meeting in Orlando, the ASB will be accepting oral comments on the First Exposure Draft of Proposed Revisions for the 2016-17 edition of USPAP. Please Note: In an effort to “go green,” The Appraisal Foundation 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 Embassy Suites by contacting them directly at (407) 325-1400. 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. Please Note: If you plan to attend the meeting, please contact Emily Mann, Standards Administrator via e-mail at firstname.lastname@example.org, or by calling 202-624-3058 to confirm your attendance. This will ensure your electronic access to the meeting materials. Get complete info or register for this meeting: https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=EventDetail&evt_key=d83895c9-9ab9-4f9b-9613-2d29635f9b6a
Call for Applicants The Appraisal Foundation Seeks Candidates for Vacancies on the Board of Trustees
Application Deadline is March 14, 2014 The Appraisal Foundation (TAF) has begun its annual search for qualified candidates to serve on its Board of Trustees (BOT). Completed applications for the vacancies must be received by March 14, 2014. There are three At-Large Trustee seats available as of December 31, 2014. The BOT is the governing body of TAF. Trustees are charged with funding the work of and appointing members to the Appraisal Practices Board (APB), Appraiser Qualifications Board (AQB), and Appraisal Standards Board (ASB), as well as providing oversight of these three Boards. The BOT meets twice a year– in the Spring and Fall–and Trustees serve on committees that meet throughout the year via telephone. Trustees are reimbursed for travel expenses and are not compensated for their time. The individuals selected for positions on the BOT will serve three-year terms commencing January 1, 2015. Two of the seats under consideration for the BOT this year are earmarked for: • A representative from academia • A licensed/certified real estate appraiser not affiliated with an Appraisal Sponsor of TAF The Appraisal Foundation, the nation’s foremost authority on the valuation profession, seeks BOT members with management and oversight experience from a high profile, leadership background. Recognized business, government, non-profit, and academic leaders with an interest in valuation are encouraged to apply. Click here to download the application package for the At-Large Trustee vacancies.