ASFMRA Weekly News February 7, 2017

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Trouble Could be Looming for Farm Bill Funding

As lawmakers begin their farm bill processes on Capitol Hill, there are concerns in Washington over how much money will be available for the next piece of legislation. Listen to the article.

With Executive Order on Dodd-Frank, What Happens to Appraisal Regulations?

On February 3, President Donald Trump issued an Executive Order requiring all federal banking and financial services agencies to review existing regulations and to identify those that inhibit a series of Core Principles listed in the Order. This has been widely interpreted as a directive to begin rolling back regulations that were implemented under the Dodd-Frank Act of 2010, and to generally promote a deregulatory posture towards banking and financial services activities. So what does this mean for those regulations that were implemented under the appraisal modernization provisions of Title XIV of Dodd-Frank?

At the outset, it’s important to note that the majority of regulations affecting appraisals and appraisers have come from the Consumer Financial Protection Bureau (CFPB). The agency, which was created as part of Dodd-Frank, is run by its sole director – Richard Cordray, an Obama appointee – for a five year term. Director Cordray’s term runs through 2018. This means that, absent legislative changes to the leadership structure of the CFPB, the Director does not have to engage in any specific regulatory actions not required as a matter of law. While there has been talk of such a legislative change, any financial services bill is likely stuck behind health care and tax reform as priorities.

Without forthcoming change, it is unlikely that Director Cordray will roll back any of his agency’s rules, meaning that for the time being existing appraisal regulations are likely to continue in their current state. However, it is possible that as part of a financial services bill that appraisal issues may be considered for changes, as the past chair of the House Financial Services Committee, Subcommittee on Housing and Insurance Blaine Lutkemeyer (R-MO) mentioned the need for “tweaks” as part of a November oversight hearing. As of now, there is little indication which direction the new Subcommittee chair Sean Duffy (R-WI).

Declining Cropland Prices Slower Than Expected

The overall trend of weakening cropland prices continued through 2016 in the grain belt states served by Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit. However, the pace of decline remains slower than expected.

The large 2016 corn and soybean crops through much of the region helped profitably levels and contributed to continued demand for quality tracts, said Mark Jensen, chief risk officer for FCSAmerica and Frontier Farm Credit.

“That being said, overall margins remain tight and input costs still are adjusting downward,” Jensen said. “As a result, we anticipate continued pressure on real estate values.”

FCSAmerica and Frontier Farm Credit track all farmland sales in Iowa, eastern Kansas, Nebraska, South Dakota and Wyoming. Appraisal teams also update values on 71 benchmark farms every January 1 and July 1. The resulting data is the largest and most comprehensive snapshot of farmland values in the region. Full article.

Midwest Farmers Prepare for Another Year in the Red

Farmers across the Midwest are trying to figure out how to get by at a time when expected prices for commodities from corn, to wheat, to cattle, to hogs mean they’ll be struggling just to break even.

“Prices are low, bins are full, and the dollar is strengthening as we speak and that’s just making the export thing a little more challenging,” says Paul Burgener of Platte Valley Bank in Scottsbluff, Nebraska.

Burgener says the problem is oversupply. Farmers responded to booming prices in the early part of the decade by planting more crops and improving their land. Soon, crop production outpaced demand.

“We did what most people would do if they had a factory and had a lot of demand: you expand,” says Brent Gloy, a Purdue University economist who also farms in southwest Nebraska.

American farmers aren’t alone, Gloy says. Farms have been expanding across the globe. Read more.

New GIPSA Rule Delayed for Two Months

The effective date for a new Agriculture Department rule that sets standards of proof for market practices in the livestock and poultry industry has been delayed two months until April 22.

The delay carries out a White House order issued the day President Trump took office to allow for review of rules that were implemented in the final weeks of the Obama administration.

The interim final rule that USDA’s Grain Inspection and Packers and Stockyards Administration (GIPSA) released in December was originally scheduled to take effect Feb. 21. An announcement posted Monday both delayed the effective date and said the agency would take public comment on the rule until March 24.  Find out why.

Senate Agriculture Committee Sets First Bill Hearing

Even though Agricultural Secretary Nominee Sonny Perdue’s confirmation hearing has yet to be scheduled by the Senate Agriculture Committee, the Committee has set a date for its first farm bill hearing. The hearing will take place on February 23, at Kansas State University in Manhattan, KS. Witnesses, the exact time and location are yet to be determined.

Vilsack Backs Perdue for Agriculture Secretary

Tom Vilsack is backing Sonny Perdue to run the Department of Agriculture, the job Vilsack held for eight years under President Barack Obama, according to a press release from the Trump transition team.

The release notes that Perdue is only one of President Donald Trump’s cabinet nominees to secure the support of his predecessor.

The transition team released the following statement from Vilsack, a former Democratic governor of Iowa, in support of Perdue, a former Republican governor of Georgia:

“I have had the opportunity to work with Gov. Perdue and know how committed he is to all of our farmers, ranchers and producers regardless of size or production method expand markets here and throughout the world. As a former governor, he knows full well the opportunities and challenges that exist in rural communities. He will, I am sure, work hard to expand opportunity in rural America. Learn more.

