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ASFMRA Ag News - May 21, 2024

By ASFMRA Press posted 05-21-2024 09:50 AM

  

Where Are the Best Places to Farm in the U.S.?

What makes a great place to farm? Good land — and lots of it — may be your answer if you think bigger is better and sales bring success.

When ag income set a record in 2022, the secrets of size held true. But in some parts of the country, prices meant profits — except where turbulent weather spelled the difference between stunning profits and staggering losses. 

That’s just one of the findings from the latest installment of Farm Futures’ two-decade study, Best Places to Farm. Based on USDA Census of Agriculture data published every five years, this project tracks profitability in 3,056 counties across the country. It’s the most detailed look at what makes farm businesses tick — or not.  

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Future Agronomy Advisors to Be Powered by AI?

How much water does corn need per week when tasseling? What causes white growth and lesions on soybean stems? Where can I find 2-4,D for the best price?

No matter the time of year, each growing season presents new challenges that conjure one question after the next.

The answers are not always easy to find. When you need the formula to mix a tank of pesticide or are not quite sure of planting depth recommendations in a certain soil type, waiting for business hours the next day to ask your agronomist is not always possible. But AI (artificial intelligence) is making this type of information easily accessible at all times.

“AI models are being trained on large and diverse information to answer common agronomic questions. It almost appears that you are speaking to a real person,” said Michael Tross, who recently completed his doctoral program in complex biosystems at the University of Nebraska-Lincoln.

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Musings in Agricultural Law and Taxation – of Conservation Easements, IDGTs & Takings

An Easement is Not Worth More than the Underlying Property

Oconee Landing Property, LLC, et al. v. Comr., T.C. Memo. 2024-25

In the latest round of the continuing saga involving donated conservation easement tax fraud, the Tax Court uncovered another abusive tax shelter. IRS guidelines make it clear that a conservation easement’s value is the value of the forfeited development rights based on the land’s highest and best use. To qualify as the highest and best use, a use must satisfy four criteria: (1) the land must be able to accommodate the size and shape of the ideal improvement; (2) a property use must be either currently allowable or most probably allowable under applicable laws and regulations; (3) a property must be able to generate sufficient income to support the use for which it was designed; and (4) the selected use must yield the highest value among the possible uses.

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Chicago Fed: Midwest Farmland Values See Smallest Gains in 3.5 Years

Farmland values across the Midwest saw a 4% increase in the first quarter of 2024, the smallest year-over-year gain in three and a half years in the Federal Reserve Bank’s Seventh District.

According to the Chicago Fed's most recent AgLetter, “good” farmland values in the District — which includes Michigan, Indiana, Illinois, Wisconsin and Iowa — rose 2% from the fourth quarter of 2023 to the first quarter of 2024, according to the survey responses of 141 District agricultural bankers.

After being adjusted for inflation with the Personal Consumption Expenditures Price Index (PCEPI), the year-over-year gain in District farmland values for the first quarter of 2024 was just above 1% but marked the 16th consecutive quarter of real year-over-year growth.

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$30 Million Texas Ranch Comes With 6 Homes and an Epic Farm

They say everything is bigger in Texas. That is certainly true of the O|W Ranch located just outside Corpus Christi in South Texas. 

Recently listed for $30 million, the 6,041-acre estate is owned by the Killam family, who are the fourth-generation owners of gas and oil company Killam Oil Co. The Killams are considered one of America’s top landowners, with a gas and oil dynasty that was established over a century ago. This particular Killam property is located in Bee and San Patricio Counties, less than 35 miles from Corpus Christi and 190 miles from Houston. According to the listing, there are six homes on the parcel as well as fully equipped farming facilities such as breeding pens, an eight-stall horse stable, a tack room, and a round pen. 

Accessible by a private two-mile road, the property is surrounded by a high fence for added security and privacy. Inside the compound, six homes can comfortably accommodate up to 20 people. The main home is an elevated hunting lodge with rustic-style interiors, a commercial kitchen, a butler’s pantry, a living area, and an outdoor patio. The current owners use O|W Ranch for hunting and agricultural purposes, but there is plenty of opportunity for the new owner to create an exquisite trophy home or epic retreat.

