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May 2010 Archive for Your Precious Land

RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 40 years.

Average Cash Return To Iowa Farmland 7% Since 1970, ISU Research Finds

May 28, 2010

Mike Walsten

The average annual cash return to an acre of Iowa farmland was 7% for the period of 1970 to 2009, according to research conducted by Iowa State University. Extension Economist William Edwards and Extension Value-Added Specialist Don Hofstrand looked at average cash rental rates and land values published annually by USDA, not Iowa State University data, in conducting their review. The lowest annual cash return was 3.8% posted in 2008 and the highest was 9.6% recorded in 1987. Edwards and Hofstand said the low 2008 return was due to land values rising faster than rental rates while the high 1987 rate was because land values declined faster than rental rates during the crisis of the 1980s. 

Their research also looks at average cash returns and land appreciation during various periods, such as the "Boom Period" of 1970-1981 and the "Recovery Period" of 1988-2003 to name two. They also look at returns based on various farmland purchase dates.

It is interesing perspective. You may access the full report by clicking here.

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

Gains Noted In Texas Irrigated Cropland and Ranchland Values

May 28, 2010

Mike Walsten

Both irrigated cropland and ranchland values in Texas rose during the first quarter of 2010, according to a survey conducted by the Federal Reseve Bank of Texas. The bank serves all of Texas plus northern Lousiana and southern New Mexico. The survey indicated the value of dryland cropland slipped, however.

The survey found the value of dryland cropland slipped 0.7% during the first quarter of 2010 compared to the previous quarter and fell 4.3% versus a year earlier. On a district basis, dryland cropland slipped 0.4% on a quarterly basis and 4.2% on an annual basis. The value of irrigated cropland across Texas rose 1.9% during the first quarter versus the fourth quarter of 2009 and rose 1.5% on an annual basis. On a district basis, irrigated cropland gained 1.7% during the quarter and 0.6% for the year. Texas ranchland rose 3.3% on a quarterly basis and 9.2% on an annual basis, according to the survey. For the district, ranchland gained 4.7% for the quarter compared to the previous quarter and increased 8.9% for the year.

The Fed bank stated: "The first-quarter survey indicates growing optimism in the Eleventh District agricultural community. A wet fall and winter has provided much needed soil moisture, ending one of the worst droughts on record for the district. It has also boosted pasture conditions, alleviating high supplemental feeding costs, which, along with rising cattle prices, has improved the outlook for the district’s livestock industry."

Please click here to access the full report.

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

Corn Belt Farmland Posts 4% Annual Gain

May 21, 2010

Mike Walsten

The value of "good" agricultural farmland rose 4% for the year ending April 1, states the regular quarterly survey of agricultural bankers conducted by the Federal Reserve Bank of Chicago. The Fed bank serves the northern two-thirds of Illinois and Indiana, all of Iowa, the Lower Pennisula of Michigan and southeastern Wisconsin. The survey also found cash rental rates rose 1%, down dramatically from 2009.

Survey respondents said demand to purchase farmland during the first quarter of 2010 strengthened from a year ago, driven primarily by demand from farmers. The survey also found the amount of farmland for sale and the number of farms sold declined in the first three months of 2010 relative to the same period in 2009. The vast majority of the bankers responding to the survey anticipate stable land values during the second quarter of 2010, the Fed bank said.

The survey reported the following annual gains by state: Illinois, 4%; Indiana, 7%; and Iowa, 8%. Wisconsin recorded a 1% decline in values on an annual basis, but indicated values rose 2% during the first quarter of 2010.

Click here for the full report.

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

Average Cash Rent In Iowa Reaches $184 Per Acre

May 18, 2010

Mike Walsten

Cash rents in Iowa average $184 for 2010, according to the annual survey of cash rental rates conducted by Iowa State University. That compares to $183 for 2009 -- an increase of 0.5%. The survey found cash rents both increased and decreased across the state, depending on the area. For instance, average cash rents rose by $6 in both the northeast and southwestern crop repording districts and by $5 an acre in the south central district. These increases represented percentage gains of 3.2%, 3.5% and 3.4% respectively. The northeast district reached $192 an acre, the southwest district $176 and the south central district $151 an acre.

