AI Brings Transparency to Farmland Values
Sometimes the answer to a question is right in front of you, but you can’t see it. Like where is the box of tissues in the storage closet? My husband insists we are out of tissues. I insist there is a box in there, he just needs to keep looking. We bicker about it some more, shouting from opposite sides of the house, until I finally join him at the closet and find it myself…in seconds.
Artificial intelligence (AI) is on its way to helping humans efficiently sort through the “storage closet” of farmland data to answer complex questions, such as how much a field is worth and who is likely to buy it. Yet, some say it has a long way to go.
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Farmer Sentiment Improves, Producers Credit Stronger Financial Conditions
Agricultural producers’ sentiment increased for the second consecutive month, as the Purdue University/CME Group Ag Economy Barometer index rose 5 points to a reading of 115, a 12% increase compared to the previous year. The sentiment growth is largely attributed to farmers’ improved perceptions of their farms’ financial conditions and prospects. This month’s Ag Economy Barometer survey was conducted from Nov. 13-17.
The Index of Current Conditions rose 12 points to 113 while the Index of Future Expectations improved by 2 points to 116. The Farm Financial Performance Index also rose in November to a reading of 95, which is up 3 points from October. The financial index reached its low point back in the spring. The November reading was 25% higher than in May and 10% higher than at the start of fall harvest in September.
“Farmers’ expectations regarding financial performance have improved, with fewer producers’ expecting worse performance than a year ago,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
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Foreign Buyers Pay a Premium for U.S. Farmland, Says Analyst
An analysis of farmland sales in the Midwest and Plains states found foreign investors paid 13.7% more than American purchasers for comparable tracts, but the infrequent transactions did not affect land values overall, said Mykel Taylor, an associate professor of agricultural economics at Auburn University, on Tuesday. Foreign ownership is “pretty hot politically” as an issue, she said, and could result in the USDA becoming part of the powerful federal committee that decides if a foreign purchase poses a national security risk.
Among the proposals in Congress to tighten U.S. oversight of land ownership or to ban sales to nations such as China and Russia, “the one that I think might get woven in [the farm bill], because I think a lot of people agree about it, is putting the secretary of Agriculture on CFIUS, which is the Committee on Foreign Investment in the United States,” Taylor said.
Some 37.6 million acres, or 2.9%, of agricultural land in the country is owned by foreign entities, with Canadian citizens and companies holding 12.8 million acres. China is 18th on the list of foreign ownership, between Sweden and Spain, with interests — ownership or long-term leases — on nearly 384,000 acres. “So for all the press that China has gotten, it is not a major holder of U.S. ag land,” said Taylor.
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Bill Would Pull Farmland Tax Credits From Farmers Hosting Solar Power Installations
Farm fields with solar power installations would no longer qualify for state tax credits under a new Republican bill. One GOP lawmaker claims it's about protecting farmland from being used for "nonsense" renewable energy projects.
The legislation, introduced by state Rep. Ellen Schutt, R-Clinton, and state Sen. Cory Tomczyk, R-Mosinee, is brief. With two sentences, the bill would block farmers from receiving Wisconsin farmland preservation tax credits for any part of their fields with solar panels that aren't specifically used to support farming.
During a Wednesday public hearing before the Assembly Committee on Ways and Means, Schutt said the bill is addressing a "loophole in current law" that allows farmers to get state funds meant to preserve farmland "despite completely changing the land to build solar energy facilities on it."
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‘Dallas’ in Oregon? Patrick Duffy’s Riverfront Ranch Is Headed to Auction
Last year, Patrick Duffy’s longtime Oregon ranch hit the open market for $14 million. Even though the price was later reduced to $11 million, the picturesque property never found a buyer, so the Dallas star is now auctioning off the compound to the highest bidder.
Spanning about 330 acres, the so-called Duffy Ranch is located outside of Medford in the city of Eagle Point and will go under the hammer from December 7th until the 14th in a no-reserve auction. According to Sotheby’s Concierge Auctions, who will be handling the sale, starting bids are expected to be in the $3 million to $5 million range.
