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ASFMRA Ag News - April 23, 2024

By ASFMRA Press posted 04-23-2024 10:45 AM


By How Much Can Appraised Farm Values Differ Across Appraisers?

By Alejandro Plastina, Wendong Zhang, and Wendiam Sawadago
We compared 54 appraisal reports, completed by nine Certified General Appraisers (CGAs) for three Iowa farms at two points in time (2019 and 2020), to evaluate the variability of appraised values and its causes. Our findings confirm that, despite the norms and regulations that CGAs abide by, the appraisal process is subjective in nature, and appraised values can differ by as much as 20% of their average appraised values. Furthermore, observed discrepancies in basic facts considered by CGAs to form their expert opinions on the value of a farm, such as tillable acres and productivity indexes, are non-trivial.

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Impact of Confined Animal Feeding Operations on Agricultural Land Values

By Raymond J. Thomas, Matthew Myers, Dustin L. Pendell, Mykel Taylor, Jisang Yu, and Amanda Tian
Previous studies have attempted to explain variations in farmland values, but few consider the effect of confined animal feeding facilities (CAFOs) on the value of agricultural land within a certain proximity. Using parcel-level transaction data and fixed-effect models with different specifications on the distance to CAFOs, this study finds a positive relationship between agricultural land prices and CAFOs located within various distances of the parcel sale. With a distance-band specification, the positive effect of CAFOs is more prominent for the 0- to 25-kilometer distance. We also find that the price rises as the nearest CAFO is located closer.

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Farmland Values Increase at Slower Rate with Tighter Profits

Farmers could see property values and cash rents level off, or even decline, if farm profit margins remain tight or negative in coming years, expert say. 

State surveys show farmland values still trying to creep higher, but the rate of increases has slowed. 

While farmland remains a stable long-term investment with a long track record of growing in value, narrow profit margins could mean a few years of stepping back in land values, said Purdue University ag economist Michael Langemeier.

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Solar vs. Soil Debate Brewing Near Lawrence 

Just before exit 204, westbound drivers on Interstate 70 crane their necks for a passing glimpse at an artistic carving in a lush field of wheatgrass. Viewed from above, they would see an earthwork installation by celebrated artist Stan Herd that reads: “Save Prime Farmland. Relocate Utility Solar.”  

“This really is the most beautiful, prime spot in my mind,” Herd said on the phone with Flatland as he got in his truck to drive out to the field near Lawrence.  That’s the argument many of the landowners and farmers in the Grant Township area, just north of the college town, have against a proposed 600-acre solar farm. 

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Economy in Negative Territory with Record-High Farm Loans 

For an eighth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the April survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for April increased to 45.8 from 38.0 in March, or its lowest level since June 2020. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Higher interest rates, weaker agriculture commodity prices and higher grain storage costs pushed the overall reading below growth neutral for the eighth straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

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IRS Loses Easement Case on Perpetuity Rule, Will Result in More Attention on Valuation

In the latest victory for taxpayers, the Tax Court determined that the Treasury failed to follow federal law in enacting a conservation easement perpetuity rule known as the “proceeds regulation.” The majority opinion held that conservation easement deeds no longer have to comply with the proceeds regulation, which it was “not optimistic” the taxpayer, Valley Park, would have met. Rather, the Tax Court applied the two overarching perpetuity requirements of the underlying statute, which it found that Valley Park satisfied. However, this case like many others will not end with the taxpayer surviving technical challenges by the IRS and will undoubtedly result in a decision based on the real issue in these cases – a determination of the value of the conservation easement.

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ASFMRA Government Relations Update

ASFMRA Joins 35 Groups Urging Preservation of 1031 Exchange Authority

The American Society of Farm Managers and Rural Appraisers recently joined 35 other organizations in a letter to House and Senate tax committee leaders urging preservation of 1031 like-kind exchange authority. President Biden’s FY 2025 budget proposed changes to 1031 exchange authority (same as his FY 2024 budget proposal). The letter makes it clear that strong support and rational exist to make no change.

House Agriculture Chairman Promises Farm Bill before Memorial Day

In an opinion piece posted on the House Agriculture website, Chairman Thompson (R-PA) stated the House Agriculture Committee will markup a farm bill before the Memorial Day recess. The piece also makes clear that the Republicans intend to make future Thrifty Food Plan updates budget neutral. In response, House Agriculture Committee Ranking Member David Scott (D-GA) published an opinion piece last Friday making it clear that Democrats will not support the Republican proposal regarding the Thrifty Food Plan. How this impasse is resolved to move a farm bill forward is unclear.

The House is in recess this week, but starting the week of April 29th, the House is scheduled to be in session for 4 weeks in a row until the week of May 27th leaving ample time for Chairman Thompson to introduce and markup a farm bill. One serious factor outside of his control is whether the House has a Speaker in May (see next piece). House Committees can meet and hold votes without a Speaker but could not bring the bill to the floor for consideration.

House Passes Ukraine and Israel Supplementals, Speakership Turmoil Looms

Over the weekend, the House passed a series of votes on a bipartisan basis to fund emergency supplementals for Ukraine, Israel, an Indo-Pacific package (Taiwan mostly) and a separate bill that includes a TikTok ban. The Senate is expected to merge the 4 bills and send them to the President this week. When the House reconvenes the week of April 29th, several conservative Republican members have threatened to proceed with a motion to vacate the Speaker’s seat, as was done to Speaker McCarthy (R-CA) last year. Republicans will have a one seat majority when they return next week due to another Republican retirement. Speaker Johnson’s  (R-LA) ability to remain as Speaker may depend on Democrats voting to support him. Recall last fall it took nearly one month for a new Speaker to be elected.

