Have Land Values Peaked?
By Roy C. Ferguson II, CMC/CAC
According to an August 16th news release, “Survey data from three regional Federal Reserve Banks provide the latest evidence of challenges to a multiyear boom in the Farm Belt. Record crop prices have fueled a surge in farmland prices and strong earnings for much of the agricultural sector, but prices are falling this year as forecasters predict a record corn harvest starting next month.
Bankers in surveys by two of the Federal Reserve banks also said they expect Farm Incomes to fall in this year’s third quarter… which is now! Moreover, the director of agricultural banking at a major, U.S. bank expects land values to fall as much as 30% over the next 3-5-year period.
A majority of lenders who participated in the Federal Reserve’s survey reportedly indicated a belief that agricultural land values during 2014 would drop by less than 10%. Most of those individuals are said to view Declining Incomes to have less of an effect on farmland values, considering low Interest Rates…the farm sector’s overall wealth…and limited alternative investment opportunities.
An executive of the Kansas Corn Growers Association is also credited with observing, “There is cheap money to be had, and farmers have Cash on hand.” Unfortunately, the latter part about Cash being on hand may not be as prevalent as some may think if the outbreak of “New Paint Fever” is as rampant as some recent data suggest quite clearly.
Revised projections from USDA indicate prospects that 2013’s corn harvest could be up from 2012’s by a record 28%…plus soybeans should also be up by 8%. Thus, prospects for a record corn harvest together with the nation’s third largest soybean crop are placing substantial pressure on grain prices.
History has shown that corn, soybeans, and wheat react to changes in production volume just as commodity products with inelastic demand are theoretically supposed to react. Prices decline as production volume increases and prices climb as production volume decreases.
Not too surprisingly, land values typically react in the same direction as overall prices, except corn prices typically exhibit an exaggerated reaction leading to the generally accepted refrain, “As corn prices go, so goes U.S. agriculture.” In fact, little doubt exists that corn is the primary driver of U.S. agriculture’s financial well being.
What should be watched carefully, however, is whether land prices actually decline by 8-10% during 2014. If they do soften that much so soon, producers should be aware that a (30%) plunge within 3-5 years might be an understatement.
Illinois Farmland Values Rise Only Slightly First Half 2013
A recent survey of Illinois real estate pros offers more evidence of a slowdown in farmland demand. The survey, conducted jointly by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) and the University of Illinois, found the value of the state’s farmland rose 2% to 3% during the first half of 2013. For perspective, a survey conducted by the Federal Reserve Bank of Chicago (page 3) suggests the small gains found by the ISPFMRA occurred early in 2013 rather than later. Logon to Member Resources and download the latest edition of LandOwner News: http://portal.asfmra.org/Scripts/4Disapi.dll/4DCGI/cms/review.html?Action=CMS_Document&DocID=27&Time=820983562&SessionID=62057594yhofx712z58m6ib178uofz4n8xa01t8fypx92ywdh85706r0j6bv566f&MenuKey=123
Index shows decline
LandOwner Newsletter – The farmland-price index calculated by Dr. Ernie Goss, Creighton University, slipped for the eighth time in the past nine months, he reports. The August index fell to 55.8 from 58.2 in July. The decline is additional evidence the Midwestern farmland market is flattening out. See above link to logon to Member Resources and download the latest edition.
Education Requirements for ARA and RPRA
Because of changes to the requirements we have as Sponsors of the Appraisal Foundation, we have been able to update the education requirements for getting an ARA or RPRA designation. Since both designations require the applicant to have a Certified General Appraisal license, we have started the education requirements from that point.
So, to get an ARA designation, you will need to have a CG license and then these courses:
• ASFMRA Best in Business Ethics tested course and be current with ASFMRA six-year Ethics requirement
• Eminent Domain (A250 or A-25)
• Integrated Approaches to Value (A304)
• Advanced Rural Case Studies (A400)
• Valuation of Conservation Easements and Other Partial Interests in Real Estate (A315)
To get the RPRA designation you will need to have a CG license and these courses:
• ASFMRA Best in Business Ethics tested course and be current with ASFMRA six-year Ethics requirement
• Integrated Approaches to Value (A304) or Advanced Rural Appraisal (A30) or Advanced Approaches to Value for Rural Appraisal (A300) as a prerequisite to starting the RPRA program.
