Farmland Buyers Hold Line on Leverage
Farmland buyers in the western Corn Belt continued to show restraint on debt financing in 2017. That restraint provides stability to the farmland market during this correction.
The table below shows the debt restraint. It is compiled by Farm Credit Services of America (FCSAmerica), which is the dominant ag lender in Iowa, Nebraska, South Dakota and Wyoming. While the data speaks only to FCSAmerica, we suspect it is representative of other Midwestern farm credit associations.
The data, provided by Jim Knuth, senior vice president with FCSAmerica, shows the steady restraint on leverage for farmland purchases during the run up and correction in farmland values. For example, the loan-to-collateral-value ratio on the association’s new loans in 2017 was 50%, unchanged from 2016.
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ASFMRA Speaks to More Appraiser Issues-Part II
The American Society of Farm Managers and Rural Appraisers (ASFMRA) reached out to Valuation Review, after reading a story about appraiser shortages, and wanted to offer its views with in-depth analysis offering some reasons as to why there is a perceived shortage of qualified appraisers.
The Appraiser Qualifications Board (AQB) recently adopted some revisions to what an appraiser will need.
“The impact of the AQB changes will be interesting to follow. I don’t think more should be done at this point. Allow this to play out and see if more enter the profession, or move up to a higher level of license,” Stalcup Agricultural Services partner Dennis Reyman said. “I do think the profession should make a strong effort to engage college students or departments to the AQB changes and the potential of the profession.
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Minding Ag's Business
Kansas farmland prices continue to march steadily downward, and there's little in the economic forecast to reverse the trend.
"All of the numbers are pointing down, but it’s not falling off a cliff," Kansas State University farm management specialist Mykel Taylor said about near-term price movements in a press release. The USDA said overall values to declined 3.9% to an average of $1,970 per acre last year, and that trend is likely to continue.
Kansas is a non-disclosure state, so Taylor uses data from the Kansas Property Valuation Division of the state's revenue department to make her estimates, which show sharper declines than data used by USDA's National Agricultural Statistics Service. For example, USDA says that since 2014, irrigated land prices have fallen 13.1%; dryland values, 13%; and pasture values, 7.9%. Taylor's data suggests it's more like 17.4% for irrigated, 19% for dryland and 21.4% for pastureland. She says those trends are likely to continue.
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Canadian Farmland Values Increase 8%
A strong and stable agricultural economy is boosting farmland values in Canada. The average value of Canadian farmland increased 8.4% in 2017, following gains of 7.9% in 2016 and 10.1% in 2015, according to the 2017 FCC Farmland Values Report by Farm Credit Canada (FCC).
Canadian farmers are generally in a strong financial position when it comes to net cash income and their balance sheets. This is supporting farmland values, says J.P. Gervais, chief agricultural economist for FCC.
Since 1993, Canadian farmland values have increased every year, but the recent increases are lower than the 2011-to-2015 period. For instance, the year-over-year increase marked in 2012 was 19.5%, and 2013 showed a 22.1% jump in values.
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Bayer Signs Agreement to Sell Further Crop Science Businesses to BASF
Bayer has signed an agreement to sell further crop science businesses to BASF for up to 1.7 billion euros ($2.06 billion). This is contingent on Bayer’s proposed acquisition of Monsanto. The businesses to be sold generated total sales of 745 million euros ($902.52 billion) in 2017.
“With this move, we are implementing the corresponding undertakings made to the European Commission and other regulatory authorities to allow the successful closing of the Monsanto transaction,” explained Werner Baumann, chairman of the board of management of Bayer AG in a Bayer news release. “In BASF, we are pleased that, for these businesses too, we have found a strong buyer that will continue to serve the needs of growers and offer our employees long-term prospects.”
The transaction is subject to regulatory approval as well as the successful closing of Bayer’s acquisition of Monsanto.
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Low Corn Acreage May Raise Prices
American farmers could sell the 2018-19 corn crop for US$4/bushel, according to a multinational ag banking organization.
Lower U.S. corn acres is one of the leading factors that could raise corn prices, said Sterling Liddell, a senior grains and oilseeds analyst with Rabobank. His projections can be found in the firm’s latest report, “Don’t Fall Asleep Behind The Risk Management Wheel.”
“A key to creating higher prices is the continual contraction of (corn) acres that USDA illustrated in its recent perspective planting report that would put us at 88 million acres,” Liddell told Farms.com today.
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Farm Bill Outlook- Perspective from Chairman Conaway
House Ag Committee Chairman Mike Conaway was a guest on Thursday’s “Adams on Agriculture” radio show with Mike Adams. The Texas Republican provided his perspective on the status of Farm Bill legislation that was approved by the Committee earlier this month.
As the discussion began, Adams asked when the Farm Bill may be considered on the House floor, Chairman Conaway explained, “Well, as soon as I can get it there— we’ll come back…of course, everybody’s back home working in their district next week. And I’m hopeful that…the popularity of work requirements is so strong, 70% among Democrats, 90%among Republicans, a blend of about 80. I’m hoping my folks have a chance to hear from their people back home on what’s actually in the bill.
And then we’ll get back that first week of May, start the whip process, and in all likelihood it’d be that following week that we would be there. But I don’t think I can get the whip thing done and to the floor that first week we’re back, so probably the second week.
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Supplies Needed for Oklahoma Wildfire Recovery Effort, Transportation of Donations Big Need as Well
“OSU Hay Hotline, this is Dana, how may I help you?” says Dana Bay, Woodward County Oklahoma Extension agricultural educator, as she answers one of three Oklahoma Emergency Management issued hotline cell phones. The caller on the other end reports he has nearly 200 bags of mineral supplement to donate to Oklahoma livestock producers who lost everything from their grassland, to livestock, to their homes in recent wildfires. The only catch is, he doesn’t have a way to transport the supplies.
Another caller from south Texas says he’s got 10,000 squares of Bermuda hay he’d like to donate and someone that will truck it but, understandably, asks if there’s assistance available for the fuel, as he can’t afford to transport that much hay such a long distance.
While offers of donations have been coming in for victims of the Rhea Fire, southwest of Woodward, Okla., and the 34 Complex Fire, north of Woodward, the transportation or fuel required to get those supplies to the eight drop-off sites is a little more difficult to come by.
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Appraisal Standards Board Public Meeting Summary
On April 20, 2018 the Appraisal Standards Board (ASB) held a public meeting in Las Vegas, NV. The ASB discussed the Discussion Draft of Potential Areas of Change to the Uniform Standards of Professional Appraisal Practice (USPAP).
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