Senator Hoeven Introduces FARMER Bill

Senator Hoeven (R-ND) introduced the Federal Agriculture Risk Management Enhancement and Resilience (FARMER) Act, a bill to increase premium support for certain crop insurance plans (SCO) and make higher levels of coverage (80 and 85% enterprise unit coverage) more affordable for producers. Senator Hoeven sits on both the Senate Agriculture Committee as well as is the Ranking Member for the Agriculture Appropriations subcommittee in the Senate.

No Democrat Senator cosponsored the bill, but Republican Senators Boozman (AR), Ernst (IA), Grassley (IA), Fisher (NE), Marschall (KS) and Hyde-Smith (MS) have cosponsored the bill. Senate Agriculture Committee Ranking Member Boozman voiced support for the bill with a speech on the Senate floor.

The total cost of the bill was not identified, nor were any ways to pay for it. Senate Agriculture Committee Chair Stabenow (D-MI) welcomed Senator Hoeven’s effort and urged her colleagues to come together and write the next farm bill.

FARMER Bill text

FARMER Summary

House Crop Insurance A&O Marker Bill Introduced

A bipartisan bill to bolster Administrative and Operating (A&O) payments was introduced by Representatives Austin Scott (R-GA), Tracy Mann (R-KS) and Jimmy Panetta (D-CA). The bill would reinstate an inflation factor that has not changed since 2015 to increase capped A&O payments starting in reinsurance year 2024. The bill would also establish an A&O payment floor of 17% for specialty crop contracts (specialty crop as defined by the bill). The specialty crop floor is retroactive to reinsurance year 2022. The authors did not provide a cost estimate for their bill.

The House Agriculture Committee expects to markup a bill before Memorial Day weekend (see story above). It is possible that the starting point, the Chairman’s mark, will include both or one of these provisions to increase A&O payments for crop insurance companies and agents.

GAO Issues CFIUS Recommendations

In a report to Congress, the Governmental Accountability Organization issued 5 recommendations to the Department of Treasury to improve the functionality of the Committee on Foreign Investment in the United States (CFIUS). Previously Congress had directed Treasury to include the Department of Agriculture in its deliberations.

Agriculture 10% of 2022 U.S. Greenhouse Gas Emissions

The Environmental Protection Agency (EPA) EPA develops an annual report called the Inventory of U.S. Greenhouse Gas Emissions and Sinks, that tracks U.S. greenhouse gas emissions and sinks by source, economic sector, and greenhouse gas going back to 1990. As an economic sector “Agriculture” is estimated to contribute by the EPA around 10% of U.S. greenhouse gases in 2022, roughly unchanged from 2021. 

Welcome New Members

Help us welcome our newest members to the ASFMRA! Because of you, the ASFMRA continues to grow and support rural property professionals across the nation!

The Society recognizes new members on a monthly basis. You may find your colleagues in the following list — if you do, we encourage you to reach out and welcome them!

New Members
Adam Crist with Peoples Company in Mineral Point, WI (Wisconsin Chapter) 
Gregory Faler with Faler Valuation Solutions, LLC in Columbus, OH (Ohio Chapter) 
Ken Flowers with Bedrock Appraisal Group in Florence, SC (Carolinas Virginias Chapter) 
Denise Hall with Mother Earth Reverence Farms & Ministries LLC in Orange, CA (California Chapter) 
Dustin Hawkins with HRE Advisors in Mayfield, KY (Kentucky Chapter) 
Kit Holst with TI-Trust in Quincy, IL (Illinois Chapter) 
Jacob Kelly with First South Farm Credit in Ridgeland, MS (Mid-South Chapter) 
Logan McCrea in Albia, IA (Iowa Chapter) 
Jason McCue with Hertz Farm Management in Mankato, MN (Minnesota Chapter) 
Kate Pauly with Ambition Unlimited, LLC in Ankeny, IA (Minnesota and North Dakota Chapters) 
Hannah Shear with Oklahoma State University in Stillwater, OK (Oklahoma Chapter) 
Hunter Stauffer with Greene Farm Management in Dunlap, IL (Illinois Chapter) 
Kerry Stilwell with Manulife Inv Mgmt Group Timberland & Ag Inc. in Corning, CA (California Chapter) 
Olivia Tersteeg in Bird Island, MN (Minnesota Chapter) 
Trent Wildman with Commissioners of the Land Office in Fort Supply, OK (Oklahoma Chapter)

Share Your Experience - Make a Referral

You know first-hand what a great organization the ASFMRA is and what it means to you both professionally and personally. We thank you for spreading the word, you are the driving force behind our continued growth! Talk to those you know who would benefit from the Society's educational offerings, networking, and meetings. Let them know your experiences of being involved in this great association and some of the business contacts you have made along with lasting friendships. Your peers listed below have done just that! They spoke to individuals about the ASFMRA and those individuals have now become members!

Ben Bolinger, ARA 
Mark Grant, ARA 
Kristen Halbur 
Danielle Harris, AFM 
Joseph Harris, II, AFM 
Douglas Hodge, ARA 
Priscilla Koser, AFM 
Ashley Poduska 
Traci Schermerhorn 
Philip Swartz 
Mykel Taylor, PhD 
Jeffrey Troendle, AFM 

Thank you to all who have referred someone and, in some cases, more than one, to join ASFMRA.