Ag News

ASFMRA AgNews - April 30, 2019

By ASFMRA Press posted 04-29-2019 12:06


What Could Dampen Farmland Values?

A laundry list of factors can support or sink farmland values. In the past few years, values have been surprisingly resilient. Looking forward, however, prices may lean lower, according to a recent report from the Federal Reserve Bank of Kansas City.
In 2018, the spread between returns to farmland owners and benchmark interest rates narrowed to its lowest level in more than a decade in the Tenth Federal Reserve District. At the same time, farmland sales increased in some states for the first time in several years.

“Together, the reduced spread and indications of increased sales in some regions suggest the potential for lower farmland values moving forward,” write Cortney Cowley, economist and Nathan Kauffman, vice president and Omaha branch executive, for the Federal Reserve Bank of Kansas City.

How Did Farmland Values Arrive at this Crossroad?

5-Year Ag Census Shows More than 2,500 Farms Lost in Iowa

Iowa has lost more than 2,500 farms over the last five years according to the recently released 2017 Census of Agriculture report from the U.S. Department of Agriculture.

The report traces trends in agriculture from 2012-17. Included in those trends were increases in the number of farms of more than 2,000 acres and those with between one and nine acres while decreases in the number of farms between nine and 2,000 acres were observed. The report also noted increases in conservation acres, an increase in organic farming numbers and sales and the continued dominance of corn and soybeans across Iowa's fields.

Read the Report.

Farm Managers’ Thoughts on Farm Debt and Profits

U.S. Secretary of Agriculture Sonny Perdue indicated in February that the amount of debt held by America’s farmers has risen rapidly to nearly 1980s levels, and this suggests a strain on the Farm Belt. The USDA projected in March that net farm income should increase about 10% in 2019, but it will still be well below the average level for the past two decades and far less than recent peaks.

In order to better understand what is occurring in terms of debt and farm profitability, we asked four ASFMRA-accredited farm managers for their thoughts on farm debt, farm profitability and what scenarios would dramatically impact their outlook.

Their Insights Follow.

Rural Mainstreet Index Rises in March

The Creighton University Rural Mainstreet Index for March rose to its highest level since December, although a significant share of survey responses arrived before the scope of flood damage in the Midwest was understood.

The overall index expanded to 52.9 from 50.2 in February. This is the highest reading since December and the eleventh time in the past twelve months that the index has moved above growth neutral. The index ranges between 0 and 100 with 50 representing growth neutral.

See the Increases.

Delgado Leads Bipartisan Bill to Ease Chapter 12 Bankruptcy Rules Amid Farm Economy Slump

Congressman Antonio Delgado, D-NY, led House Judiciary Committee Ranking Member Jim Sensenbrenner, R-WI, House Agriculture Committee Chairman Collin Peterson, D-MN, and Reps. TJ Cox, D-CA, Kelly Armstrong, R-ND, and Dusty Johnson, R-SD, in introducing the bipartisan Family Farmer Relief Act of 2019, legislation that would ease the process of reorganizing debt through Chapter 12 bankruptcy rules. The restructuring of the rules to make more farms eligible comes amid a continued downturn in the farm economy.

“For folks in Upstate New York, farming is more than a job—it’s a way of life. And in this extremely challenging farm economy, we must come together to help our family farmers overcome years of low prices and increased market consolidation. The Family Farmer Relief Act will provide the critical restructuring and repayment flexibility these folks need to get through these hard times without permanently closing their operations,” Delgado said.

Will the Bill Pass?

Canada's Farm-Value Growth Seen Slowing Amid China Canola Spat

Growth for Canadian farmland values could be the next victim of the country’s trade spat with China over canola, according to Farm Credit Canada.

As trade issues continue to wreak havoc on crop prices in Canada, FCC expects the growth rate for farmland values could be cut in half to about 3 percent this year. That compares with 6.6 percent in 2018, according to the government-owned agricultural lender.

What Does this Mean for Canada?

State Hemp Production Gaining Popularity

Some U.S. states are taking legalized hemp production seriously after the 2018 Farm Bill authorized states to implement individual legalization measures subject to USDA approval.

Iowa’s legislature, for example, passed the Iowa Hemp Act on Thursday. The bill allows farmers to cultivate 40 acres of hemp. Lawmakers have sent the bill to Governor Kim Reynolds’ desk for her signature.

Legalizing hemp production benefits several industries, said Rep. Jarad Klein.

“This bill, in my opinion, is a win for everyone: consumers, retailers and, most important to me, the farmers,” he said, KHQA reported. “Allow the building of the infrastructure of this market now so that, when it comes time for our farmers to harvest their crops, there will be a robust demand and an outlook for industrial hemp.”

Which States will Legalize Next?