However, the north central district fell $5 an acre, 2.6%, to an average of $191 an acre; the southeast district declined $4 an acre, 2.3%, to an average of $169 an acre; the central district eased $2 an acre, 1%, to an average of $195 an acre; and the west central district slipped $1 an acre, 0.5%, to an average of $195 an acre.

Five of the state's nine crop reporting districts recorded an increase in average cash rents while four reported a decline. The highest average cash rent was reported in the east central district at $196 an acre up $3, or 1.6%, an acre versus last year. The highest average cash rent last year, $197 an acre, was reported in the central district, which reported a decline of $2 an acre on average this year.

There are plenty of details in this report, which you can access by clicking here. The report itself is based on the data supplied by 1,249 individuals -- 45% farmers, 31% landowners, 9% professional farm managers, 11% lenders and 4% other professions.

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

Plains States Bankers Report Rise in Ranch And Farmland Values

May 17, 2010

Mike Walsten

Farm and ranchland values in the Central and Southern Plains rose during the first quarter of 2010, according to a survey of agricultural bankers conducted by the Federal Reserve Bank of Kansas City. The survey found non-irrigated cropland rose 2.8%, irrigated cropland rose 2.5% and ranchland rose 1.6% versus values of a year earlier. The Kansas City bank serves Kansas, northwest Missouri, Nebraska, Oklahoma and the mountain states of Colorado, Wyoming and northern New Mexico.

Led by Nebraska, ranchland values posted their strongest gain in more than a year as income prospects for the livestock sector improved, the bank reported. The survey indicated demand for cropland was strong during the quarter, driven primarily by farmer demand.

Most survey respondents indicated they expected farmland values to hold stready during the second quarter. Nine percent of survey respondents, mostly from Nebraska, said they expected farmland values would rise during the second quarter. Five percent, mostly from Oklahoma, said the expected farmland values would decline. Indeed, Oklahoma reported a decline of 0.8% in the value of non-irragated cropland and 0.7% in the value of ranchland compared to a year ago.

The mountain states of Colorado, Wyoming and northern New Mexico reported a decrease of 2.9% in the value of non-irrigated cropland and a decline of 1.4% in the value of irrigated cropland versus a year earlier. Nebraska reported gains of 6.2%, 4.6% and 6.1% respectively in the value of non-irrigated cropland, irrigated cropland and ranchland.

Click here for the full report.

I will have more details in the next issues of my newsletter. If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

 

Land Values Rise Nearly 4% In Brazil

May 11, 2010

Mike Walsten

Rural land values in Brazil have remained stable to even increased, according to Dr. Michael Cordonnier, Soybean and Corn Advisor, Inc., and a consulant to LandOwner Newsletter. Dr. Cordonnier points to data from the consulting firm AgraFNP which says the average price of rural land in Brazil rose 3.9% the first two months of 2010 compared to the same period a year earlier. The firm pegged the average price at R$4,500 per hectare or US$1,023 per acre. Land used for sugarcane production is some of the most expensive land in Brazil, whereas unimproved pastures are some of the cheapest, the report states.

The most expensive land in Brazil is found in the southern region which includes the states of Parana, Santa Catarina and Rio Grande do Sul. During the first two months of 2010, the average price of rural land in that region was R$9,486 per hectare or US$2,168 per acre, which was up 7.5% compared to a year earlier.

Southeastern Brazil, which includes the state of Sao Paulo, had the second most expensive land at R$7,868 per hectare (US$1,798 per acre), which was up 3.1% from the previous year.

In the center-west region, which includes Mato Grosso, the average price was R$3,487 per hectare (US$797 per acre), up 3.8% compared to a year earlier. In northeastern Brazil, the average price was R$2,028 per hectare (US$463 per acre), which was up 4%. In northern Brazil, the average price was R$1,423 per hectare (US$325 per acre) which was up 5.7%.

The exchange rate used was 1.75 Braziliam reals to 1 dollar.

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

Fund Managers Seek Safety, Returns In Farmland

May 10, 2010

Mike Walsten

Safe, predictable returns. Following last week's gyrations in the financial markets fund managers more than ever appreciate the perceived safety of farmland ownership. At least that was the theme coming out of a recent confab of farmland fund investors in New York. Here are several stories filed from that conference.

It's all about safety, with a hefty focus on South America. That's the thrust of this story carried by Reuters.

Farmland fundaments are strong, according to this report carried on AgWeb.com.

