ASFMRA AgNews - Vol. 13 Issue XLII [October 2, 2018]

By ASFMRA Press posted 10-01-2018 18:35


Rising Interest Rates Will Test the Strength of Crop Land Values

Many commercial row crop farmers across the U.S. have seen their margins squeezed by lower commodity prices and relatively higher production costs, says Bryon Parman, North Dakota State University Extension agricultural finance specialist.

Rents have come down modestly in North Dakota, declining from a high of $69 per acre in 2015 to a statewide average of $65 in 2018.

Similarly, cropland values in North Dakota mostly have held their value, declining from a high of $2,123 per acre in 2015 to $1,996 per acre in 2018. However, rising interest rates will increase borrowing costs, making operating loans and new land purchases more expensive. Also, as interest rates rise, fixed-income alternative investments become more attractive, likely pushing cropland values down further.

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Disappearing Farmland: Little Protection Exists for Midwest Farmland

America has lost millions of acres of farmland over three decades to urban and rural development.

Despite conservation efforts by state and local governments and increased financial incentives for farmers, urban development and the expansion of rural residential real estate over the last 25 years has eliminated farmland across the country at levels not seen since the early 1970s.

Since 1992, nearly 31 million acres of farmland have been developed for residential use around urban centers and rural communities, according American Farmland Trust’s latest report, “Farms Under Threat.”

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Farm Bill Expires

The 2014 farm bill officially expired on September 30, 2018. Its expiration has no impact on the crop insurance program, nor on the Supplemental Nutrition Assistance Program (SNAP). Both are permanently authorized. Moreover, ARC and PLC payments due this month on the 2017 crop will be paid. New sign-ups for most conservation programs will not occur, such as CRP, but existing contract payments will be continued to be made.

The House is now in recess until after the November 6th election, putting prospects for the completion of the 2018 farm bill on hold until the expected lame duck session after the election. The House is scheduled to return to Washington November 13th.

The four Agriculture Committee principles (Chairmen Roberts and Conaway and Ranking Members Stabenow and Peterson) will continue to meet during the month of October. The four of them issued a statement last week that they remain committed to completing a farm bill before the end of the calendar year. If this Congress does not complete the farm bill before the next Congress is seated in January, the new Congress will have to start from the beginning as all bills expire at the end of the Congressional session.

ASFMRA prefer the farm bill to be completed this year to avoid uncertainty going into the next planting season. Additionally, neither the Senate, nor the House cuts, caps or means test crop insurance and a do-over next year could result in changes that are harmful to the program. Now that House members have returned to their districts to campaign, seek out your Representative and urge them to complete the farm bill before the end of this Congress.
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Farmland Values Hold Strong

Go to a farmland auction this year, and you’ll probably come away thinking the farm economy is in fine shape.

Farmland values appear stubbornly oblivious to bad news. There’s a growing disconnect between farm profit margins and what people will pay for ground, says one farm real estate agent.

While most farm commodity prices remain at or below breakeven, surveys around the country verify the underlying strength in the farmland market.

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Could A Farm Bill Expiration Compound Trade Issues?

As farm bill conference committee members are hard at work this week, the clock is ticking for them to get a deal done before the September 30 deadline. One Iowa farmer has concerns an expired farm bill could compound trade issues.

“One the thing that I think we need to keep in perspective with the farm bill are the market access programs and the foreign market development [programs] which are which are critical, especially for trade, especially in this time of tariffs and trade wars,” Bob Hemesath told AgriTalk host Chip Flory. “Whether it's the U.S. Grains Council or the Soybeans [Associations] or U.S. Meat Export Federation, they leverage those funds to develop new markets, to get access to new markets, and to maintain markets.”

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A Region-by-Region Look At the 2018 Farmland Market

Here’s what farmland real estate agents from across the country told Successful Farming magazine about the current farmland market in their regions, including their best take on where opportunity lies.

See the Breakdown
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National Credit Union Administration Proposes Appraisal Rule

The National Credit Union Administration (NCUA) Board approved a proposed rule (Part 722) to amend the agency’s real estate appraisal requirements for certain transactions. The proposed rule would:
• Increase the threshold for required appraisals in non-residential real estate transactions from the current $250,000 to $1 million;
• Reorganize the appraisal regulation to make it easier to determine when a written estimate or an appraisal is required; and
• Incorporate the rural exemption contained in the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155.

Comments on the proposed rule must be received within 60 days of publication in the Federal Register. ASFMRA will comment on the rule, however, if you wish to comment, please see the rule on how to submit comments to NCUA.
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Farmland Seller Vs. Buyer Motivation

Kyle Hansen, a broker/auctioneer with Hertz Real Estate Services, Nevada, Iowa, says the land market is starting to pick up, similar to a year ago.

Last year, the volume of land on the market increased from July through the winter months and into the spring of 2018.

“There was a period when land sales slowed in the 2017 months of May and June. Yet, 2018 has seen land sales activity pick up again in July. This indicates that we may have an active fall,” Hansen says.

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In Memory

Charles Cooley, II, AFM
Knoxville, IL
ASFMRA has just learned that Charles passed away in July 2018. ASFMRA was honored to welcome Charles into the membership in 1982 as an Associate member. He obtained his Accredited Farm Manager (AFM) designation and advanced to the Accredited membership classification. Charles was active at the National level with being a member of the Management/Consulting Education/Accrediting Committee in 1987-1988, 1989, and 1991. He was also active on the National Government Relations Committee from 1994 to 1996. He made many friends through his association with the Society and will be missed greatly. Our thoughts and prayers are with his family.

Garrick Mallery, ARA-Retired
Noblesville, IN
ASFMRA has just learned that Garrick passed away in December 2017. ASFMRA was honored and pleased to welcome Garrick into the membership in 1959. He obtained his Accredited Rural Appraiser (ARA) designation in 1962 and maintained his Accredited membership until he transfer to Retired in 1996. Through his association with the Society and at the Chapter level, Garrick made many friends and will be missed greatly. Our thoughts and prayers are with his family.
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