Five High-Tech Farming Trends
What one generation sees as a luxury, the next sees as a necessity," said Anthony Crosland, British Labor Party politician and author, in his most cited sentence. History has shown this to be true: One need not look further than cell phones, televisions, hand-held devices and computers, for starters. Then look at how living conditions and diets have changed, as societies have become more affluent.
Dr. Lowell Catlett, a popular speaker and retired regents professor and dean emeritus from New Mexico State University, says achieving significant increases in meat production will require “continued applications of new and emerging technologies.
“Many of the technologies are based on ‘hard’ science in the form of sensors, robotics and genetics, but some are ‘soft’ in the area of human-animal bonds and health,” Catlett says.
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How are Farmers Affording High Land Prices?
In Iowa, farmland values and sales declined slightly in January, but there was an uptick in February with a hot market. We watched land sales from all over the state come in with phenomenal figures.
A sale in Sioux County, Iowa, reached $18,360 per acre, which marks the highest selling farmland in 2018. In central Iowa, we saw most of the sales of good tillable farmland yield over $10,000 per acre with many bringing in closer to the $11,500 range. These prices deemed a successful February for farmland sales. Overall, trends are on the rise for quality farms. I always say, “Good ground sells good!”
There are more farms coming to the market in March and April as we approach planting season, and there’s new interest from investor buyers and groups that are bidding the price up at auctions. Investors are now competing against the neighbor farmer who usually is the unchallenged bidder and then ends up buying the ground. Interest in purchasing recreational ground is also on the rise. We’ve received calls from out-of-state investors who were interested in seeing recreational ground during their stay in Iowa for the Iowa Deer Classic.
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Passage of a Farm Bill Faces 8 Major Roadblocks
If a farm bill is passed by Congress this year it could look a lot like the 2014 bill, according to Pat Westhoff, director of the Food & Agricultural Policy Research Institute, housed at the University of Missouri. Westhoff spoke during the Abner Womack Missouri Agriculture Outlook Conference held March 14 in Columbia, Missouri.
“It is really hard to agree on alternatives so if Congress can’t decide on something in the next few months it will be more or less forced to extend the current bill at least for a while,” Westhoff said.
Westhoff sees eight problems with getting a farm bill done in the next few months. No. 1 is cotton. The 2014 farm bill ended the basic commodity program for cotton and started a new crop insurance program that has not been very popular. A bi-partisan budget act did include a new program for “seed” cotton. Not everyone in cotton country thinks this is the final solution.
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Granular Partners To Provide Planet’s Satellite Imagery
Granular, a software business owned by Corteva Agriscience, has partnered with Planet, an aerospace and data analytics company, for a three-year, multi-million dollar deal. The partnership will combine Planet’s global satellite imagery data with Granular’s farm management software beginning with its agronomic offering, Encirca Services.
“Our team of data scientists have built tools that translate Planet's imagery into actionable insights on the health of crops throughout the growing season," says Sid Gorham, Granular co-founder and CEO. “Our farmer customers access these insights via Granular's easy-to-use mobile applications – enabling farmers to tap into the power of a global satellite network right from their phone."
Daily satellite imagery from Planet provides farmers timely visibility into problem spots, as well as patterns in weather-related impacts, on every field. Granular's analytics give farmers a view of what certain conditions indicate about crop health, along with methods for optimal response.
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Survey: 2.9% Increase in Iowa Farmland Values
Iowa farmland values have risen nearly 3% on average since September and are 5% higher than a year ago, based on the most recent statewide survey by the Iowa Chapter of the Realtor’s Land Institute.
The RLI conducts the survey every six months, in early September and early March. Participants are real estate professionals specializing in farmland sales.
Statewide, the average value of cropland rose by 2.9% between September 2017 and March 2018. Combining this increase with the 2% rise reported for the six months prior to September indicates a statewide average increase of 4.9% from March 1, 2017, to March 1, 2018.
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The Farm CPA: Section 199A "Fix" - Winners and Losers
The "fix" for the "grain glitch" that we have previously posted on several times is now part of the budget bill that should be passed by the end of this week. Since we are now fairly certain as to what the final 199A law will be, I thought it would be good to go over the winners and losers of 199A (in its final form).
First, for all non-corporate farmers, there are no losers compared to the old law in effect before 2018. In almost all cases, your deduction under Section 199A will be greater than any deduction that you got under Section 199 DPAD. At a minimum, you will get an 11% deduction for dealing with a cooperative. This is the worst case and it is still larger than the old 9% which was then limited to 50% of wages paid. Under the old law, if you had no wages paid, you got no deduction (other than any DPAD from a cooperative). Under the new law, you get a minimum of 11% (up to the threshold amount).
