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June 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.

Pension Fund Manager Confirms Desire to Own More Farmland

Jun 30, 2010

Mike Walsten

A key investment manager of the massive TIAA-CREF pension fund recently confirmed his desire to add more farmland to the fund's investment portfolio. Jose Minaya, who heads the fund's investments in agriculture, told Bloomberg News "we don't have enough" farmland in their portfolios. He indicated that TIAA-CREF wants to add more farmland because it diversifies their portfolio since farmland has low correlation with other asset classes and is an inflation hedge. He went on to say that "farmland is also a store of wealth. It is kind of like gold."

Click here for the full story, which ran in Investment News.

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

Will Brazil Shut The Door On Foreign Ownership Of Farmland?

Jun 23, 2010

Mike Walsten

Brazil wants to tighten restrictions on foreign ownership of farmlands in its nation, the Agrarian Development Ministry told local media yesterday. According to Stan Lehman of the Associated Press, ministry spokeswoman Denise Mantovani confirmed published remarks by Minister Guilherme Cassel, who said the government does not want foreigners to buy agricultural land in Brazil. Included in the published reports is a potential threat to non-Brazilians already owning farmland in Brazil.

"We do not need foreigners to produce food in Brazil," Cassel told the business newspaper Valor Economico. "This is the policy of President Luiz Inacio Lula da Silva. Because of food security, Brazilian lands must remain in Brazilian hands," he said.

Mantovani said 10 million acres (4 million hectares) of land had been registered by foreigners as of 2008 and that between 2002 and 2008, foreigners invested $2.43 billion to purchase land. According to Valor Economico, the decision to put a lid on foreign ownership of land is due to rising world demand for food, water and natural resources.

According to the AP report, Mantovani said that current law says large rural properties can only be purchased by Brazilian citizens or residents.

"But foreigners often bypass that rule by setting up companies in Brazil, which are controlled abroad, to purchase land. This is a foreign company and this is what we want to control. I am not a xenophobe but our land is finite. The population grows and demands food,” the minister said.

Mantovani said that representatives from several ministries were preparing a constitutional amendment to further restrict foreign ownership of land.

She said the amendment being drawn up “could include the revoking of land titles already purchased by foreigners.” She did not provide details.

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

Wall Street Journal Discovers Farmland

Jun 21, 2010

Mike Walsten

Farmland's steady return in today's low-interest-rate environment was the focus of a feature by Jilian Mincer in the June 19 issue of the Wall Street Journal. Fully hyped stories in the popular media can sometimes be the signal a move in commodities is about to end. But this piece avoids the hype and deals with the basics of farmland ownership with a caution at the end. You might be interested in what the story says to non-farm investors.

Click here to read the story.

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

Survey: Cropland Values Rise 5% to 6% In Northern Plains, Northern Corn Belt

Jun 16, 2010

Mike Walsten

Irrigated cropland rose almost 6% from a year ago and 2% from the prior quarter as of March 31, 2010, says the Federal Reserve Bank of Minneapolis. The quarterly survey found the increase was most dramatic in North Dakota, which said irrigated cropland jumped 28% from a year earlier. The bank survey found non-irrigated cropland rose 5.3% compared to a year earlier. However, the survey found non-irrigated cropland decreased 3.2% in northwest Wisconsin and 1.8% in Montana. The survey indicated average cash rents on cropland rose across the Fed bank's district, which includes Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin and the Upper Peninsula of Michigan. The bank says cash rents on ranchland fell 6.4% from the previous quarter and 4.5% from last year.

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.

South Dakota Farmland Posts 5% One-Year Gain

Jun 16, 2010

Mike Walsten

Posting its slowest rate of increase since 1996, South Dakota recorded an annual increase of 5.2% from 2009 to 2010, according to the South Dakota Farm Real Estate Market Survey. From 2001 to 2008, agricultural land values increased more than 10% each year, including more than 20% in 2005 and again in 2008, write Larry Janssen, Burton Pflueger and Emmanuel Opoku, who conducted the survey at South Dakota State University. From 1991 to 2000, annual increases in South Dakota farmland values varied from 4% to 10%.

The survey found cropland values increased at a higher rate than for any other agricultural-type land. Cropland increased 6.8% statewide compared to increases of 4.6% for hayland and 1.9% for rangeland. The strongest increases (gains in excess of 10% for each land use) occurred in the north-central region, the survey notes. Land value changes were positive for each type of land use in the southeast and northwest regions. In all other regions, land value changes were mixed.

Farm expansion and investment potential continue as the major reasons for purchasing farmland, the survey found, while retirement from farming, settling estates and realizing gains from high sale prices are the major reasons for selling farmland.

Click here to receive the full the 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.

Demand For Quality Midwestern Farmland Outpaces Supply

Jun 14, 2010

Mike Walsten

Here is further confirmation of what we'be been reporting in LandOwner Newsletter since last fall -- demand for high quality farmland is much stronger than for lower-quality ground. There are several reasons for the additional strength. There is very little high quality land on the market, for one. For another, expansion-minded farmers are very aggressive but they are also selective -- they want to buy land but they don't want to burn up their buying power on lower-quality ground in case a better-quality piece of property comes available later.

Confirming what we've been reporting is this press release from Farmers National Company, the large farm management firm out of Omaha, Nebraska. In the release, Lee Vermeer AFM, ALC and vice president of real estate operations for the firm, says: "We are seeing value on the top quality ground at or even above the peaks we saw in 2008. In some cases, it is beyond that point, above the $7,000 per acre mark. The market for these properties is strong and, based on economic indicators, we project that to continue." He also added that properties that are only partially tillable or have lower-quality soils take longer to sell.

For the full press release, including more detailed regional reports, click here.

For a chart showing average prices for high quality versus low quality land by state, click 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.

Survey: Farmers Have Aggressive Land Buying Plans

Jun 02, 2010

Mike Walsten

The farmland market is about to get much more active, according to a recent survey of farmer attitudes conducted by Rabobank. The large Dutch firm has conducted its U.S. Farm & Ranch Survey semi-annually since fall of 2008. In it's spring survey the bank discovered "two and a half times more producers plan to purchase, rent or lease new land compared to previous Rabobank U.S. Farm and Ranch Surveys". The number planning to buy new land registered at 15% versus 6% recorded in the previous survey. The bank also notes the current survey is the first to report a significant change in land plans.

Meanwhile the number planning to sell farmland in the next year is also at its highest rate, the survey indicated, at 6%.

Growers most likely to be the most active in the land market were (no surprise) the largest farms -- those with more than $1 million in gross farm income. The suvey found 20% of this group intended to buy while 11% intended to sell.

The bank pointed out the North Central Region "stood out as an active region with 20% of producers intending to buy and 9% intending to sell.

You may access Rabobank's press release here.

You may access the full Rabobank survey here. Note: this is a very large file and may a little time to download.

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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