Land Prices Improving
As fall harvest 2017 rolls along, the Iowa farmland market continues to show signs of stability and some slight price improvement in areas. Early harvest yield reports have been supportive to upcoming land sales. This confirms the recent survey of real estate agents that reported land values increasing 2% since March 2017, and 2.9% for the full year-over-year period.
The relative sale price strength from neighborhood to neighborhood (or sale to sale) can seem somewhat inconsistent, depending upon the strength of the local neighborhood. Strongest values continue to be seen in the sale of top-quality farms with highly productive soils, solid fertility and drainage, and high “farm-ability” as in large and square fields, and few point rows, waterways and obstructions.
Investor interest in farmland continues to provide stability to the overall land market, as interest rates remain very low and there’s a general belief that farmland is a tangible asset and sound overall investment. That said, the current land market also has somewhat offsetting factors at play, such as low commodity prices that create the potential for land price weakness. For owners concerned about land values dropping, now may be a logical time to consider selling, as most farmland sales in any given year occur following fall harvest.
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Big Cuts Coming in Farm Safety Net?
Every time the National Farmers Union board meets, the state presidents each get a few minutes to report on the top issues in their area, a collective checking of the pulse of the farm sector nationwide.
“Pretty much the entirety” of the discussion is the agricultural slump, says NFU president Roger Johnson. “There is deepening concern about the economic outlook.”
Market prices are down steeply from their peaks during the commodity boom that ended in 2013. USDA says net farm income will stabilize this year after a long tumble, landing at one half of the record set four years ago. Ag bankers are charging higher interest rates and setting longer repayment periods on farm loans in the face of rising – but still historically low – delinquency rates on farm loans, according to the Federal Reserve. The outlook is dreary for any great improvement in commodity prices in the near term.
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Agri-Pulse Farm Bill Series: Part 6: What Have We Learned?
After years of drafting, negotiating, and implementing, how does the 2014 Farm Bill hold up? Agri-Pulse sat down with four lawmakers that were intimately involved with the bill’s passage to get their thoughts.
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RMI Reveals Greatest Banking Threat is Farm Foreclosures
The Rural Mainstreet Index (RMI) released each month by Creighton University is becoming a broken record when describing the farm economy – the overall index remaining below growth neutral. The bright spot in the September RMI is the index saw slight improvements, jumping from 39.6 in September to 45.3 in October. Every state showed a boost in the RMI, except Missouri, where the index slipped to 49.2 from 51.3
The RMI is a survey of ag bankers in a 10-state region. While October’s number showed outlooks are on the rise, it’s the struggling farm economy due to stagnant crop prices acting as a wet blanket on the overall RMI.
“As a result of weak farm income and low agriculture commodity prices, approximately 9.5 percent of bank CEOs expect farm loan foreclosures to pose the greatest threat to banking operations over the next five years,” said Ernie Goss, author of the RMI.
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Farmland Market in Iowa: “It’s a Sellers’ Market”
The start of fall is bringing more land to the auction market. A new report from Terva, LLC shows land auctions ticked higher during the final month of the third quarter of 2017, yet experts say the Iowa land market remains stable.
“The data suggests the market has gotten stronger through the year, and even with more land being auctioned, the market appears to be very strong,” said Jim Rothermich, a land market analyst.
Terva’s quarterly land value assessment includes listings from all 99 counties in Iowa. The Q3 report shows Iowa had 120 land auctions during the months of July, Aug. and Sept. 92 of those auctions had land for sale that was at least 85 percent tillable. The average price for all land sales cashed in at $8,038, which is considerably higher than Q2, where the average farmland price totaled $7,181.
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Sound Cash Rental Decisions for Landowners
What would be the cash rental rate for my farmland? This is a frequent question from landowners who call the Michigan State University Extension county offices for a quick answer. Different agencies carry out yearly surveys and estimated dollar figures are published. However, MSU Extension recommends landowners only use them as a guide because there are a few other considerations for making sound rental decisions.
Cash rents can vary from year-to-year. According to USDA’s 2017 Cash Rents Survey, the national average for cropland cash rent is $136 per acre. This average was the same in 2016, but in 2015 the average rent peaked at $144 per acre. Michigan’s average cash rental value in 2017 was $123 per acre, down 3 percent from 2016 (Fig. 1). This declining trend in rental rate is largely attributed to the decline in net farm incomes.