Now you will likely notice I started the last paragraph with non-corporate farmers. Therefore, it must mean that the losers may include C corporation farmers. The answer is yes and no. C Corporations will not be entitled to any Section 199A deduction. However, in return, these entities saw their top tax rate drop from 35% to a flat 21%. Therefore, they already received a 40% tax reduction. The only reason for giving any Section 199A benefit to non-corporate taxpayers was to level the playing field with this lower corporate tax rate. Congress was not interested in maintaining the Section 199 deduction for any taxpayers. Calling the deduction 199A simply added confusion for taxpayers in assuming it had something to do with old Section 199. We do know that many farm corporations will see a 40% tax increase from 15% to 21% and not receive any Section 199A deduction. These taxpayers are the biggest loser.
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More Water Shortages on Tap in Desert Southwest?
The Southwest could experience another water shortage from the Colorado River as drought conditions continue.
That message from Dr. Paul Brown, biometeorology specialist with the University Arizona Department of Soil, Water and Environmental Science, includes about half the normal spring inflows into Lake Powell, on the Arizona-Utah border.
Brown’s message at the Southwest Agricultural Summit blames a warm, dry winter across much of the Desert Southwest and a below-average snowpack throughout much of the West for his outlook of possible water cutbacks as drought continues.
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Survey Finds Illinois Farmland Prices Stabilizing
BLOOMINGTON, Ill. — After three consecutive years of decline, farmland sale prices in Illinois remained relatively flat in 2017.
Results of an extensive statewide survey by the Illinois Society of Professional Farm Managers and Rural Appraisers were released March 22 at the Land Values Conference.
“The news is there isn’t much new regarding land values,” said David Klein of Soy Capital Ag Services and overall chair of the land values project.
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Political Foreplay or Farm Bill Grist?
Legislation supporting agriculture and conservation is easy to “put wheels on,” but often lacks horsepower, traction and fuel. That may currently be the case with the 2018 Farm Bill. And as Congress faces major federal revenue shortfalls, “show me the money” will still be the real bottom line.
Writing of the 2018 Farm Bill stalled out in mid-March due to rancor expressed by 19 House Ag Committee Democrats over proposed reinstatement of work requirements for participation in the Supplemental Nutritional Assistance Program and transparency issues. Referring to Ag Committee Chairman Mike Conaway’s withholding of the proposal’s legislative language, Rep. David Scott, D-Ga., and Rep. Jim Costa, D-Calif., noted they couldn’t “agree to any deal without ample time to review proposed policies” and scoring by the Congressional Budget Office.
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1031 Exchanges Now More Complicated
Planning to trade up or out some farmland this year? Consult your tax adviser first. Since the Tax Cuts and Jobs Act is now law, Section 1031 Tax-Deferred Exchanges (also known as like-kind exchanges) are now more complex to execute.
“Under the new tax law, trading farmland is allowed using a 1031 exchange to defer the tax,” says Paul Neiffer, a CPA and principal at CliftonLarsonAllen and author of the blog “The Farm CPA.” “However, in order for it to be completely tax-free, it usually must include only land or items that constitute real estate.”
Non-Land Assets. Therefore, when land includes tiling, wells, irrigation pivots, etc., these items are likely to be treated as non-real estate. As a result, these assets will be fully taxable—even if you trade the property for other farmland, Neiffer explains. However, if the farmland you are exchanging for includes these same items at equal to or greater than what you are selling, the income tax effect will likely be a wash.
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Recognition of Long Standing Members
We are recognizing long-standing members of ASFMRA on an annual basis according to their join date. 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 2018 year.
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. ASFMRA continues to make every effort to offer member services which will benefit your professional and personal life.
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Member Speaks at Grain Elevator and Processing Society (GEAPS) Conference
Jeff Berg, ARA spoke at the at the Grain Elevator and Processing Society (GEAPS) conference on how to find the right professional to help you with valuation when there are mergers and acquisitions.
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South Dakota Chapter Members Visit SDSU Classroom
Jordan Bauer, Seth VanDuyn, and Kevin Johannsen spoke to Professor Elijah Kosse's Farm and RanchManagement Class and Professor Ryan McKnight's Small Business Management class at SDSU on March 21st and 22nd. Student Involvement Committee Chair Jordan Bauer lined up arrangements with Ryan McKnight and Elijah Kosse.
In each class, Professor McKnight and Kosse introduced the chapter members and they gave a short introduction regarding their background and employment. Approximately 150 students were present between the two classes.
Jordan gave a quick overview of ASFMRA, the SD Chapter, memberships, and opportunities that ASFMRA provides. Students were encouraged to become student members (no cost) and starl to network with industry professionals.
Jordan also talked about the opportunity to network at Summer Education Week 2018 in Des Moines, IA and shared his experience of attending this event 2 1/2 years ago. Jordan mentioned there will not be a career day however, there are still networking and education opportunities for the students to take advantage of.
Seth VanDuyn spoke about Farmers National and what it takes to be an Accredited Farm Manager. He gave them examples of his responsibilities and benefits of the career.
Jordan followed with some of the same format talking about Farm Credit Services ofAmerica and what it takes to become a Certified General Appraiser.
Jordan, Seth and Kevin strongly encouraged the students to be proactive and look for opportunities to network and make yourself known (student membership), and to not be just a name on a resume.
The students showed interest and asked questions of Seth, Jordan and Kevin.
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