Farmland Values Hit Record Highs, Pricing Out Farmers
A series of economic forces — high prices for commodity crops like corn, soybeans and wheat; a robust housing market; low interest rates until recently; and an abundance of government subsidies — have converged to create a “perfect storm” for farmland values, said Jason Henderson, a dean at the College of Agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City.
As a result, small farmers are now going up against deep-pocketed investors, including private equity firms and real estate developers, prompting some experts to warn of far-reaching consequences for the farming sector.
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Great American Land Rush
Green technology isn't competing with just itself for valuable space. As the population and the economy continue to grow, America also needs space for more residential buildings, factories, and farms.
That raises a question: Do we have enough land to completely reshape our power grid? Based on the best estimates of how much space is needed, it's unlikely the US is going to run out of space anytime soon. But turning the country totally green will require tough choices about where we build this tech — and trigger some serious land battles in the process.
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Rents expected to follow increase in farmland value
Skolness said the competition for farmland isn’t just for buying land. He said his firm gets calls from producers every week about any rental land that might become available perhaps through a retirement or the end of a rental agreement.
He said, for example, he spoke with a farmer who plans to bid on some property through a Farmers National auction, but in the event that farmer doesn’t win the bid, he asked Skolness to pass his name along to the winning bidder in the hope that there might be a shot at renting the land.
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Space for Ag: NASA Works to Ensure Food Security
NASA’s missions capture all aspects of the planet: the oceans, land, ice, and atmosphere. Through these observations, NASA has noted changes in the water cycle, which have led to changes in the carbon cycle and, in turn, to agriculture.
Scientists have measured the energy entering and leaving the Earth’s system and noted an imbalance, with significantly less energy now leaving than entering. More than 90% of this energy is being absorbed by the oceans, and transported all around the world, says St. Germain. These changes in energy are then manifested in more intense drought, flooding, or other severe weather events.
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Cash Rents on the Rise in 2023
Cash rents are following land values higher.
Four out of five ag lenders reported rising land values in 2022, according to a survey of 300 agricultural bankers conducted by the American Bankers Association and Farmer Mac, a secondary market provider for ag loans.
However, land value changes pulled back somewhat in the South and West in 2022, as profitability in those regions lagged compared to the Midwest.
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ASFMRA Government Relations Update
Congress Returns to Washington D.C Following November ElectionsCongress returned last week to Washington following a nearly 5-week recess and the November elections. Senate Minority Leader Mitch McConnell (R-KY) was re-elected as the Republican leader in the Senate last week. Senate Democrats will hold their leadership elections next week. Senator Schumer (D-NY) is widely expected to remain Senate Majority Leader.
With the Republicans officially taking the majority in the House, Representative Kevin McCarthy (R-CA) won support from his conference to be the next Speaker of the House. He will need to garner 2018 votes for Speaker on January 3rd. Current Speaker Nancy Pelosi (D-CA) announced she will not be seeking a leadership role in the next Congress. Congressman Hakim Jefferies (D-NY) is running uncontested for Minority Leader in the next Congress.
Presently, Republicans have 219 seats, Democrats 212 with 4 races undetermined. The final numbers will set the “ratios” for the Congressional Committees. Currently, the House Agriculture Committee’s ratio is 27 Democrats to 24 Republicans. The Republicans will pick up seats on the Agriculture Committee while the Democrats lose seats with the change in majority.
At least 10 members of the House Agriculture Committee will depart after this session either due to retirements or defeat. Others could seek committee assignments elsewhere. Representatives O’Halleran (D-AZ), Lawson (D-FL), Axne (D-IA), Maloney (D-NY), Flores (R-TX) lost reelection. Three other members retired, Bustos (D-IL), Rush (D-IL) and Jacobs (R-NY). Congresswoman Hartzler (R-MO) ran unsuccessfully for the Republican nomination for Senate in Missouri and Congressman Davis (R-IL) lost to Representative Miller (R-IL) in a primary earlier this year.
While the Senate majority is not in question, the outcome will have to wait until after December 6th as neither candidate in Georgia obtained over 50% of the vote and Georgia law requires a runoff between the top 2 candidates when that happens. Senator Stabenow (D-MI) will remain Senate Agriculture Committee Chair while Senator Boozman (R-AR) will remain Ranking member.
The lame duck session of Congress will run through at least December 16th, 2022. That is when the current Continuing Resolution (CR) runs out. Because Congress did not complete any FY 2023 appropriation bills, the government is funded by the CR. Don’t expect any progress on either an omnibus FY 2023 bill or another CR until after Thanksgiving.
USDA Announces ERP Phase 2 and PARPLast week USDA announced plans to provide additional emergency relief for 2020 and 2021 crops via a second phase of the Emergency Relief Program (ERP) and more pandemic assistance for the 2020 calendar year with a new Pandemic Assistance Revenue Program (PARP). Regulations with further details for both programs will be forthcoming.
ERP Phase Two includes producers who suffered eligible losses but may not have received program benefits in ERP Phase One. To be eligible for Phase Two, producers must have suffered a loss in allowable gross revenue (defined in forthcoming regulation) in 2020 or 2021.
Eligible crops include both traditional insurable commodities and specialty crops that are produced in the United States as part of a farming operation and are intended to be commercially marketed. In general, ERP Phase Two payments are expected to be based on the difference in certain farm revenue between a typical year of revenue as will be specified in program regulations for the producer and the disaster year.
PARP is authorized and funded by the Consolidated Appropriations Act of 2021 (different pot of money from ERP). To be eligible for PARP, an agricultural producer must have been in the business of farming during at least part of the 2020 calendar year and had a certain threshold decrease in allowable gross revenue for the 2020 calendar year, as compared to 2018 or 2019. Exact details on the calculations and eligibility will be available when the forthcoming rule is published.
ERP Phase Two and PARP will use revenue information that is readily available from tax records. USDA is encouraging producers to have their tax documents from the past few years and supporting materials ready. Producers will need similar documentation to what was needed for the Coronavirus Food Assistance Program (CFAP) Phase Two, where a producer could use 2018 or 2019 as the benchmark year relative to the disaster year.
NRCS Seeks Comments on IRA FundingThe Natural Resource Conservation Service (NRCS) is asking for
public comments by December 21st on how it should spend the funding it will receive from the Inflation Reduction Act (IRA). Recall, NRCS is slated to received nearly $20 billion (FY 2023 -2026) targeted to improve soil carbon, reduce nitrogen losses, or reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions, associated with agricultural production.
Specific questions from NRCS include: What systems of quantification should NRCS use to measure the carbon sequestration and carbon dioxide, methane, and nitrous oxide emissions outcomes associated with activities funded through IRA? How can NRCS engage the private sector and private philanthropy to leverage the IRA investments, including for systems of quantification? And, how should NRCS streamline and improve program delivery to increase efficiencies and expand access to IRA funded programs and projects for producers, particularly underserved producers?