Crop Insurance Saved 20,900 Jobs in 2012

Farm Credit Services of America released a report demonstrating that crop insurance saved 20,900 jobs in Iowa, Nebraska, South Dakota and Wyoming with an annual labor income of $721.2 million following the 2012 drought. The report makes the point that farmers pay for their insurance – investing more than $3.7 billion to purchase more than 1.2 million crop insurance policies covering 298 million acres in 2015. More than 90% of the acres planted to principal crops in 2015 were protected by crop insurance. Read the report. 

Iowa Supreme Court Rules Drainage Districts Are Immune From Damage Claims

The Des Moines Register reported the Iowa State Supreme Court ruled Iowa Drainage Districts are immune from damage claims. The court ruling affects a federal lawsuit, expected to go to trial in Sioux City in June, brought by the Des Moines Water Works (DMWW). The DMWW blames drainage districts in three counties in northwestern Iowa for high nitrate levels in the Raccoon River. The Federal lawsuit came in 2015 after the DMWW was forced to operate their nitrate removal system for long stretches at a cost over $1 million when record-high levels of nitrogen were present in the Raccoon River, which is the water supply source for roughly 500,000 people. The case has huge ramifications for farmers and ranchers not just in Iowa, but throughout the nation.

No Fast Track for 2018 Farm Bill

Don’t expect any quick action on a Farm Bill that’s due in 2018. That’s the view of federal agricultural policy analysts who were panelists on a “Food Policy and Farm Bill” program at the 2017 Dairy Forum sponsored by the International Dairy Foods Association.

Approving a new Farm Bill in 2017 would be “a heavy lift” and even doing so in 2018 could be “a long shot,” according to Krysta Harden, who was chief of staff for Secretary of Agriculture Tom Vilsack during the Barack Obama administration.

That players with many different interests and preferences would like to have a role in creating the next Farm Bill was pointed out by panelists Randy Russell of the Russell Group and by Dale Moore, an agriculture and food policy director for the American Farm Bureau Federation. Full article.

House Agriculture Committee Staff Changes

House Agriculture Committee Chairman Conaway (R-TX) announced last week that his Staff Director, Scott Graves, will be leaving the committee for the private sector. Matt Schertz, policy director, will take over the role of staff director, while Bart Fisher, the Committee’s Chief Ecnomist, will become Deputy Staff director while retaining the Chief Economist Responsibilities. Mr. Fisher has addressed Leadership Institute participants for the past 3 years.

Brazil to Open Airlines, Agricultural Land to Foreign Buyers

President Michel Temer will propose legislation to lift restrictions on foreign ownership of airlines and agricultural land in Brazil as he strives to pull the economy out of a two-year recession, government sources said on Monday.

Temer’s center-right government plans to send Congress a bill allowing 100 percent foreign ownership of airlines, though investors will be obliged to help expand regional flight services, two sources said.

The government will soon propose a bill lifting a ban on foreign investors buying agricultural land in Brazil, on the condition that 10 percent of any purchase is destined to land reform to benefit landless farmers and peasants, said a presidential aide who was not authorized to speak on the matter.

Temer last year vetoed an aviation bill that would have allowed full foreign ownership of local airlines in an agreement with senators who wanted inclusion of measures to boost regional aviation. The new draft will do just that. Read more.

The Appraiser Qualifications Board Engages Practical Applications Panel

The Appraiser Qualifications Board (AQB) of The Appraisal Foundation (Foundation) has engaged a panel to assist in the development of Practical Applications of Real Estate Appraisal. This panel will provide the AQB with recommended outlines for programs offering alternative options for appraiser candidates to obtain real property appraisal experience.

“The AQB’s goal is to design an experience-based curriculum that will emulate real estate appraisal practice. The curriculum will include experience modules for the Licensed Residential, Certified Residential, and Certified General credential levels,” Joseph Traynor, Chair of the AQB said. “Benefits of this type of practice-based experience will include consistent educational materials provided by qualified mentors. Experience module outlines are currently being developed for each of the credential levels stated above,” Traynor added.

The panel first met in Washington, DC on December 14, 2016. The composition of the panel is diverse, and includes members with backgrounds in residential and non-residential appraising, real property education, appraiser regulation, membership organizations, and appraisal management companies.

Panel members include:

  • Scott Biethan Seattle, WA
  • William Fall Toledo, OH
  • Rebecca L. Jones Binghamton, NY
  • Randall Kopfer Austin, TX
  • Jordan Petkovski Dallas, TX
  • Donald T. Rodgers Raleigh, NC
  • Debra Rudd Phoenix, AZ
  • Leslie P. Sellers Clinton, TN
  • Stephen Sousa Boston, MA

The AQB intends to issue a Third Exposure Draft of Proposed Changes to the Real Property Appraiser Qualification Criteria in mid-March. The Third Exposure Draft will include proposed alternative experience requirements based on the recommendations developed by this panel. The recommended outlines will be presented in the draft.