Weekly AgNews – May 9, 2017

Printer Friendly
Bookmark and Share

Farmland Values Lower Year-Over-Year But Still Relatively High, Sales Show

The value of farm land in the biggest corn and soybean producing states fell between 2014 and 2016, according to the U.S. Department of Agriculture, and likely will decline again this year as commodity prices remain low.

The farmland index from the University of Illinois shows that 2015 values fell only slightly from the prior year, but more dramatically in 2016. With the cost of ag land in 1979 being a 100 on the index, 2014 came in at a reading of 405, 2015 had a reading of 404 and 2016 had a reading of 398. Prior to that, the value of crop land year-over-year hadn’t declined since 2009.

In Iowa, land prices declined 1.9% per acre from 2015 to 2016, Indiana farmers saw their land values fall 1.3% and in Nebraska, the price of agriculture real estate dropped 3.3%, data from the USDA show.

Read More

What Does the Trump Tax Proposal Mean for Appraisers?

On April 26, President Trump announced a series of principles around which a tax reform proposal will be based; while lacking much detail, the principles do provide enough substance to begin to understand what the impact could be on appraisers.

• The end of the estate tax means a drastic reduction in the need for estate planning related valuations. By proposing to eliminate entirely the federal estate tax, President Trump’s proposal would reduce or eliminate the need for clients to obtain valuations when they make estate planning decisions. While some state-level tax codes will still collect estate taxes, and therefore require more detailed planning, the elimination of the federal estate tax could have the most immediate impact upon appraisers.

• However, the President’s plan would protect charitable contribution deductions. While much has been made of the doubling of the standard deduction for individual taxpayers, some expected this to mean a drastic reduction in the number of itemized deductions that would remain in the tax code – including noncash charitable contributions, such as conservation or façade easements. Fortunately, the President’s announcement specifically called for protecting charitable deductions, meaning easement valuation work will likely continue – if not expand – under his plan.

• The call for a reduction in tax breaks for the wealthy might mean the end of 1031/Starker exchanges. While other deductions and tax breaks were not specifically mentioned in the announcement, some concern has existed over whether 1031 like-kind exchanges (also known as Starker exchanges) might be eliminated under the proposal. Until more detail is available, though, the exact fate of the 1031 will remain unknown.

• Pass-Through entities may see rates close to, or the same as, the proposed 15% business tax. One big point of debate will be whether to lower pass through tax rates (that is, the rate individuals pay on taxes earned from an S-Corp or similar pass through entity) closer or equal to those paid by C-Corp businesses. Given that most US businesses, including appraisal firms, use this structure, it will be closely watched in the weeks ahead to see how close to rate parity the proposal comes.

During May, the Trump administration will be holding listening sessions ahead of the crafting of a specific proposal; once specific language becomes available and addresses these areas, we will provide an update of how the finished product will affect appraisers.

The 5 Biggest Ag Lender Concerns

Farmers are feeling the pressure from the currently anemic agricultural economy. Nearly 90% of agricultural lenders have reported an overall decline in farm profitability this past year, according to a joint survey from the American Bankers Association and the Federal Agricultural Mortgage Corporation.

Among other things, the survey – comprised of responses from more than 350 agricultural lenders – revealed some common concerns lenders have about their farmer customers. They were asked to rate their concerns regarding various topics from low (1) to high (5). Here are their top concerns, ranked by percentage who answered with a 4 or 5.

1. Commodity prices (95%)

2. Liquidity (88%)

3. Farm income (88%)

4. Farm leverage (74%)

5. Land Rents (56%)

Learn More About the Results

Tricky May Forecast Raises Uncertainties for U.S. Corn -Braun

The planting and emergence of the 2017 U.S. corn crop is right on schedule, but the weather might continue to present some unique challenges as May begins.

The U.S. Department of Agriculture on Monday placed corn plantings at 34 percent complete by April 30, identical to the five-year average but below last year’s 43 percent. Emergence stood at 9 percent, compared with an average of 8 percent, and 12 percent one year ago.

Even though the progress pace lines up with recent averages, an “on-time” crop can feel late, especially this year given the economic battle with soybeans, corn’s key competitor. If planting pace is quick, the market has much more confidence that corn acres are unlikely to fall from intentions.

More on the Forecast

Farm Profitability Down, Commodity Prices Top Concern

WASHINGTON — Nearly 90 percent of agricultural lenders have seen an overall decline in farm profitability in the last 12 months, according to a joint survey by the American Bankers Association and the Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A).

The survey of more than 350 agricultural lenders representing institutions of all sizes across the country revealed that when it comes to their producer customers, lenders are most concerned about commodity prices, liquidity and farm income.

Read More

Major Blow to Soy Industry as Chinese Grow Wary of GMOs

Despite the Chinese government’s assurances that genetically modified (GMO) foods are safe, Chinese consumers are growing increasingly wary of the products, fueling a looming crisis for the country’s lucrative soybean crushing industry as non-GMO alternatives become more popular, Reuters reported.