The TV legend, who starred alongside pop culture icon Suzanne Somers in the family sitcom Step by Step, has owned the Staley Road residence for over 30 years. Duffy and his late wife, Carlyn Rosse, bought the home in 1990 for $1.5 million. “It was pristine,” he told Mansion Global. “There was no paved road. There were some trails through the woods and about a mile—a little less than a mile—of river frontage.”
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ASFMRA Government Relations Update
Limited Progress on FY 2024 Appropriations
Neither the House nor the Senate took up any FY 2024 appropriations bills last week. Recall, the government is currently being funded at FY 2023 levels via a Continuing Resolution (CR) through January 19 (4 of the 12 bills) or February 2, 2024 (8 of the 12). Talks between the House and Senate are ongoing to reach a top line spending number for 2024. No agreement has been reached. The likelihood that 12 individual appropriation bills will be passed between now and January is close to 0. While avoiding a large omnibus before the Christmas holiday, without significant progress this month, Congress will now face that proposition in January.
Regulators Update Appraisal Threshold Exemption for Inflation
Federal banking regulators updated the appraisal exemption threshold for inflation via a final rule in the federal register published on November 29th. The updated threshold is $32,400 updated from $31,000.
USDA Forecasts Decline in Net Farm Income, Remains Above Average
USDA’s Economic Research Service (ERS) forecast farm sector income to fall in 2023 after reaching record highs in 2022. Net farm income reached $182.8 billion in calendar year 2022, increasing $42.4 billion (30.2 percent) from 2021 in nominal dollars. In 2023, net farm income is forecast to decrease by $31.8 billion (17.4 percent) from 2022 to $151.1 billion. In inflation-adjusted 2023 dollars, net farm income is forecast to decrease by $37.9 billion (20.0 percent) in 2023 compared with the previous year. If realized, net farm income would remain above its 2003–22 average (in inflation-adjusted dollars).
FSA Waives Notice of Loss Requirements for Some Livestock Emergency Programs
The Farm Service Agency (FSA) waived notice of loss requirements for 2023 for the Emergency Assistance for Livestock, Honeybees, and Farm-raised Fish (ELAP) and Livestock Indemnity Program (LIP). To streamline assistance to support access to critical 2023 natural disaster recovery assistance, FSA is waiving the requirement to submit ELAP or LIP notices of loss within a pre-determined number of days for 2023. Instead, producers have the flexibility to submit 2023 notices of loss as soon as possible, once losses are realized, following a natural disaster event or no later than the established annual program application for payment deadlines for each program. FSA county committees are also being asked to re-evaluate 2023 ELAP and LIP late-filed notices of loss to determine if the waiver applies.
Updated GAO Crop Insurance Report
The U.S. Government Accountability Office (GAO) released an updated crop insurance report. The report focuses on payments to approved insurance providers (Administrative and Operating, A&O, and underwriting gains) as well as the distribution of premium support and A&O payments by farm size. The report was requested by Senators Gillibrand (D-NY) and Booker (D-NJ).
GAO claims that private company returns from crop insurance exceed market rate returns and urges Congress to repeal the Standard Reinsurance Agreement (SRA) limitation put in place in the 2014 farm bill that limits USDA’s ability to cut expected underwriting gains to companies as it did in 2011. GAO also focuses on large premium assistance provided to growers with an AGI greater than $900,000 and urges limitations on premium assistance based on AGI.
The GAO makes specious assumptions regarding A&O payments (payments = company costs) and its analysis regarding market rate returns in the report is sketchy as well. The report will likely gain no traction with the House Agriculture Committee. It is more likely to register in the Senate Agriculture Committee where Senators Gillibrand and Booker both sit on the committee and Senator Booker is advocating for changes to the A&O payment structure (pay based on policy complexity not as percent of premium).
RMA Expands Enterprise Unit Availability
The Risk Management Agency (RMA) is expanding Enterprise Unit availability to additional specialty crops and other actual production history (APH) crop programs. The following crops will have Enterprise Units available beginning with the 2024 crop year:
- Extra Long Staple Cotton
- Fresh Market Tomatoes (insured under the Guaranteed Production Plan policy)
- Processing Tomatoes (excluding California)