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ASFMRA Government Relations Update

Supreme Court Rules CFPB Funding Structure is Constitutional

The justices ruled 7-2 that the way the Consumer Financial Protection Board (CFPB) is funded does not violate the Constitution, reversing a lower court and drawing praises from consumers. Justice Clarence Thomas wrote the majority opinion, splitting with his frequent allies, Justices Samuel Alito and Neil Gorsuch, who dissented.

Chairman Thompson Releases Farm Bill Legislative Text 

Chairman Thompson (R-PA) released a 942-page discussion draft legislative text last Friday. This legislative text is scheduled to be marked-up on May 23rd at the full committee level (the time has not yet been announced). A process for amendments has not been announced either. Typically, amendments are filed with the Committee some time in advance of the markup. Usually, the markup proceeds title by title although not necessarily in numerical order. Chairman Thompson also released an updated summary of the bill. 

Ranking Member David Scott (D-GA) released a statement in opposition to the Thompson bill after the discussion draft text was made available. It is unclear whether House Agriculture Committee Democrats will participate in a meaningful way during markup. 

Three major provisions remain a source of contention. The Chairman’s bill would make future Thrifty Food Plan for the Supplemental Nutrition Assistance Program (SNAP) updates budget neutral. It’s been widely report that the Congressional Budget Office estimates $27 billion savings over 10 years from that change and Democrats view the provision as a cut, while Republicans contend current benefits are not reduced. The Chairman’s bill moves remaining Inflation Reduction Act conservation spending into Title II (Conservation Title) to increase baseline spending for conservation programs, but the bill would not keep the climate smart agriculture purposes of the funding. Democrats oppose the loss of the climate smart agriculture purposes. Finally, the Chairman’s bill would remove the Secretary of Agriculture discretion to use the Commodity Credit Corporation (CCC) for emergency purposes. The savings resulting from this limitation are used to bolster spending in the Commodity and Crop Insurance Titles according to Committee staff. Democrats object to the discretionary CCC authority removal.

House Working Draft Major Commodity Title Provisions

Title I, the Commodity Title starts on page 14. Major changes include increases to reference prices (see table below or House summary document) and marketing loan rates (see House summary document). The title also contains administrative changes that could help non-operating landowners. The bill would change the treatment of pass-through entities allowing farmers to get the same treatment if they are in an LLC as those in general partnerships. Also, operations that get 75% of their income from farming would be eligible for a payment limit of $155,000 (up from $125,000) that is indexed to inflation going forward. Finally, the Adjusted Gross Income (AGI) test is waived for disaster and conservation programs if 75% or more of the income is derived from farming.

Commodity Current SRP New SRP % Increase
Corn $3.70 $4.10 10.8%
Sorghum $3.95 $4.40 11.4%
Barley $4.95 $5.45 10.1%
Oats $2.40 $2.65 10.4%
Soybeans $8.40 $10.00 18.5%
Wheat $5.50 $6.35 15.5%
Seed Cotton $0.37 $0.42 14.4%
Rice $14.00 $16.90 20.7%
Peanuts $535.00 $630.00 17.8%
Other Oilseeds $20.15 $23.75 17.9%
Dry Peas $11.00 $13.10 19.1%
Lentils $19.97 $23.75 18.9%
Small Chickpeas $19.04 $22.65 19.0%
Large Chickpeas $21.54 $25.65 19.1%

House Working Draft Conservation Provisions

The House bill would rescind the remaining unobligated Inflation Reduction Act (IRA) funding for the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), the Agricultural Conservation Easements Program (ACEP), and the Regional Conservation Partnership Program (RCPP). The rescinded funds (nearly $14 billion) are reinvested across the 4 conservation programs as well as in other programs contained in the conservation title. While the funding retains its conservation purpose, it does not retain its focus on climate smart agriculture practices. 

