Low Interest Rates Help Keep Farmland Values Stable
An extension ag business management instructor is confident farmland will hold its value as long as interest rates remain low. David Bau with the University of Minnesota says his latest survey of 14 counties in southwest Minnesota shows prices only softened an average of $13 an acre. He attributes that relative strength to continued high cash rents and cheap interest rates.
“That helps the borrower if you want to borrow some money for land. It also gives a better opportunity towards investing in land than investing in CD’s at the bank because the interest rates are so poor that the investors might think land is a better investment than saving at the bank.”
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Efforts Underway To Get Food From US Farms To The Needy
As food banks have struggled to meet soaring demand from people suddenly out of work because of the coronavirus pandemic, it has been especially troubling to see farmers have to bury produce, dump milk and euthanize hogs.
Now some states are providing more money to help pay for food that might otherwise go to waste, the U.S. Agriculture Department is spending $3 billion to help get farm products to food banks, and a senator is seeking $8 billion more to buy farm produce for food banks.
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Latest Farm Relief Bill Will Help Farmers and Ranchers Impacted by COVID-19 Pandemic
President Trump announced a 19 billion dollar farm relief package. The U.S. Department of Agriculture said this helps farmers and ranchers impacted by the COVID-19 pandemic.
The Nebraska Farm Bureau said of the $19 billion, about $16 billion will go toward direct payments for farmers and ranchers, while about $3 billion will be used to purchase products used for food banks and other areas.
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Welcome New Members
Help us welcome our newest members to ASFMRA! We are thrilled that you have chosen ASFMRA as the organization to be affiliated with. Because of you, ASFMRA continues to grow and support rural property professionals across the nation!
We are recognizing new members of the Society on a monthly basis. You may recognize your colleagues in the following list and we encourage you to welcome them into ASFMRA!
- Larissa Gordon with Ag New Mexico Farm Credit in Albuquerque, NM (New Mexico Chapter)
- Hays Paul in Lake Placid, FL (Florida Chapter)
- Raj Sam in Fremont, CA (California Chapter)
- Renga Samy in Fremont, CA (California Chapter)
In Memory: Larry D. Kloster, Spokane Valley, WA
The ASFMRA was honored and pleased to welcome Larry into the membership in 1977. He served the Washington Chapter as the Chapter Treasurer from 2005 to 2010. Larry trained a number of appraisers while he worked at NWFCS and was a mentor/resource to many others. Larry maintained his Associate membership until 2011. He made many friends through his association with the Society. He will be greatly missed. Our thoughts and prayers are with his wife Kathy and his family.
ASFMRA Joins 10 Other Groups Urging IRS to Revisit Appraiser Penalty Process
A joint
letter was sent to the Internal Revenue Service last week outlining concerns with recent changes by the IRS to its Manual specifically relating to changes in the process by which the IRS considers whether or not a valuation professional has violated the valuation misstatement provisions of Section 6695A of the Internal Revenue Code. ASMRA joined 10 other associations on the letter.
The letter was sent not to simply critique the new review process, but to encourage the IRS to work collaboratively with the valuation profession to find a way forward that maintains the rigor that existed under the previous review program while addressing resource constraints and other issues that led to the recent change. ASFMRA and the other groups are hoping the letter will result in a dialogue with the IRS on how best to move forward.
CFAP Sign-up Starts Today
Last week USDA announced the details and published the accompanying
regulation to implement the Coronavirus Food Assistance Program (CFAP). Information about CFAP is available at
https://www.farmers.gov/cfap. Farmers can apply for assistance starting today through August 28, 2020. The program is quite complicated with different pots of funding, and differing assistance formulas depending on what eligible commodity a farmer grows. An adjusted gross income (AGI) test applies: $900,000 or less for tax years 2016, 2017 and 2018 unless 75% or more of the income derives from farming, ranching or forestry. A payment limit is in place: $250,000 per person or entity with exceptions for corporations, LLCs and partnerships. Applicants must also comply with conservation compliance provisions (Sod and Swamp buster).
