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October 2012 Archive for Your Precious Land

RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 35 years.

$21,900 per Acre for Sioux County Farmland!

Oct 25, 2012

Mike Walsten

Now it's $21,900 an acre for Sioux County, Iowa farmland. Remember that $20,000-an-acre auction in Sioux County about a year ago? Well... never mind. Now it's $21,900 an acre. The parcel, sold today by Rich Vander Werff, Vander Weff & Associates, Inc., Sanborn, was 80.5 acres located a little southwest of Boyden. It featured 79 flat tillable acres and carried a CSR2 of 84.1 and a CSR of 73.7. The county average CSR (not CSR2) is 64.8. (CSR2 is an updated soil evaluation system released recently by Iowa State University. It replaces the old CSR, which has been around since the 1970s. While carrying the same name, CSR2 is not really comparable to CSR. "It's like comparing apples to oranges," one expert tells me. It includes new soil productivity factors developed since CSR's original development. These new factors tell much more about the soil's producitive capability.)

"We had four bidders above $20,000," says Vander Werff. "All were local. There were more than 150 people in attendance."

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If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

Creighton Farmland Index Confirms Bull Market Lives

Oct 23, 2012

Mike Walsten

The demand for farmland has firmed, following a short period of uncertainty this summer due to the drought. That's according to the farmland-price index monitored by Creighton University economist Dr. Ernie Goss who publishes the index as part of the Rural Mainstreet Index.

In his latest report, Goss said the October reading of the farmland-price index climbed to 71.7, its highest level since March of this year from September’s 61.6. This is the 33rd consecutive month that the farmland-price index has risen above growth neutral. “Except for a brief period this summer, farmland prices have expanded at a pace that, in my judgment, depends too heavily on high agriculture commodity prices and record low interest rates. The farm-equipment-sales index expanded to 60.5, its highest level since May of this year, and was up dramatically from September’s growth neutral 50.0,” said Goss. 

The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, rose to a solid 56.6 from September’s weak 48.3.  It was the first time since June that the index rose above growth neutral. “Our survey indicates that the negative impacts of the drought are being more than offset by the positives of very strong incomes from high agriculture and energy prices,” says Goss. 

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

Canada Farmland Up 8.6% First Half 2012

Oct 15, 2012

Mike Walsten

The average value of Canadian farmland increased 8.6% during the first half of 2012, according to Farm Credit Canada's (FCC) semi-annual update of 245 benchmark farm properties. That 8.6% rise coupled with the 6.9% increase found the last half of 2011 suggests the average value of Canadian farmland rose 15.5% on an annual basis as of July 1.

FCC, Canada's largest agricultural lender, says farmland values rose or remained stable in all provinces except British Columbia, which saw a 0.3% decrease. Ontario experienced the highest average increase at 16.3% followed by Manitoba at 10.3% and Saskatchewan at 9.1%. Quebec and Alberta experienced 6.7% and 5.7% average increases, followed by Prince Edward Island at 3.1% and Nova Scotia at 2.8%. Farmland values were unchanged in New Brunswick and Newfoundland and Labrador.

Canadian farmland values have risen steadily during the last decade. FCC states. The current average national increase is the highest since FCC began reporting on farmland values; with the second highest increase being 7.7% in the second half of 2008. The last time the average value decreased was by 0.6% in 2000.

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

Drought? What Drought? Iowa Farmland Posts 8% 6-month Gain

Oct 09, 2012

Mike Walsten

The value of Iowa farmland rose 7.7% from March until September, according to a survey conducted by the Iowa Farm and Land Chapter #2 REALTORS Land Institute. Couple that gain with the 10.8% rise found in the September-March survey indicates a statewide average increase of 18.5% for the year ending September 1. All nine Iowa crop reporting districts showed an increase. The district gains ranged from 5.0% in south central Iowa to an increase of 10.8% in the southwest district for the March to September period.

The survey pegged the statewide average value of high-quality cropland at $10,445 an acre, the first time the statewide average has exceeded $10,000 an acre. The average value of medium-quality cropland was pegged at $7,877 an acre while the value of low-quality cropland was placed at $5,314 an acre. Non-tillable pasture is pegged at $2,518 an acre, up 7.7% for the six-month period. Timber land was pegged at a statewide average of $2,089 an acre, up 2.9% for the six-month survey period.

The northwest district reports the highest average price for high-quality cropland at $11,908 per acre. The lowest average value is found in the south central district at $7,822 an acre. Seven of the nine crop districts report an average value in excess of $10,000 an acre in the value of high-quality cropland.

Send me an email if interested in seeing a copy of my newsletter, LandOwner.

 

Rural Mainstreet Index Sees Rebound in Farmland

Oct 03, 2012

Mike Walsten

A bank-based farmland values index has firmed reversing a downward trend triggered by this year's drought. The farmland-price index portion of Creighton University's Rural Mainstreet Index (RMI) reversed course in September and climbed to 61.6, reports Creighton University economist Dr. Ernie Goss who conducts the monthly survey. The rise left the index at its highest level since May of this year and reversed three-months of decreases recorded by the index. The index was 52.8 in August.

“Bankers in some parts of the region are reporting farmland prices as high as $20,000 per acre.  Despite the drought, farmers continue to put more air into the farmland price bubble.  This is the 32nd consecutive month that the farmland-price index has risen above growth neutral.  The farm-equipment-sales index rose to growth neutral 50.0 from August’s very weak 38.3,” said Goss. 

This month, bank CEOs were asked to project farmland price growth for the next year.  There was a great deal of variation across the 10-state region with an average gain of approximately 3% expected. Areas that suffered the most from the drought were expected to grow the least.  Approximately 13% of the bankers expect price declines over the next year.  This is up from 9% this time last when we asked the same question.

The RMI, which ranges from 0 to 100 with 50 representing growth neurtral, was up slightly for September at 48.3, from 47.1 in August and 47.9 in July. However, it was the third straight month the index has been below growth neutral. Observes Goss: “The drought continues to dampen economic activity for businesses linked to agriculture such as ethanol, and agriculture-equipment sellers.  I expect food processors to take a hit later in the year as higher food prices work their way through the system.” 

This month the survey asked bankers about the impact or expected impact of the implementation of the Dodd–Frank Wall Street Reform and Consumer Protection Act on their bank’s costs. Bank CEO’s, on average, expect their bank’s costs to grow by approximately 9% as a result of Dodd-Frank.  Roughly 6% anticipate an increase of more than 15%, 36% expect an expansion of 10% to 15% with the remaining 58% forecasting an upturn of 2% to 9% resulting from the implementation of Dodd-Frank.  

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

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