• Introduction to Appraisal Review (A-360 or A-35)
• Appraisal Review Under USPAP (A-370 or A-35)
• Appraisal Review Under UASFLA (A-380)
• Advanced Appraisal Review Case Studies (A-390)
There are no equivalent courses you can use as substitutes for these courses, but you can challenge any of these with the exception of ASFMRA Best in Business Ethics.
Please note that A-30 and A300 are no longer equivalents for A304. The applicant is responsible for all material on the accrediting exam, even if it has been awhile since you’ve taken your education.
All other requirements still apply.
Click here for the complete ARA checklist: http://www.asfmra.org/wp-content/uploads/2013/07/Accredited-Rural-Appraiser-Checklist-06132013.pdf
Click here for the complete RPRA checklist: http://www.asfmra.org/wp-content/uploads/2013/08/Real-Property-Review-Appraiser-Checklist-2013.pdf
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, 2013 to December 31, 2013. Click here to download the complete list of members recognized. http://portal.asfmra.org/userfiles/file/2013%20Anniversary%20List%20for%20Sept%2010%20ASFMRA%20ENews.pdf
A round of applause is extended by the American Society of Farm Managers and Rural Appraisers (ASFMRA or the Society) to our long-standing members for their continuous support. The Society appreciates every member for choosing us as the association you desire to affiliate with especially with many organizations vying for your membership. The ASFMRA continues to make every effort to offer member services which will benefit your professional and personal life.
40 and 50 Year Memberships and Silver Plow Award Recipients to be Recognized
The ASFMRA recognizes several milestones in membership and this year, we are pleased to announce we will be recognizing sixteen members for their 40 years of membership, seven members for their 50 years of membership, and three individuals for their ten year service as Chapter Secretaries of the ASFMRA.
Join us at this year’s Annual Meeting during a special Accreditation and Awards Presentation on Wednesday, November 13, 2013 from 3:30 – 5:00 pm where the following will be honored. The forty and fifty year members will be honored for the principles they established, goals they set, and work they have done for those years which are the foundation for the ASFMRA’s success and high standing today. The Silver Plow is award to those Chapter Secretaries for the service that they have provided to their Chapter as well as the National ASFMRA for those ten years. Come join us in honoring these outstanding members!
40 Year Members
|Mr. Arlin J. Brannstrom, AAC||4/27/1973|
|Mr. I. Mac Boyd, ARA||1/1/1973|
|Mr. Dale E. Aupperle, AFM, ARA||1/17/1973|
|Mr. Jeffery D. Hudson, AFM, ARA||1/17/1973|
|Mr. James Connor Smith, ARA-Retired||1/17/1973|
|Mr. Wendel K. Nicolaus, Jr., ARA||4/27/1973|
|Mr. R. Wayne Buck, ARA-Retired||7/7/1973|
|Mr. Keith W. Carlson, AFM, ARA||7/7/1973|
|Mr. Kenneth D. Conrad, AFM-Retired||7/7/1973|
|Mr. Owen R. Demo, ARA||7/7/1973|
|Mr. Larry J. Neppl, AFM-Retired||7/7/1973|
|Mr. Dennis P. Uthof, AFM||7/7/1973|
|Mr. Alvin E. Butch Nelson, Jr., ARA||9/8/1973|
|Mr. Martin L. Mattes, AFM, ARA-Retired||11/25/1973|
|Mr. William P. Hunter, Jr.||1/1/1973|
|Mr. Raymond E. Defenbaugh||7/8/1973|
50 Year Members
|Dr. Fred E. Justus, Jr., Ph.D.||6/24/1963|
|Mr. Roger Heller, AFM||6/24/1963|
|Mr. Robert H. Williams, ARA||12/2/1963|
|Mr. Ray M. Carmichael, AFM, ARA-Retired||12/3/1963|
|Mr. Jay D. Luse, AFM, ARA||12/3/1963|
|Mr. Wallace L. Yoder, AFM, ARA-Retired||12/3/1963|
|Mr. John M. Cotton||6/24/1963|
Silver Plow Award – 10 Year Service
|Name||Chapter||Service as Secretary|
|Steven Olson||North Dakota||2003-2013|
|Juliana Young, ARA||Florida||2003-2013|
+ You = Two! Register your spouse and/or guest today!
