4 Drags on Farmland Values
The average value of farm real estate increased by 47% between 2009 and 2017, according to the 2018 U.S. Baseline Outlook compiled by Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.
Average U.S. farmland values are expected to soften over the next decade. Analysis from FAPRI shows the average value of farm real estate to decline slightly—to $3,002—between 2017 and 2021.
What is keeping farmland prices under pressure? Here are four key factors to watch.
The Four Factors
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How do Agricultural Economists View Possible Trade War?
Agricultural economists warn that a trade war between the United States and China could leave no winners and both countries with damaged economies. They also point out that agriculture often bears the brunt of trade battle casualties.
Mark Welch, Texas AgriLife Extension economist, College Station, explains the complications created by trade disputes.
“Economic theory tells us that when you raise the price of a commodity (which a tariff does) to expect the quantity demanded to go down,” Welch says. “That would mean fewer U.S. exports of soybeans, higher stocks (since we cannot consume all we produce), and somewhat lower prices.”
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Farmland Sale Snapshot: 3 Recent Sales Top $10,000/Acre
Demand for high-quality, productive farmland remains strong, according to recent farmland sales data. Here are results from three February 2018 farmland auctions, where prices topped $10,000 per acre.
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Seven Farm Bill Hurdles
The current farm bill expires in September 2018. So that’s the hard line in the sand to pass a new farm bill or extend the current one.
“The 2018 farm bill could look mostly like 2014 farm bill,” says Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “A lot of people are reasonably happy with what they have, and it is hard to agree on alternatives.”
Beyond overcoming the political differences in Washington, every component of the farm bill comes with a price tag, as does every proposed change. “There is very little additional money to spend on the farm bill,” says Jim Wiesemeyer, Washington policy analyst for Pro Farmer and Farm Journal. “That’s why everyone is saying the farm bill will be evolutionary rather than revolutionary.”
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U.S. Senators Ask Trump to Suspend EPA's USE of Biofuel Waivers
NEW YORK, April 9 (Reuters) - Five Republican senators on Monday called on President Donald Trump to temporarily halt the use of biofuels policy waivers for small oil refineries, after reports the Environmental Protection Agency had issued a recent wave of such exemptions.
The group of lawmakers, which includes Senators Charles Grassley and Joni Ernst of Iowa and John Thune of South Dakota, said the EPA waivers are “undermining” the U.S. Renewable Fuel Standard, a law that requires biofuels like ethanol to be added to the nation’s fuel, which Trump has said he supports.
“We therefore urge you to call on the EPA to cease all RFS waiver action until the agency’s administration of the RFS can proceed in a more transparent and impartial manner,” the senators said in a letter dated April 9.
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U.S. DOJ Approves Bayer, Monsanto Deal
The U.S. Department of Justice reportedly approved Bayer’s acquisition of Monsanto—conditional on the sale of certain assets to secure antitrust approval, according to Wall Street Journal.
This approval comes at the heels of the European Union’s approval of the deal, which required several divestments, including Bayer’s LibertyLink and row-crop businesses and Monsanto’s NemaStrike seed treatment. BASF will acquire the LibertyLink and row crop businesses.
With this approval in the books there are just a few countries left to grant approvals before the companies merge, notably Canada and Mexico.
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How Might NAFTA 2.0 Look
A stopgap Nafta deal could be around the corner. What might it look like?
Though the U.S., Canada and Mexico have made progress recently, including on the critical issue of autos, the majority of North American Free Trade Agreement chapters are unfinished and key disputes remain unresolved. That means a preliminary accord may still need to be changed to satisfy the next U.S. Congress or Mexican Senate and president.
While it’s not clear what a deal “in principle” as envisioned by President Donald Trump’s negotiating team actually means, pressure is ramping up. “The U.S. is wanting to move faster and to really draw to a resolution,” said Robert Holleyman, a partner at Crowell & Moring who served as deputy U.S. Trade Representative under Barack Obama. “At a political level, are there the outlines of what could be a successful conclusion for all three parties that then leaves it to the career negotiators and the attorneys to figure out how to flesh out?”
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Fourth Annual Drop for Nebraska Farmland Prices
For 2018, Nebraska farmland prices average $2,745, which is a 3% drop from a year ago. This annual drop is less than the 9% drop seen in 2017 and similar to the 4% drop reported in 2016, according to a preliminary report of the 2018 Nebraska Farm Real Estate Market survey.
Overall, Nebraska farmland per-acre prices have dropped 17% since reaching a high of $3,315 in 2014.
Low commodity prices and property tax policies are behind the declining farmland values, says Jim Jansen, agricultural systems economics, University of Nebraska.
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Snowpack Improved but Still at Half Normal Depth
A wet March improved California’s snowpack, but it’s still only about half its normal depth for this time of year at a state Department of Water Resources mountain survey station east of Sacramento.
The agency’s monthly manual snow survey on April 2 found a snow-water equivalent of 12.4 inches, or 49 percent of average for this time of year as recorded since 1964. The snow-water equivalent is the amount of water contained within the snowpack.
The readings conducted by state snow surveys chief Frank Gehrke followed significant storms in March that dumped several feet of snow in the Sierra Nevada and boosted the water content at Phillips Station near Lake Tahoe from just 23 percent of the March 1 average.
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US Farm Management Software Market to Reach $1.62bn – Report
Most farmers in America don’t currently use farm management software (FMS) – but that could change, fast.
Working from data collected from a survey of 1,490 farmers in January 2018, a new report estimates the US market for farm management software could grow to $1.62 billion. According to the report from Alpha Brown, the Israeli agtech market research company, the farm management software (FMS) market holds enormous potential, especially for farms under 50 acres.
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Farm Manager of the Year
Voting is open for the 2018 Farm Manager of the Year! If you know someone
whose dedication and commitment to agriculture has benefited their clients, the American consumer and our most precious commodity - the land then nominatate them today!
Voting closes April 30, 2018.
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