Sales of the nation’s primary cooking oil, soy oil—most of which is made from imported GMO soybeans—have taken a hit. According to data from Euromonitor, retail sales of soy oil fell one percent last year to 35.7 billion yuan ($5.19 billion), compared to a growth of between two and six percent for alternatives such as non-GMO soy, sunflower, peanut or sesame.

Johnny An, the supply chain director of Aramark, which services more than 60 Chinese cities, told Reuters that “non-GMO oil is gradually replacing (soy oil).”

Learn More

Monsanto Terminates Precision Planting Aquisition With Deere

Nearly two years after it initially agreed to sell Precision Planting to John Deere, Monsanto has announced it is terminating the 2015 agreement.

“We made the strategic decision nearly 18 months ago to focus our business exclusively on our digital agriculture platform, Climate FieldView,” says Mike Stern, chief executive officer of The Climate Corporation, a subsidiary of Monsanto Company. “The delay in closing due to the Department of Justice concerns is what ultimately drove our decision to terminate our agreement to sell Precision Planting to John Deere.”

In 2016, the U.S. Department of Justice brought legal action against Deere & Co. to block the transaction. In summary, the initial claim stated that if Deere were allowed to purchase Precision Planting, it would create a monopoly in the high-speed precision planting market.

More on the Transaction

Tap Drone Tech for Your Next Move

It’s hard to manage what you can’t see. That’s where aerial imagery can lend farmers a hand. Send up a drone or plane or lasso a satellite to collect a bird’s-eye view, compile available images to analyze points of interest and trends, and then set out on foot to investigate before it’s too late.

Remote-sensing technology has most commonly been used to help farmers target scouting efforts based on a curious looking spot on an image, likely due to stress from weeds, pests or nutrient issues. A new wave of technology available to farmers claims to pinpoint plant population and yield.

Learn More

Data As Agriculture’s New Currency

Farmers are adapters. Many are early adopters of cutting-edge advances that will help them be more efficient, competitive and profitable. These innovators are already learning to harness data that they generate on-farm and much more from other sources like governments. In fact, data are fast becoming agriculture’s new currency.

The shift has already taken place in other major industries in which data have become integral to successful operations. Without data – and the ability to manage it effectively — modern transportation, shipping, and communications networks would all grind to a halt.

Despite the central role data have assumed in our lives, the concept remains a bit fuzzy, and can be difficult to define. Synonyms for “data” include “facts, figures, and statistics.” They refer to pieces of information that can be analyzed, quantified and summarized. But data can be much more powerful than mere statistical information.

As information systems grow in utility, data have come to represent different things for different industries, overlapping many scientific disciplines. Along the way, the scope of information that industries want to capture and measure expands, and the data become yet more useful.

Learn More

South Dakota Chapter Visits South Dakota State University

Forty-eight individuals gathered on April 10th at the Chicoine Champions Room at the Dykhouse Student Athlete Center in Brookings for the purpose of education, fellowship, networking, and building relationships between the SD Chapter and South Dakota State University. 

Those present from SDSU included:

  • SDSU President Barry Dunn
  • Ag & Bio Sciences: Associate Dean Don Marshall
  • Interim Associate Director-SDAES/Associate Dean for Research/Professor Bill Gibbons
  • Ag Engineering/Technology: Dr. Van Kelley (Department Head)
  • Agronomy, Horticulture, and Plant Science: David Wright (Department Head)
  • Animal Science: Joe Cassady (Department Head),
  • Dairy and Food Science: Vikram Mistry (Department Head)
  • Economics: Dr. Eluned Jones (Department Head), Nicole Klein (Assistant Department Head), Nacasius Ujah
  • Extension: Heather Gessner
  • F.I.R.E. Club – Jordan Hill, Lisa Smith, Mikayla Frederick
  • Office of Research: James Doolittle
  • SDSU Foundation: Mike Barber
  • USDA: Sharon Papiernik
  • Veterinary and Biomedical Science/SD Animal Research and Diagnostic Laboratory: Jane Christopher-Hennings

Members & Guests Attending:

  • Officers: Terry Leibel, Adam Nelson, Paul Sickler, Paul Reisch
  • Directors: Jim Dunlap, Brian Gatzke , Jay Knuppe
  • Committee Chairs: Jordan Bauer, Barb Hegerfeld, Allan Husby, Kim Larson, Keith Newman
  • Academic Members – Jack Davis , Jim Jansen, Larry Janssen, Ryan McKnight, Jerry Warmann
  • Farm Managers – Rick Gullickson, Jackson Hegerfeld, Vince Hanson, Tom Jass, Paul Joerger, Seth Van Duyn
  • Lending Services – Jim Hollenbeck, Kevin Johannsen, Brooke Lindgren
  • Fee Appraisers – Michael Braun, Tamara Joerger
  • Affiliate Member – Ron Dunker
  • USD Law – Dean Thomas Geu

See the Full Story