Weekly AgNews – August 1, 2017

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Outside Agriculture Investors: Blessing or Curse?

A friend asked me the other day whether I thought all the outside investment in agriculture had been a good thing for the industry. I have spent many years working with non-ag investors of all stripes who are interested in investing in agriculture.  While a number of these investors have been great assets to our industry, many others have been a net negative for agriculture.

Why Ag? Financialization and Asset Bubbles

The first thing to understand, and this has nothing to do with agriculture, is that we are in the late stages of a 30-year run of destructive monetary policy. Since the late 1980s, the US Federal Reserve has pursued a policy of trying to drive economic growth through manipulation of the supply and price of money with zero interest rates and by printing money. Their basic premise was that we just don’t have enough debt, and if we make money cheap enough folks will borrow and fuel a perpetual economic expansion. Well, they have clearly fixed that “not enough debt” problem, as we now have record levels of debt at the corporate, personal, and government levels. It’s shocking how both economists and consumers think growth fueled by borrowing money is a sustainable strategy. To paraphrase President Trump, this is fake growth.

This policy has resulted in a massive asset price bubble in every part of the economy – homes, commercial real estate, stocks, and bonds. Guess who owns most of these assets? The richest 10% of the population. But aside from the highly negative effect of this monetary policy in increasing income inequality and punishing savers, the most pronounced effect has been the “financialization” of the US economy. Have you noticed those TV ads for new cars and trucks don’t mention the price, only the monthly payment? Homebuilders are now starting to do the same thing. Our entire economy, and lives, are being reduced to a portfolio of cash flow streams, being sliced and diced and endlessly resold to investors desperately searching for yield. This is financialization, and it has worked its way over 30 years into every nook and cranny of our lives and economy – and it will end badly.

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Farm Bill Hearing Focuses on Economic Challenges Facing Farmers

In preparation for writing the 2018 Farm Bill, the Senate Agriculture Committee on Tuesday heard four hours of testimony on the severe economic conditions gripping farm country and the need to protect and improve crop insurance and access to credit.

Sen. Pat Roberts, R-Kan., chairman of the committee, said his conversations with producers across the country demonstrate that “all of agriculture is struggling with low prices, not just one or two commodities or regions.”

Congress must listen to farmers and ranchers first on what they need to manage their risks, and that is exactly what the committee is continuing to do, he said.

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WOTUS Withdrawal: EPA, Corps Publishing Proposal

WASHINGTON, July 26, 2017 – The Trump administration’s effort to write new “waters of the U.S.” regulations takes a big step forward Thursday with publication of a proposed rule to withdraw the Obama administration’s 2015 rule.

The proposal was announced June 27 but publication was delayed because of issues involving the formatting of the document, Don Parrish, American Farm Bureau Federation’s senior director of regulatory relations, told Agri-Pulse earlier this week.

Now that questions about the way the document looks have been laid to rest, interested parties will have an opportunity to comment on the proposal’s substance.

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More Sales Are Likely

As we approach the late-summer and early-fall harvest season, land sales activity is likely to pick up. The strongest values within the market continue to be for top-quality farms with the most productive soils, solid fertility and drainage, and high “farm-ability” (e.g., large and square fields, and not an abundance of point rows, waterways and obstructions). Farm sales located in neighborhoods with strong long-term farmland owners are outperforming those areas that lack local neighborhood strength.

Farmland sales activity has declined slightly each year for the past five years. In those locales where multiple large sales have occurred, the potential for weakness is higher, as local capital has been drawn out of the market. A balance of current farmers, local farmland investors and non-local farmland investors has continued to show interest in purchasing land. The stabilization in the farmland market prices and the increase in interest from investors are in reaction to a search for solid investments, low-interest rates, and a general belief that farmland is a tangible asset and sound investment.

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Agri-Pulse: Open Mic Interview with Senator John Hoeven, ND

This week’s guest on Open Mic is U.S. Senator John Hoeven. Severe drought in his home state and across the Northern Plains heightens the need to secure risk management tools to protect farmers and ranchers. As agriculture chair on the Appropriations Committee and a member of the Senate Agriculture Committee, Hoeven says the budget will be a challenge in writing a new farm bill. The North Dakota Republican says agriculture has a strong message to share on budget savings and a real need for
protection given current challenges from revenue and potentially from global trade.

Listen

Rise in Farmland Values Turns Flat

The prices of Illinois farmland have been largely flat for the last four years, which is cause for concern through the agricultural industry.

