Stable Land Values Continue Into 2020
Many agricultural experts and economists have been warning for the past few years that we could be headed for a significant correction in farm land values in the Midwest. Land value summaries showed that a reduction in average land values did occur in many regions of the U.S from 2014-16, including the Upper Midwest, before stabilizing in many areas in 2017 and early 2018. Land values have been under pressure in some areas in late 2018 and in 2019, due to reduced crop yields, the ongoing trade war with China, low commodity prices, and reduced farm profitability. However, overall land values have remained fairly stable due to relatively low long-term interest rates, a limited supply of land being offered for sale, and relatively strong buyer interest.
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Six Possible Impacts of COVID-19 on Farming
The rapidly evolving situation with COVID-19 is raising questions throughout the U.S. As concerns continue to grow about the virus, it is not only wreaking havoc on the stock market, it is causing a significant downturn in the general economy.
But, what about agriculture?
Mark Stephenson and John Shutske with the University of Wisconsin-Madison say there are six specific things farmers, farm families, ag employers, and employees need to be aware of and plan for.
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Nebraska Ag Land Values Increase for First Time Since 2014
Nebraska agricultural land values increased 3% over the last year to a statewide average of $2,650 per acre, according to preliminary results from the University of Nebraska–Lincoln’s Farm Real Estate Market Survey. This marks the first year-to-year increase since land values in the state peaked at $3,315 per acre in 2014.
Survey participants reported that economic forces providing stability in the market included the limited supply of land for sale, strong demand for purchases, and disaster-assistance payments over the last year.
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Stronger Farmland Values are Supporting the Farm Economy
Strength in farm real estate markets provided support to the agricultural sector amid ongoing financial challenges. The Tenth District Survey of Agricultural Credit Condition from the Federal Reserve of Kansas City says non-irrigated cropland values and cash rents increased slightly in the fourth quarter of last year.
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What's a Farm Worth?
This is a question that you probably think about frequently – every time you apply for a loan, hear about a land sale next door, or just assess your financial progress from year to year.
What is a farm worth? The simple answer you often hear is “whatever someone is willing to pay for it.” And that is indeed one kind of value, normally known as market value.
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Second Corona Virus Bill Clears the House
On Saturday the House passed a second emergency appropriations bill (
HR 6201) by a vote of 363-40 to respond to the ongoing coronavirus outbreak in the U.S. The bill was negotiated between House Democrat Leadership and the White House. House action occurred after the President declared a state of National emergency.
The Senate is expected to act on the bill sometime this week. The bill suspends work and job training requirements for Supplemental Nutrition Assistance Program recipients and provides an additional $1.25 billion for public nutrition programs. The bill also addresses other critical issues such as free testing, paid sick leave and paid family and medical leave, enhanced unemployment insurance, and ensuring access to affordable care.
Canada Passes USMCA
Last Friday the Canadian House of Commons and Senate approved the U.S., Mexico, Canada Agreement (USMCA) on trade. Canada was the final country to approve of USMCA and 90-day implementation period commences before the agreement is in effect.
Agriculture Secretary Perdue Appears Before House Agriculture Committee
Agriculture Secretary Sonny Perdue testified before the House Agriculture Committee on the State of the Rural Economy. You can watch a
replay of the hearing and read his
written testimony. The hearing starts around the 40:30 mark of the video with Chairman Peterson’s opening remarks. Secretary Perdue did address the possibility of MFP round three (around 50:28 mark) by making clear that USDA’s goal is not to continue Market Facilitation Program payments. He is encouraging farmers to plant for the market and emphasized that MFP is a trade disruption program, not a price support program. He said USDA is watching China closely and anticipates it will meet its Phase One trade promises. Later speaking to reporters after the hearing he said he foresees a less than 10% chance of MFP round 3.
Prevent Plant, Cover Crop Flexibility Act Introduced in the Senate
Last week Senators Thune (R-SD) and Stabenow (D-MI) introduced a bill,
S 3479 to provide permanent authority within the crop insurance program for farmers to harvest (hay, graze or chop) cover crops planted on prevented planted acres. The Senators seek to make permanent the provisions the Risk Management Agency (RMA) made available last year after many acres were unable to be planted.
In addition, the bill provides RMA authority to adjust prevent plant factors to take into account cover crop seed and grazing related expenses (fencing and water). RMA must first complete a study, within one-year, to determine what factors to include. Additionally, the study requires USDA to determine what impact cover crops have on production risk and the crop insurance program.
Farm Service Agency Announces CRP Grasslands Enrollment
The Farm Service Agency (FSA) announced that farmers and ranchers may apply to enroll grasslands in the Conservation Reserve Program (CRP) Grasslands signup beginning March 16. The signup runs through May 15. Through CRP Grasslands, participants retain the right to conduct common grazing practices, such as haying, mowing or harvesting seed from the enrolled land. Timing of some activities may be restricted by the primary nesting season of birds.
Participants will receive an annual rental payment and may receive up to 50 percent cost-share for establishing approved conservation practices. The duration of the CRP contract is either 10 or 15 years. FSA will rank applications using a number of factors including existence of expiring CRP land, threat of conversion or development, existing grassland, and predominance of native species cover, and cost. The 2018 Farm Bill set aside 2 million acres for CRP Grassland enrollment.
Collin Peterson Announces He is Running for 16th Term
Last Friday House Agriculture Committee Chairman Collin Peterson announced he will run again for Congress. There was some concern he would decide to retire. The Chairman, who has been a strong proponent of crop insurance and farm bill commodity programs, issued a statement late Friday afternoon confirming he’ll seek re-election.