Additionally, the draft bill makes significant changes to the Conservation Reserve Program (CRP). Rental rates would be based on land capability classification with higher rental rates paid on lands classified III through VII. The bill would also raise the annual payment limit for CRP payments to $125,000 from the current $50,000.

The bill would raise Federal cost share payments for ACEP and would streamline the administrative process to receive a RCPP agreement.

House Working Draft Crop Insurance Title Provisions

The crop insurance language starts on page 800 of the discussion draft. There are 16 sections in the crop insurance title (Title XI). The section of most interest to the delivery sector is Section 11010. That section includes an additional loss adjustment expense payment of 6% of net book premium on eligible policies in an eligible State with a loss ratio greater than 1.2. Eligible policies do not include policies that don’t require loss adjustment (area and index plans) and CAT policies. Eligible States do not include State Group 1 States (IL, IN, IA, MN, and NE) as defined in the 2025 SRA.

Section 11010 also includes the reinstatement of an inflation factor (none has been in place since 2015) on the Administrative and Operating (A&O) cap that was set in the 2011 SRA beginning with Reinsurance Year (RY) 2025. It also places a minimum A&O payment rate of 17% for specialty crop contracts, starting in RY 2025. Finally, there is a one-time $50 million provision for RY 2022, 2023, 2024 to make additional A&O payments on specialty crop contracts up to 17% of net book premium.

The bill increases premium assistance for beginning and veteran farmers for the first 10 years of farming. It would direct the Risk Management Agency Research and Development efforts as well as make changes to the private sector new product submission and development process (508h). It also increases premium assistance for the Supplemental Coverage Option to 80% and maximum coverage to 90%. 

USDA Announces Support for Producers Impacted by Bird Flu

USDA Secretary Vilsack announced that USDA is taking steps to support dairy producers with H5N1-affected premises to improve biosecurity to reduce the spread of the virus and USDA will compensate producers for lost milk production in affected herds. USDA is coordinating its efforts with the Food and Drug Administration and the Center for Disease Control. 

NASS Releases Congressional District Agriculture Profiles

The National Agricultural Statistics Service (NASS) released the Congressional District Profiles and Rankings from the 2022 Census of Agriculture. This summary presents data by congressional district from the 118th Congress that includes land, farms, market value of agricultural products sold, rankings and producer characteristics. 

“These profiles present local data in a fast and easy-to-read format, allowing producers and all data users to quickly view and evaluate information,” said NASS Acting Administrator Joseph Parsons. “Congressional District Profiles and Rankings from the ag census are only available every five years. Providing ag census information at a congressional district level, in addition to state, county and nationwide data, allows data users to compare districts to each other, shows the value of agriculture in a district, and informs policy makers.”

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
Bradley Calaway in Emmett, ID (Idaho-Utah, Oregon, and Washington Chapters) 
Mason Cochran in College Station, TX (Texas Chapter) 
Sonya Echols with Janoll Consulting, Inc. in Denver, CO (Colorado Chapter) 
Chris Foster with Foster Company LLC in Okarche, OK (Oklahoma Chapter) 
Hudson Fraser in College Station, TX (Texas Chapter) 
Allison Hahn in Westhoff, TX (Texas Chapter) 
Larerick Little in Jonesboro, AR (Mid-South Chapter) 
Joseph Mitchell with Golden State Farm Credit in Elk Grove, CA (California Chapter) 
Zachary Piggott in Cypress, TX (Texas Chapter) 
Lauren Roth in Dixon, IL (Illinois and Indiana Chapters) 
Robbie Stites with Mike Woolf Farming LLC in Firebaugh, CA (California Chapter) 
Anthony Wayne in Clayton, NC (Carolinas Virginias Chapter) 
Benjamin West in McAllen, TX (Texas Chapter) 
Ian White with Brantley Appraisal Company in Bowling Green, KY (Kentucky 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!

Carolyn Haygood, ARA 
Alan Hopkins 
Randy Minton, ARA 
Paul Moore, ARA, RPRA 
Skye Root, AFM, AAC 
Chrystol Thomas-Winston 

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

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