“I tell people stable but erratic,” said Donald Cochran of Cochran Ag Services in Wheeler.

It’s particularly notable in the cost of higher-value land, he said, in part because institutional investors are supporting the market as they seek to diversify. And with concerns in the bond and stock markets, it makes sense to look toward farms, he
said.

“Farmland is basically worth what it earns,” Cochran said.

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Bee Pesticide Ban Debate Could Arise in Next Farm Bill

Rep. Earl Blumenauer (D-Ore.) wants to include a ban on pesticides linked to declining bee health in next year’s farm bill, one of several initiatives he is pushing in the legislation to reauthorize agriculture and nutrition programs.

Thirty-one Democrats are backing a bill—the Saving America’s Pollinators Act of 2017 ( H.R. 3040)—that would suspend the approval of neonicotinoid pesticides, common insect-killers that are said to harm honeybees, aquatic insects, birds, and other insects and animals. H.R. 3040 would ban imidacloprid, clothianidin, thiamethoxam, dinotefuran, and any other neonicotinoids until the Environmental Protection Agency can determine that the pesticides won’t harm pollinators, based on peer-reviewed studies.

Blumenauer, one of the bill’s sponsors, told Bloomberg BNA he hopes the bill “will be folded into part of a larger initiative” like the next farm bill. Blumenauer is set to release a report next week outlining several measures to support small farmers, local food systems, and sustainability.

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California Farms Produce a Lot of Food – But What and How Much Might Surprise You

California’s 77,500 farms produce more than 400 commodities, and two-thirds of the nation’s fruits and nuts. About one-quarter of what California produces is exported around the world.

Here are some more facts and figures about California agriculture.

California’s cornucopia

California remained the nation’s leading state in cash farm receipts in 2015 and produced 13 percent of the U.S. total. Nearly 27 percent of California’s 77,500 farms generated sales over $100,000, greater than the national average of 20 percent.

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Conaway: Texas Values at the Heart of Farm Bill Talks

The history of Texas is found in its dirt.

It was written by generations of farmers and ranchers who coaxed life out of our hardscrabble countryside, pioneering families who braved the wilderness and established communities like San Angelo that we still call home. Every Texan since has reaped blessings from the land they tamed, the wisdom they shared and the values they instilled.

Wisdom about the land, its people and the business of farming and ranching forms the foundation of our communities. Values like hard work, grit, self-reliance, respect and humility are the code we live by in rural Texas. This legacy has shaped each of us and provides Texans with a unique and important perspective on life, agriculture and conservation. Perspectives at the heart of our nation’s farm policy.

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Syngenta Ventures Invests in Premier Crop Systems After Months of Trials with Software

Syngenta Ventures has acquired a minority stake in Premier Crop Systems (PCS), a Des Moines, Iowa based agronomic software tool in a growth equity investment round. The investment comes after months of Syngenta using the tool in multiple field trials. Syngenta was joined by some early investors in PCS.

This marks the company’s first round of external funding since early investment from angel investors around the company’s founding in 1999. The company has grown on revenue alone since then.

PCS CEO Dan Frieberg told AgFunderNews that funding in the early aughts wasn’t available for agronomic decision-making software and what seems like a rare concept today — organic growth through revenue — was the only option for the nearly 20-year-old company.

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John Deere and Granular Collaborate to Deliver Advanced Software Tools to Farms

According to a company press release, John Deere and Granular are partnering to bring together the best operational and financial software in agriculture. Today, the companies announced a product development and comarketing agreement that gives producers more tools to measure and improve their financial performance.

Under the terms of the agreement, the two companies will work to integrate further Granular’s leading Farm Management Software (FMS) product and the John Deere Operations Center. Basic financial FMS functionality will be offered free of charge to Operations Center users in the U.S., Canada, Australia, and New Zealand so that producers who choose to share their machine data with Granular can measure their profitability at the field and subfield levels. The companies will also more deeply integrate Granular’s paid FMS product with the John Deere Operations Center so users of both applications have maximum utility and minimum duplicate data entry.

“Farmers need tools that allow them to learn from their data, turn it into insights, and make informed decisions. Our goal is to help make a good farm even better,” said John Stone, SVP of John Deere’s Intelligent Solutions Group. “With that in mind, John Deere is pleased to partner with Granular because its FMS is a leading solution in this area. It is a strong complement to operational execution tools we have in the John Deere Operations Center.”