AgroNomics Vision 2014 provides you with the opportunity to bring friends and family, enjoy Reno, and rub elbows with agriculture’s best and brightest – together. It’s true – the AgroNomics team has put together a packed and dynamic agenda – a dream for rural asset managers, appraisers and investors.
But the team is also very proud of the spouse and guest program that is offered in conjunction with the conference. Activities, socializing, and tours will keep family and friends feeling welcome, entertained, connected, and fully in synch with the main conference.
The spouse/guest Meet & Greet sets the stage for a couple days of fun, feasts, and festivities. Guests get acquainted over coffee and then set off to explore the splendors of the Peppermill Resort Spa Casino. Soon guests will be transported a far, complete with the tastes, sounds, and smells of Italy at Romanza. Guests are treated with a front-row seat to see first-had a Master Chef’s culinary demonstration topped off with a savory sampling of Reno’s finest Italian cuisine.
Spouses and guests are also offered the opportunity to relive the Old West and be a pioneer for day, perfect for Reno, heart of the Great Bonanza Trail. Guests will be guided on a historical journey, blazing trails like the gold seekers who came before, experiencing the rags to riches stories of days past, and exploring the Sawdust Corner Saloon, old-time shops, and gambling halls – still in operation.
Of course, spouses and guests are a key part of this exciting conference, including:
• The welcome dinner at the National Auto Museum, hosted by the California Chapter of the ASFMRA, Kefa Capital, Rabobank, N.A., and the Farm Credit Alliance of American AgCredit, CoBank, and Farm Credit West
• The DuPont Pioneer Farm Management Ag Tour
• Opening reception
• Spirited and fun Education Foundation silent and live auction
• Donner-Truckee tour
• Full trade show access
• Networking and refreshment breaks
Register your spouse and guests today! They will enjoy the luxury of the Peppermill Resort Spa Casino, and keep you company as you all discover Reno, the biggest little city in the world. Discover this gateway to the old west, the magic of the Sierra Nevada mountains, and plenty of good old fashioned fun!
Register now > http://www.agro-nomics.org/register.htm
View the website > http://www.agro-nomics.org
See the schedule > http://www.agro-nomics.org/Program.htm
Make hotel reservations> http://www.agro-nomics.org/hotel.htm
Kiplinger: After a long standoff over industrial hemp…the feds vs. states and farmers…
The Justice Dept.’s bow to states that allow marijuana clears a path for hemp. Logon to Member Resources and Download the latest edtion.
Leadership Institute Attendees Meet with Secretary Tom Vilsack in DC Today
Twenty-nine ASFRMRA Members along with DuPont Pioneer sponsors of Leadership Institute met with Secretary of Agriculture at the USDA building on the National Mall in Washington, DC.
Animal Disease Traceability Forum White Paper Released
COLORADO SPRINGS, CO.—A White Paper summarizing information presented at the Joint Strategy Forum on Animal Disease Traceability, “Bringing Industry and Regulatory Leaders Together to Create Sensible Solutions,” sponsored by the National Institute for Animal Agriculture and the U.S. Animal Health Association, Aug. 6-7, has been released.
“This Forum provided a platform for much-needed interaction between those impacted by the animal traceability rule,” stated symposium co-chair Victor Velez, California Department of Food and Agriculture,. “State, Federal and Tribal animal health officials, animal producers, veterinarians, livestock marketers and handlers and meat processors as well as state and national livestock show officials and rodeo officials openly and candidly discussed challenges of implementation—and a lot was learned from this exchange.
“The White Paper presents information delivered by speakers plus shares implementation concerns and priorities identified by participants.”