Farmland values are expected to rise as the general economy continues to recover, says this report from Bloomberg.

Meanwhile, the next issue of LandOwner will include further details of rural land values in Texas and take a closer look at the premium currently being paid for high-quality land in Iowa. If interested in seeing a copy of my LandOwner newsletter, just drop me an email at landowner@profarmer.com or call 800-772-0023.

Two Sales Reports Suggest Strong Demand

May 04, 2010

Mike Walsten

Two recent auctions, one in Georgia the other in Indiana, underline the strength that's returned to the farmland. Both auctions were conducted by Schrader Real Estate & Auction Co., Inc., Columbia City, Indiana. The Indiana auction featured cropland and some picturesque homesights and cattle facilities. The Georgia auction offered 4,900 acres of primarily timber and was conducted with the timber-auction firm Woltz & Associates, Roanoke, Virginia. Below are the press releases from Schrader concerning both auctions.

Indiana farmland auction draws crowd of 250, resulting in $3.7 million sale

FAIRMOUNT, Ind. (April 22, 2010) – Monday's auction of a 681-acre farm attracted a crowd of more than 250 people – including 76 registered bidders – resulting in a sale for a total price of more than $3.7 million.

The outcome re-confirmed the recent strength in prices of quality farmland, according to Rex Schrader, president of Schrader Real Estate & Auction Company. “The price per acre definitely indicated that farmland prices are higher than in the fall of 2009. Demand is strong, and the number of farms on the market remains at record lows,” said Schrader.

The local bidders dominated the early bidding, which reached a total of $3,067,000 on 15 individual tracts. After larger bidders began making offers on combinations, the final total came to $3,717,000.

“Almost all of the cropland went for $5,607 per acre to one investor who had searched diligently for a farmland investment that met his requirements,” said Schrader. “We had  spirited competition between this buyer and several local bidders. The result underscores the strength of the market and the quality of the land, which had been in one family for three generations,” he said.

In addition to the large cropland sale, there were six other successful buyers for homesteads, woodland, and a cell tower.  The main homestead last occupied by Lloyd Campbell sold for $250,000 to a local family, and the cell tower sold for $100,000 to an out-of-state investor.

The land was owned by the Lloyd and Charlotte Campbell Trust. Campbell, who died in November 2009, had been very active in selling feeders and buying fat cattle from many area cattlemen while working many years for the Emge Packing Company. Three of his four sons were able to attend the auction, traveling from their respective homes in Tennessee and California.

Georgia land auction draws big crowds, resulting in sale of  4,900 acres over two days

DUBLIN, GA. (April 17, 2010) – Hunters, investors, timberland buyers and other bidders snapped up approximately 4,900 acres of land in a two-day auction of South Georgia forest land April 9-10, as two of the nation's leading land auction companies combined forces to sell the land for Rayonier.

The sale, which included sessions in Waycross, Ga., on April 9 and in Dublin, Ga., on April 10, resulted in a combined sale price of more than $6.3 million in the Woltz & Schrader auction. The auction attracted capacity crowds on both days.

“It was a very successful auction. We had sought to create a level playing field between large buyers and those who wanted smaller amounts of land, and that worked out just as we had hoped,” said Jim Woltz, president of Woltz & Associates. “For most of the two days, we had a tug-of-war between bidders seeking to buy large combinations of tracts and those seeking just 100 acres or so.”

“We offered the land in 106 tracts, and we had more than 40 different successful buyers, so the bidders seeking smaller amounts of land more than held their own against the larger investors,” said Gene Klingaman, vice president of Schrader. “This served to create more competition, ensuring that the high bids would represent fair values based on today's market conditions, so we were pleased with the outcome.”

Rayonier accepted more than 86 percent of the total bids based on value, said Woltz. “Additional offers on additional land are being considered,” he said.

The auction included land in 16 counties throughout Southeast Georgia.

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

The Saudis Are Coming

May 03, 2010

Mike Walsten

Saudi investors are taking a look at direct investment in the U.S. food chain to assure that country's food supply, according to this article. For decades the country has focused on boosting its own production, trying to be self-sufficient. But, according to the article, the country realizes the limitations it faces on water supplies is too much of a hurdle. The new focus is to invest directly in food companies and sign direct contracts with U.S. producers to grow crops dedicated to Saudi firms.

Click here for the full story, which ran in the Saudi Gazette..

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

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