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Agtech Startup Prospera, Which Uses AI and Computer Vision to Guide Farmers, Harvests $15M

Tel Aviv-based startup Prospera has raised a $15 million Series B to expand the scope of its technology, which uses computer vision and artificial intelligence to help farmers analyze data gathered from their fields. The round was led by Qualcomm Ventures, with participation from Cisco Investments, ICV and returning investor Bessemer Venture Partners, and brings Prospera’s total funding to $22 million (its Series A was covered by TechCrunch in July 2016).

The startup’s new capital will be used enter more global markets, add people to its delivery and customer-facing teams and broaden its services to cover more crops, “including making a key shift from indoor farms to outdoor farms, which has huge implications given that 40 percent of U.S. land is farmland,” says co-founder and CEO Daniel Koppel.

Since its Series A, Prospera has added new customers in Europe, Mexico, and the U.S. and now claims thousands of users, including produce growers for Walmart, Tesco, Sainbury’s, and Aldi.

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Strength in Farm Business Powers DuPont’s Results Beat

(Reuters) – DuPont’s (DD.N) quarterly profit and revenue beat estimates on Tuesday, driven by strength in its agriculture business, its biggest, sending its shares to a record high.

DuPont, which is merging with Dow Chemical (DOW.N), rose as much as 2.4 percent to $86.36 in morning trading. Dow, which will report quarterly earnings on Thursday, was up 1.7 percent.

Sales in DuPont’s agriculture unit, which accounts for nearly half of its total revenue, rose 7 percent as the company sold more soybean seeds in North America and sunflower seeds in Europe.

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Brazil Trade Chamber Postpones Decision on Taxing U.S. Ethanol

BRASILIA (Reuters) – Brazil’s foreign trade chamber, Camex, has put off for 30 days a decision on whether to impose a tariff on ethanol to curb a surge in imports from the United States, a senior government official who attended the meeting told Reuters
on Tuesday.

The official said the chamber, which represents eight ministries, could not agree on applying a tariff and may consider quotas for imported ethanol at its next meeting.

The quota proposal to be discussed would allow in 500,000 tonnes a year of ethanol and apply a 20 percent tariff on any imports beyond that quota, the source said.

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District VII Vice President Encourages Involvement

Marlo Dill, ARA encourages our membership to get involved in their regional State Appraisal Certification and Licensure Boards and for good reason, our State agencies need to hear from appraisers. In the first quarter of this year she had the opportunity to testify in the Oregon Legislature in regards to two proposed House Bills, HB 2501 of which she was in strong opposition, and HB 2189 of which she supported.

 See the Full Statement

AQB Update on Proposed Changes to the Real Property Appraiser Qualification Criteria

For the last two years, the Appraiser Qualifications Board (AQB) has been examining potential changes to the Real Property Appraiser Qualification Criteria (Criteria).

To solicit feedback from its stakeholders, the AQB issued a Concept Paper, Discussion Draft, three Exposure Drafts, held a public hearing, an online briefing, and several public meetings over the last two years. The number of responses for each publication has far exceeded comments received on past drafts issued by the AQB. The AQB had hoped that consensus would start to build among the proposed requirements, which include: changes to the college degree requirement, revisions to Guide Note 4 (GN-4) and the development of modules in lieu of field experience, and revisions to experience requirements.

The only consensus at this time seems to be a lack of consensus. Comments from the Third Exposure Draft, which can be downloaded here, ranged widely:

• 43% of respondents did not address Section 1 (Licensed Residential and Certified Residential College-Level Education Requirements) of the draft. Of those that did respond, 58% were opposed to the proposals.
• 53% of respondents did not address Section 2 (Practical Applications of Real Estate Appraisal). Of those who responded, 55% were opposed to the proposals.
• 65% of respondents did not address Section 3 (Experience Requirements), and of those that did, 58% were opposed to the proposals.

Common feedback the Board has received includes:

• The current requirements should remain in place
• There is a shortage of appraisers because of the current AQB requirements
• There is no shortage of appraisers – it’s a matter of economics
• Not enough Trainees are entering the profession
• Trainees are having difficulty finding a supervisor
• Licensed Residential appraisers are unable to find work and are unable to move up to Certified Residential because of the requirement to have a bachelor’s degree

The AQB’s primary responsibility when setting qualifications is to protect the public trust. With this in mind, and based on the feedback received, the AQB has decided on the following course of action:

• Appoint a Focus Group to solicit input as to whether any Criteria change is needed, and if so, in what areas and to what extent is appropriate
• Survey state regulators regarding potential reciprocity issues if the Criteria is revised
The Board next meets publicly in Minneapolis, Minnesota on September 8. You can register by clicking here.