Farmland Values Stable, But Risks to Outlook Remain
Farmland values remained stable in the fourth quarter, according to the Tenth District Survey of Agricultural Credit Conditions.
Declines in the value of non irrigated and irrigated cropland remained modest across the District, and declined only 3 percent from last year. On average, cropland values also declined at a slower pace in 2018 than in the previous two years.
Ranch land values increased slightly for the second quarter in a row, the first consecutive increase in farmland values since 2015.
Furthermore, most of the strength in ranch land values across the Kansas City, Missouri, district were driven by developments in the Mountain States and Oklahoma, states with higher concentrations of cattle production. Bankers in these states also commented that farmland values have been supported by an uptick in activity in the energy sector.Read more.
3 Wildcards for Farmland Values
Farmland values continue to defy gravity in many regions of farm country. Reports from the Federal Reserve Banks, universities and real estate groups continue to point to stable or slightly softer prices. “Farmland prices remain resilient despite downward pressures,” says R.D. Schrader, president of Schrader Real Estate and Auction Company in Columbia City, Indiana.
Yet, most farmland analysts expect farmland values to continue to drift lower. This is due to a multitude of factors, Schrader notes, such as reduced incomes for farmers, higher interest rates, a strong dollar and trade uncertainty. Here are three reasons farmland values could make a dramatic move
Federal Reserve Reports Little Change in Ag Outlook
Federal Reserve districts reported slight-to-moderate economic growth in late January and February, but agricultural commodity prices were mixed and soybean and dairy prices notably weak.
The Federal Reserve’s Beige Book publication reflects economic conditions based on information collected on or before March 6. The summary includes commentary from economists, market experts, bankers and other sources on economic conditions, including in agriculture, across the 12 Federal Reserve Districts.
“Prices for corn were up a bit over the reporting period, while soybean and wheat prices moved lower. Contacts expected crop incomes to be lower in 2019 compared with 2018, anticipating that prices will stay low and the harvest will be smaller than 2018’s bumper crop,” according to the Seventh Federal Reserve District of Chicago report, which includes the northern two-thirds of Illinois and Indiana and all of Iowa, Wisconsin and Michigan.Read more.
Farm Income Projections Hold a Bit of Good News
Corn prices are on the rise, while soybean prices are projected to continue to dip this year before recovering a bit in 2020, according to government projections. And this year, national net farm income, which takes into account many commodities not grown in Ohio, is projected to increase 10 percent over last year’s total, forecasts from the U.S. Department of Agriculture (USDA) show.
“These are not the best of times, but it’s stable,” said Ani Katchova, associate professor and chair of the farm income enhancement program at The Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES). Low commodity prices can put financial stress on growers, but the bankruptcy and loan delinquency rates, indicators of the financial health of farms, have not fluctuated much in recent years, said Katchova, one of the authors of a new CFAES report on farm income forecasts.Learn more.
Unchanged Interest Rates in 2019 Better for Agriculture
With the Federal Reserve hinting at leaving interest rates unchanged in 2019, the farm economy has one less chance for deterioration. Low-interest rates have been cited as the reason the current farm economy has not reached the crisis seen in the 1980s. Politico reports that while farmers are having losses, those losses don’t compare to the 1980s when interest rates were between 10 and 20 percent, compared to the five or six percent rates seen today. Despite declining farm income and low commodity prices, the low-interest rates are keeping land values strong.Learn more.
Floods Shut Nearly A Sixth of U.S. Ethanol Production
Massive flooding in the U.S. Midwest has knocked out roughly 13 percent of the nation’s ethanol production capacity, as plants in Nebraska, Iowa and South Dakota have been forced to shut down or scale back production following the devastation.
Production facilities owned by large companies like Archer Daniels Midland Co and Green Plains Inc were still operating despite days of snowstorms followed by rains that sent record floods into the Farm Belt. However, with rail lines washed out and corn in storage flooded, production is dropping off, sending prices spiking in markets that buy the corn-based fuel.Learn more.
Farmers Turn From Agriculture to Harvesting Solar Power
Farmers across the United States have struggled in recent years due to low commodity prices as well as the repercussions of trade disputes between the U.S. and countries including China and Mexico. So, like any business owner, many farmers are looking to diversify. That’s brought a number of them to an industry expected to boom over the next few years: Solar power.
Farmers turn from agriculture to harvesting solar power. Illinois has some of the most fertile soil in the world. But in the near future, farmers are expected to dedicate more land to solar energy farms. Eighteen months ago, Randy DeBaillie installed solar panels to provide power to his farm in Orion, Illinois. Now, like many othr farmers in Illinois, he wants to dedicate much more of his land to solar, leasing it out to power companies for a hefty profit.Read more.
Grape Growers Continue Push to Mechanize
Along with everyone else, the grape industry was impacted this year by the government shutdown, waylaying things like required laboratory analyses, approval of labels, and dissemination of the crush report, due to missed deadlines to submit purchase data for the 2018 harvest. But the $57 billion economic sector represented by 6,000 wine grape growers in California has carried on, tallying 2018 year-end facts and crystal-balling 2019 predictions.
As the West Coast’s table grape industry reported shipments of near record volume in 2018, regional winegrowers touted exceptional quality due to a later harvest. Players like Sun-Maid Growers of California launched aggressive raisin marketing plans for this year and grape growers throughout the state met to discuss down-to-earth strategies to keep things humming in current fashion.Learn more.
Will the Next Generation Show Up to Work?
