Will 2020 Be The Year The Land Market Tumbles?
The land market in 2019 continued the plateau trend of the past several years in which the supply of agricultural land for sale on the market remained lower than average and prices for good quality cropland held mostly steady. Looking ahead to next year, will financial stress from lower commodity prices and poor harvests in some regions cause prices to decline?
Farmland sale activity in the first part of 2019 was slower than it had been for some time with late spring and early summer especially void of farms for sale. Planting delays and prevented plantings contributed to the lackluster activity.
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A Growing Presence on the Farm: Robots
In a research field off Highway 54 last autumn, corn stalks shimmered in rows 40-feet deep. Girish Chowdhary, an agricultural engineer at the University of Illinois at Urbana-Champaign, bent to place a small white robot at the edge of a row marked 103. The robot, named TerraSentia, resembled a souped up version of a lawn mower, with all-terrain wheels and a high-resolution camera on each side.
In much the same way that self-driving cars “see” their surroundings, TerraSentia navigates a field by sending out thousands of laser pulses to scan its environment. A few clicks on a tablet were all that were needed to orient the robot at the start of the row before it took off, squeaking slightly as it drove over ruts in the field.
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Farming’s AI, Data Driven (And Vertical) Tech Revolution
Farming has been around for thousands of years – tens of thousands of years, perhaps, according to some estimates.
And it is a labor-intensive, resource-intensive and time-consuming endeavor. Consider the fact that, as measured by the Water Footprint Network, it takes about 26 gallons to make one pound of tomatoes, and 67 gallons of water to produce one pound of oranges.
In the bid to transform age-old processes, to make them more efficient in a world marked by increasing scarcity of resources, climate change, and a growing population, data – and in particular the intelligent use of data – can help transform food production supply chains, improving safety and reducing costs.
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10 Minutes with a Farmer
For most U.S. farmers, February is a month that offers opportunities to attend meetings, shows, and events to catch up with the latest and greatest in agriculture.
But if you really want to know what farmers are thinking and doing at this time of the year, try spending 10 minutes with them.
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The Foundation Pleased Congress Requested Government Accountability Office Study of Appraisal Exemptions by Federal Agencies
The Appraisal Foundation is pleased that Congress announced it has requested the Government Accountability Office conduct a study pertaining to the 1989 law that set up appraisal regulations, Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). That study, which will focus on federal practices that exempt many real estate transactions from appraisals, is a first step to help protect taxpayers and homebuyers.
“Thirty years ago, Congress passed FIRREA to protect homeowners and the federal deposit insurance fund from the impacts of inaccurate and inflated property valuations,” said David Bunton, president of The Appraisal Foundation. “Over the years, however, federal agencies have created loopholes that exempt 90 percent of real estate transactions from the appraisal requirement.”
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President’s FY 2021 Budget Targets Farm, Crop Insurance and Conservation Programs
Last week, President Trump released the Trump Administration’s FY 2021 budget request to Congress. This is the traditional start of the annual Congressional Budget and Appropriations process. The various cabinet officials will begin testifying about the budget to Congressional committees over the next several weeks.
As it has in the past (3 Trump budget requests), this budget once again includes proposals to cut farm and conservation programs and crop insurance. None of the proposals is likely to be picked up by Congress. A short summary:
Farm Service Agency:
- Limit Commodity Title and Conservation Title programs to producers under $500,000 AGI.
- Eliminate generic certificates.
- Eliminate separate pay limit for peanuts.
- Subject Marketing Assistance Loans to $125,000 pay limit.
- Limit all farms to one manager.
Risk Management Agency:
- Eliminate the 508(h) (new private product) development process.
- Limit crop insurance premium support to producers with under $500,000 AGI.
- Reduce premium support for Harvest Price Option (HPO) coverage by 15 percentage points and reduce all other premium support by 10 percentage points other than catastrophic level of coverage.
- Cap expected industry underwriting gains target at 12 percent.
Natural Resource Conservation Service
- Eliminate the Conservation Stewardship Program (CSP)
- Cut the Agricultural Easement Conservation Program (ACEP) by $40 million a year, currently funded at $450 million annually.
USDA Announces More Details regarding Hemp Pilot, NAP Coverage
Last week USDA announced more details regarding its hemp crop insurance pilot (see Weekly from January 6th for initial announcement) as well as coverage for hemp under the Noninsured Crop Disaster Assistance Program (NAP). The pilot hemp insurance program provides coverage against loss of yield because of insurable causes of loss for hemp grown for fiber, grain or Cannabidiol (CBD) oil in 21 States. You can find more information about the insurance product
here.The Noninsured Crop Disaster Assistance Program
(NAP) coverage protects against losses associated with lower yields, destroyed crops or prevented planting where no permanent federal crop insurance program is available. NAP basic 50/55 coverage is available at 55 percent of the average market price for crop losses that exceed 50 percent of expected production. Buy-up coverage is available in some cases. The 2018 Farm Bill allows for buy-up levels of NAP coverage from 50 to 65 percent of expected production in 5 percent increments, at 100 percent of the average market price. Premiums apply for buy-up coverage. For all coverage levels, the NAP service fee is $325 per crop or $825 per producer per county, not to exceed $1,950 for a producer with farming interests in multiple counties.
Producers may apply now for hemp coverage, and the deadline to sign up for insurance or NAP coverage is March 16, 2020.
NASS to Discontinue Some County Crop Data, Irrigated/ Non irrigated Practice Data
The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) will no longer publish county level estimates for dry edible beans, flaxseed, hay (alfalfa and other), potatoes, sugar beets, sugarcane, sunflower (non-oil and oil varieties) and tobacco. In addition, NASS will discontinue county estimates based on irrigated/non-irrigated practices for all crops. These changes are effective beginning with the 2019 crop year.
The data collection cost for the surveys used to gather the data used for county level estimates had been partially funded through a cooperative agreement, which was not renewed. As a result, NASS is adjusting its county estimates program to reflect the lower funding availability.