The Animal Disease Traceability Forum White Paper can be accessed online at www.animalagriculture.org
The National Institute for Animal Agriculture provides a forum for building consensus and advancing proactive solutions for animal agriculture—the aquaculture, beef, dairy, equine, goat, poultry, sheep and swine industries—and provides continuing education and communication linkages for animal agriculture professionals. NIAA is dedicated to programs that work towards the eradication of disease that pose risk to the health of animals, wildlife and humans; promote a safe and wholesome food supply for our nation and abroad; and promote best practices in environmental stewardship, animal health and well-being. NIAA members represent all facets of animal agriculture.
News from The Appraisal Foundation
The Appraisal Standards Board (ASB) has issued USPAP Q&As on the following topics:
• “Rebuttals” and Appraisal Reviews
• Difference Between Appraisal and Appraisal Report
• Signed and Dated Certification Requirement for an Oral Appraisal Review
• Differing Scopes of Work
Issued: September 2013
Questions? Please contact Emily Mann, Standards Administrator, 202.624.3058.
The Appraisal Foundation Seeks Candidates for Business Valuation and Personal Property Resource Panels
Application Deadline Extended to September 20, 2013
The Appraisal Foundation, a non-profit organization dedicated to the advancement of professional valuation, is initiating its search for qualified candidates to serve on two volunteer resource panels that will report to the Board of Trustees: the Business Valuation Resource Panel and the Personal Property Resource Panel. There are up to ten vacancies on each panel and terms will last approximately one year.
Completed applications for the panels must be received by September 20, 2013.
The purpose of these Resource Panels is to provide a permanent forum for assembling representatives from diverse backgrounds within each of these disciplines of valuation, so that the Board of Trustees: 1) has a centralized ongoing facility for communication with representatives of the two disciplines; and 2) benefits from information, advice and recommendations developed by these resource panels on issues relevant to these disciplines.
The Resource Panels, in addition to enhancing communication between the Board of Trustees and said disciplines, will consider a number of professionally relevant issues, aimed at preserving / improving the public trust in valuation, in areas specific to each discipline, including, but not limited to the following:
• Consideration of a universal accreditation/certification or framework;
• Consideration of the creation of a “national registry” of valuation specialists/appraisers in each of these disciplines;
• Development of a comprehensive framework for discipline-specific standards and/or recognized methods and techniques;
• Development of a unified framework for discipline-specific qualifications, potentially for future submission to the Foundation’s Appraiser Qualifications Board (AQB);
• Consideration of methods of oversight across these various disciplines, recognizing that the nature of the assets valued, and the purposes of valuation, may not fall under the auspices of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) or state appraisal regulation; and,
• Other relevant discipline-specific issues.
Service on these panels is voluntary and panelists will not be compensated for their time. It is envisioned that the first panels will serve terms commencing immediately upon appointment until December 31, 2014. Appointments thereafter will be made on annual basis.
Application packages for these positions are now available: https://appraisalfoundation.sharefile.com/download.aspx?id=s458133c87ab48dc9.
If you would like to request an application package via email, please contact Paula Douglas Seidel (firstname.lastname@example.org). When requesting information on the applications via e-mail, please use the phrase “Business Valuation Resource Panel” or “Personal Property Resource Panel” in the subject line, and please include your full name email address and phone number.
The Appraisal Foundation is pleased to announce that the Appraisal Practices Board (APB) has adopted the following Valuation Advisories:
• APB Valuation Advisory #4: Identifying Comparable Properties
• APB Valuation Advisory #5: Identifying Comparable Properties in Automated Valuation Models for Mass Appraisal
The APB is an independent Board of The Appraisal Foundation, which is responsible for developing voluntary guidance on recognized valuation methods and techniques.
To obtain copies of the new Valuation Advisories, please visit the following links:
APB Valuation Advisory #4: Identifying Comparable Properties: https://appraisalfoundation.sharefile.com/d/sec077b865b7457aa
APB Valuation Advisory #5: Identifying Comparable Properties in Automated Valuation Models for Mass Appraisal
Questions? Please contact Staci Steward, Practices Administrator, at 202.624.3052.