Applications must be made at your local Farm Service Agency (FSA) office. If you are not familiar with your local county office, you can find it and its phone number using this
tool. FSA offices are open by phone appointment only. While USDA staff will continue to come into the office, they will be working with producers by phone and using online tools whenever possible. All visitors wishing to conduct business with the FSA are required to call their local office to schedule a phone appointment.
CFAP provides financial assistance to producers of eligible agricultural commodities who have suffered a 5%-or-greater price decline due to COVID-19 and face additional significant marketing costs as a result of lower demand, surplus production, and disruptions to shipping patterns and the orderly marketing of commodities.
For eligible non-specialty commodities, the assistance is based on 50 percent of a producer’s 2019 total production or the 2019 inventory as of January 15, 2020, whichever is smaller, multiplied by 50 percent and then multiplied by the commodity’s applicable
payment rates. Note: no payment for 2020 crop production is available at this time.
For livestock a single payment will be calculated using the sum of the producer’s number of livestock sold between January 15 and April 15, 2020, multiplied by the
payment rates per head, and the highest inventory number of livestock between April 16 and May 14, 2020, multiplied by the payment rate per head. Note: no assistance is provided under CFAP to growers who are euthanizing animals because of disruptions at meat packing facilities. Also, chickens and catfish are not eligible.
For
dairy, a single payment will be made based on a producer’s certification of milk production for the first quarter of calendar year 2020 multiplied by $4.71 per hundred weight. The second part of the payment is based a national adjustment to each producer’s production in the first quarter multiplied by $1.47 per hundred weight.
Producers of specialty crops are eligible for CFAP payments in the following three categories:
1. Had crops that suffered a five percent-or-greater price decline between mid-January and mid-April as a result of the COVID-19 pandemic,
2. Had produce shipped but subsequently spoiled due to loss of marketing channel, and
3. Had shipments that did not leave the farm or mature crops that remained unharvested.
A list of specialty crops and associated eligibility for payment in each category can be found
here.
USDA Announces $1 Billion Loan Guarantee Program
U.S. Secretary of Agriculture Sonny Perdue announced that the Department is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic. Additionally, agricultural producers that are not eligible for FSA loans may receive funding under
USDA Business & Industry (B&I) CARES Act Program provisions included in the CARES Act.
In addition to expanding eligibility to certain agricultural producers, the changes Secretary Perdue announced allow USDA to:
- Provide 90 percent guarantees on B&I CARES Act Program loans;
- Set the application and guarantee fee at two percent of the loan;
- Accept appraisals completed within two years of the loan application date;
- Not require discounting of collateral for working capital loans, and
- Extend the maximum term for working capital loans to 10 years.
B&I CARES Act Program loans must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic. The loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020. USDA intends to consider applications in the order they are received. However, the Department may assign priority points to projects if the demand for funds exceeds availability.
Paycheck Protection Program Changes in the Works
The House is scheduled to consider a bill to ease some requirements of the Paycheck Protection Program (PPP) this week. Congress is under pressure from restaurants and other sectors to address several PPP issues, most notably the requirement that businesses spend the funds on payroll within eight weeks as well as the requirement that 75% of the loan proceeds be spent on payroll expenses in order for the loan to be forgiven. The Senate has introduced a similar bill; it is expected to take up the measure when it returns from its Memorial Day recess next week.
House Passes $3 Trillion HEROES Act
The House passed a partisan $3 trillion emergency relief bill, the Health and Economic Recovery Omnibus Emergency Solutions (
HEROES) Act, by a
vote of 208 to 199. The bill was crafted by the House Democrat leadership without any committee hearings and only one Republican (Peter King, NY) voted for it. Fourteen Democrats voted against the measure. House and Senate Republican Leadership as well as the White House have stated the bill is a non-starter.
The bill includes numerous agriculture provisions, which are more likely to end up in any final package than other parts of the massive spending bill. The House Agriculture Committee
summary details the various provisions. In addition to another round of direct payments ($16.5 billion) for producers, the bill would make payments to livestock, dairy and specialty crop growers whose markets have been upended by the coronavirus. The bill also boosts the Supplemental Nutrition Assistance Program payments. The American Farm Bureau Federation has also released a
summary of the agriculture provisions.
Any further action on additional emergency relief will occur in June at the earliest.