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Agriculture Secretary Perdue Talks TPP, Nafta and Climate Change
Farmers are facing uncertainty over a number of large issues. Trade deals may have a big impact on how they sell their goods overseas. Immigration laws may restrict their access to workers.
To sort through these questions, The Wall Street Journal’s John Bussey spoke with Secretary of Agriculture Sonny Perdue. Here are edited excerpts of the conversation.
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At Napa Vineyards Untouched by Wildfires, the Grapes Must Still be Picked
Mario Maldonado didn’t wear a mask. The 22-year-old field laborer thought it would slow him down. Besides, he doesn’t like to cover his face when he tends to the vineyards on most nights.
But this Napa Valley harvest was different than most. A muddied pinkish glow emanated from the horizon. A haze hovered in the air and through the vines. A motor hummed from a generator that powered brilliant lights mounted on tractors idling behind the pickers. It illuminated the harvesters’ path and accentuated the fine ash and the dust swirling along with some moths.
About 10 miles west, the Nuns fire had already roared through more than 46,000 acres. A few miles to the east, the Atlas fire had decimated more than 50,000 acres. Both conflagrations marched relentlessly through vineyards, wineries, homes — consuming property and life in their paths.
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Iowa Soybean Harvest the Slowest Since 1985, Report Says
Iowa’s soybean harvest is the slowest since 1985, with only 32 percent of the crop combined, according to a report released Monday.
Several days of rain delayed the corn harvest as well, according to a U.S. Department of Agriculture report.
Just 13 percent of the corn crop for grain had been harvested — the smallest percentage harvested by this date since 2009, according to the report, looking at conditions through Sunday.
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House Panel’s Dodd-Frank Tweaks Won’t Add Up to ‘a Big Number’
President Donald Trump promised to do “a big number” on the Dodd-Frank Act. But a slate of bills House Republicans will take up Wednesday shows how difficult it is to get anything big through Congress these days.
The House Financial Services Committee is set to consider almost two dozen legislative proposals targeting financial rules. Instead of gutting the Volcker Rule, shutting down the Consumer Financial Protection Bureau or enacting other sweeping overhauls, most would make incremental tweaks.
The piecemeal approach of advancing one-off bills is the latest sign that Republicans don’t expect to dismantle rules stemming from the 2008 financial crisis anytime soon, lumping it in with other deferred priorities such as repealing Obamacare and overhauling tax policy.
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Implications of BASF Purchasing Bayer’s Seed Assets
Last week, BASF announced it will purchase Bayer’s seed assets for $7 billion. The deal includes Bayer’s LibertyLink businesses and the canola, cotton, and soybean seed operations.
Since Bayer is divesting the seed technology, it will allow Bayer and Monsanto to come closer to its merger. The companies are still waiting for regulatory approval from other countries, and selling the seed technology is believed to help alleviate competition fears.
“This is simply an asset sale rather than a merger, but nonetheless is a significant one in some markets” said Allan Gray from Purdue University’s Center for Food and Agricultural Business.
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No More CRP Enrollment for 2017
USDA is capping Conservation Reserve Program (CRP) offers to avoid exceeding the 24 million acre limit set by the 2014 Farm Bill. As of early October, there were 23.5 million acres enrolled and applications for enrollment after Sept. 30 will not be granted.
“All current, eligible CRP continuous enrollment offers made through Sept. 30, 2017—except for those made under the Pollinator Habitat Initiative—will be approved,” said Steven J. Peterson, acting Farm Service Agency (FSA) administrator.
Pollinator acreage has already met its enrollment goal, so no further acres will be considered. USDA’s suspension of all CRP continuous offers will remain through part of the 2018 fiscal year.
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Successful Student Reception
Seventeen students attended the California Chapter’s Student Reception at their Fall Meeting. Todd Combs, ARA presented a PowerPoint to the students on ASFMRA which was followed by networking with current members. Members had a great time getting to know the students. The event was supported by the ASFMRA Education Foundation, via a grant from Monsanto’s sponsorship of the annual Early Career Award.
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Member Spotlight: William Barnes, ARA
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