By now, there’s little doubt the younger generation is changing the look and feel of the ag industry. After all, millennials now outnumber baby boomers. For these up-and-comers, food is personal. How, where and by whom food is produced matters a lot to them.
On the surface, this younger generation, who are stereotypically labeled as harsh critics of our food production system, only seem to want to voice their dissatisfaction vicariously. It’s easy and safe to go after genetically modified apples and Roundup in Cheerios on Facebook and Twitter. What’s becoming increasingly apparent is there’s a much, much lower percentage of this next generation that actually wants to “get their hands dirty” when it comes to being a part of the solution to the problem they’re essentially creating.Find out more.
USDA's 2019 Agricultural Forum: Recap and Takeaways
On February 22-23, agriculture stakeholders gathered at USDA’s annual Agricultural Outlook Forum to discuss current and emerging issues affecting U.S. agricultural production and international trade.
This year’s Forum, themed “Growing Locally, Selling Globally,” brought together more than 1,500 producers, processors, policymakers, government officials,and nongovernmental organizations from the U.S. and around the world. Participants explored timely and emerging topics such as developments in animal and crop biotechnology, global trade trends, frontiers in conservation, and outlooks for food and commodity markets.See what stood out.
Farms on the Margins
Iowa attorney Joe Peiffer spent the latter half of February helping some of his clients try to restructure debt and get operating loans for 2019 after these farmers found out their past lenders weren't going to continue financing them. "Right now, we're having many people find out shortly before they have to pay rent that they aren't going to have financing," said Peiffer, who works with farmers in Iowa and Illinois.
Some of these farmers needed millions to pay rent. Peiffer said they didn't all get financing. Farmers who gave up rented ground run the risk of being sued for any shortfall landlords experience if they must lower rent to secure a new tenant. At the well-known farmer support organization, Farm Aid, officials say they have added staffers for the group's hotline, which has seen a doubling in crisis call volumes.Read more.
Welcome New Members!
Help us welcome our newest members to ASFMRA! You may recognize your colleagues in the following list and
we encourage you to reach out and welcome them into ASFMRA!Joshua Barkhimer
with United Country–Neeley Forestry Service, Inc. in Camden, AR (Mid-South Chapter)Riley Bauling
in DeKalb, IL (Illinois and Iowa Chapters)Jeremy Bengtson
with REDI in Tallahassee, FL (Minnesota Chapter)Bay Bolen
in Stillwater, OK (Oklahoma Chapter)Haley Brokate
in Paxton, IL (Illinois Chapter)Jes Contreras
in Chico, CA (California Chapter)Grey Foster
in Plumas Lake, CA (California Chapter)John Goodwin
with Jake Goodwin Appraisals, Inc. in Benton, AR (Mid-South Chapter)Skylar Hieronimus
in Adrian, MN (Minnesota Chapter)Jeanice Hunter
in Townsend, MT (Arizona and Montana Chapter)Stacy Jackson
with Hall and Hall, Inc. in Melissa, TX (Texas Chapter)Austin Jacobs
with Morehead State University in Starkville, MS (Kentucky Chapter)Tony Jennings
with MetLife Agricultural Finance in Stanberry, MO (Iowa and Missouri Chapters)Sayer Kraus
in Porter, MN (Minnesota and South Dakota Chapters)Carrigan McMahon
in Greenview, IL (Illinois Chapter)Alanda Meyer
with Preferred Appraisal Services in Decorah, IA (Iowa Chapter)Jared Pennington
in Starkville, MS (Mid-South Chapter)Nicholas Pieper
in Clara City, MN (Minnesota Chapter)Jess Powell
with Titles of Dakota Appraisal Services in Pierre, SD (South Dakota Chapter)Blayke Rogers
in Prairie Grove, AR (Mid-South Chapter)Jerald Sanders, Sr.
with Farmland Reserve, Inc. in Indianapolis, IN (GA, Mid-South, and NC Chapters)Brandon Silveira
with Diversified Crop Services, Inc. in Hanford, CA (California Chapter)Richard Jeremiah Struck
in Franktown, CO (Colorado Chapter)Amanda Tolzin
in Brookings, SD (South Dakota Chapter)Holly Vanckhoven
in Junction, TX (Texas Chapter)Kelsey Vaughn
in Paxton, IL (Illinois Chapter)Elisabeth Wagner
with Nash Johnson Associates, Inc. in Lyons, CO (Colorado Chapter)Joshua Weinheimer
in Onida, SD (South Dakota Chapter)Emma West
in Springfield, IL (Illinois Chapter)Gary Winrow
with Live Oak Analytics, LLC in For Myers, FL (Florida Chapter)Michael Zarybicky
in Beatrice, NE (Nebraska Chapter)
Thank Your for the Referrals!
You know first-hand what a great organization ASFMRA is and what it means to you both professionally and personally.
We thank you for spreading the word, you are the driving force behind our continued growth! Joel AmbroseCarmen BierschwaleWade BuckDaniel Ceilley, ARAVernon Fred Greder, Jr., ARAFrank JuddNotie Lansford, Jr., Ph.D.Tyler Mark, Ph.D.Kevin McCartyRyan McKnightTim Pepper, ARAShiloh Wittler
Thank you to all who have referred someone and in some cases, more than one, to join ASFMRA.
First Education Foundation Auction Donations Received!
The first two Education Foundation Auction donations have been received! The first 2019 Auction donation made by a Chapter was received from the Indiana Chapter
- they donated the Indy 500 Race Ticket Package!
The first 2019 Auction donation made by a member was received from Paul E. Moore, ARA, RPRA
- a stay at his vacation home near Lake Cumberland, Kentucky!