The Surprising Reason Land Values Remain Strong
Falling cash grain prices are resulting in lower farmland values in many Corn Belt states, but not as much as you might think.
Recent survey results indicate that average prices paid for average farmland in those states declined by 1% since January 1 in Illinois, and 1.7% from March to September in Iowa. The Illinois Society of Farm Managers and Rural Appraisers and Realtors Land Institute released survey results on August 29; the Realtors Land Institute unveiled its findings September 10.
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Why Aren't Land Values Plummeting? That's a Trick Question
USDA released net farm income projections for 2018 that call for a $9.8 billion drop from 2017 to $65.7 billion. However, they also anticipate
assets and equity to increase. According to USDA, net cash farm income is forecast to decrease 12.0% to $91.5 billion.
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Farm Bill Expiration Nearing
The 2014 Farm Bill expires September 30, 2018. Time is running short to complete the 2018 farm bill before the 2014 version expires. The House is not in session this week and returns September 25th through the 28th leaving 4 legislative days remaining in September. It is highly unlikely the 2018 farm bill will be finalized before September 30th. The House is currently scheduled to be in session for 8 days in October, but it is likely that some of those legislative days will be canceled once the annual appropriations process is dealt with (see below) to provide members more time to campaign leading up to the November midterm election. The 2018 farm bill could be completed during the lame duck session that will occur after the November election.
The four Agriculture Committee principles (Chairmen Roberts and Conaway, Ranking Members Stabenow and Peterson met in person last week, but little progress was made towards workout remaining differences between the Senate and House bills. In addition to Nutrition title differences, commodity and conservation title funding remain an issue.
The 2014 farm bill expiration will have no impact on crop insurance. Crop insurance authority is provided separately from the farm bill and is permanent authority that does not expire. The SNAP program is also not impacted by the expiration. 2017 ARC and PLC payments due in October would also not be impacted by the 2014 expiration. Some conservation programs would no longer have authority to operate in FY 2019 (starting October 1st, 2018). All of this is to say that expiration does not have an immediate short-term impact making completion during the lame duck session a viable, although less desirable, alternative.
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Path Cleared to Avoid a Government Shutdown
The Appropriations Committee has laid out a path to avoiding a government shutdown. Last week the House passed a minibus appropriation bill that funds Energy and Water, Military Construction, Veterans and the Legislative Branch for FY 2019. The Senate had previously passed the bill and it is now on the President’s desk for signature. This week the Senate will vote on another minibus appropriation bill to fund Defense and Labor, HHS. That bill will also include a Continuing Resolution (CR) to fund the remainder of the Government through December to avoid a government shutdown. The House is expected to vote on the measure next week. The agriculture spending bill is part of a 3rd minibus that could also be completed before the end of the month.
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USDA Releases Trade Aid Payment Methodology
USDA released the methodology it used to calculated the Market Facilitation Program (MFP) and Food Purchase and Distribution program last week. Additionally, USDA Chief Economist Rob Johansson answered questions about the
methodology before the Senate Agriculture Committee last week during a
trade hearing. USDA has been getting some criticism over its payment calculations especially regarding the disparity of payments among commodities and the lack of basis consideration.
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Renting Cropland Still Competitive
Much like land values, cash rents for farmland are holding steady and even seeing a slight increase in some areas. According to the U.S. Department of Agriculture, which publishes the results of a (
cash rent survey) each August, the average cash rent in Ohio is $152 an acre, unchanged from 2017, but up from $122 an acre in 2012. In Pennsylvania, the average rent for farmland is $80.50 an acre, up a dollar from last year, and up $8 per acre from 2012.
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Rabobank: Could Growing Chinese Middle-Class Temper Trade War?
While speculation of significant impacts remain from trade war between the U.S. and China, Rabobank sees a bright spot in the growing
Chinese middle-class economy. Ongoing trade wards between the United States and other countries continue to threaten American agricultural exports, according to a Rabobank study.
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2018 Leadership Institute a Huge Success
Last week 26 (12 appraisers and 14 farm managers) ASFMRA members attended the annual Leadership Institute sponsored by Pioneer in Washington D.C. We heard from Farm Credit Administration economists, Pioneer’s Chief Economist Steve Elmore and completed a full set of meetings at USDA including meeting with Deputy Secretary Steve Censky. Much of our discussion focused on tariffs and trade aid. The group thoroughly enjoyed the Wixted communications training session, met with members of Congress, including House Agriculture Chairman Mike Conaway, farm organization representatives, and the farm managers concluded with their visit to Chesapeake Farms in Maryland despite earlier forecasts that Hurricane Florence may impact the area. With regard to the farm bill, Chairman Conaway said it is his full intention to try to complete the farm bill before the end of September, but he is a bit frustrated with the progress of negotiations with the Senate.
Appraisers concluded Thursday afternoon with a meeting at The Appraisal Foundation (TAF) which included CEO Dave Bunton and Jim Park, Executive Director of the Appraisal Subcommittee (ASC). Appraisal discussions centered on appraisal waivers, most recently from North Dakota, and perceived appraiser shortages.
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Welcome New Members!
Thank you for being a part of ASFMRA! Help ASFMRA welcome our new members and thank them for choosing the Society as the organization that they desire to be affiliated with. ASFMRA continues to support rural property professionals and offers services, resources and education which will be of benefit to all of our members, both professionally and personally.
You may recognize your colleagues in the following list and we encourage you to welcome them into ASFMRA!
New Members
Daryl Duncan with American AgCredit in Stockton, CA (California Chapter)
David Leatham with Texas A&M University in College Station, TX (Texas Chapter)
Christian Minard with Northwest Farm Credit Services in Pasco, WA (Washington Chapter)
Luke Minnix in Manhattan, KS (Kansas Chapter)
Levin Porter in Fort Stockton, TX (Texas Chapter)
Jessica Putz with Capital Farm Credit in Jourdanton, TX (Texas Chapter)
Hunter Spaeth in Abilene, TX (Texas Chapter)
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Share Your Experience - Make a Referral!
You know first-hand what a great organization ASFMRA is and what it means to you both professionally and personally. Pass that benefit on to others that you know who would benefit from membership with The Most Trusted Rural Property Professional organization – ASFMRA! Talk to those you know who would benefit from ASFMRA’s educational offerings, networking, and meetings.
Thank you to all who have referred someone and in some cases, more than one, to join ASFMRA.
Paul Bierschwale, ARA
Erin Kiella
Jeff Myers
Wayne Young, ARA
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