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August 2011 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.

Illinois Farmland Posts 14% Leap First Half 2011

Aug 31, 2011

Mike Walsten

Farmland values across Illinois are up 14% in the first half of 2011 versus a year earlier, and the average value of excellent-quality farmland has reached the $10,000-per-acre milestone. That's according to a midyear "snapshot" survey of members of the Illinois Society of Professional Farm Managers and Rural Appraisers.

According to the survey, $8,500 is the new average for farmland rated as good quality, with $7,200 the new level for average-quality farmland and $5,800 the new average for fair-quality farmland. Excellent-quality land produces more than 190 bu. of corn per acre; good-quality land, 170 to 190 bu.; average quality, 150 to 170 bu.; and fair quality, below 150 bu. per acre.

Survey respondents said the volume of farmland offered for sale in the first half of the year was up slightly versus the first half of 2010. Most expect an increase in the number of properties offered for sale in the last half of the year. They also expect that prices paid for farmland will increase during the next 12 months. One-third expect prices will increase more than 5%, while 48% expect an increase of up to 5%. Only 6% of respondents expect prices to decline.

High commodity prices and low interest rates are most commonly cited as reasons for the rise in farmland values. In that regard, 58% expect corn prices to average between $6 and $7 per bushel for the 2011 crop. For soybeans, 56% expect prices to hover between $13 and $14 per bushel.

The "snapshot" survey supplements the Society's larger and more exhaustive survey efforts conducted at year-end, which highlight statewide farmland values and cash rents in detail.

Cash Rents

Respondents also indicate they expect 2012 cash rent levels to rise versus 2011 rates. For excellent-quality farmland, respondents say average cash rent was $329 per acre in 2011, with an average of $367 an acre expected for 2012. For good-quality land, $285 was the 2011 average, with $321 expected for 2012. For average-quality farmland. $241 was the 2011 average, with $269 expected for 2012. For fair-quality farmland, $190 was the 2011 average, with $214 expected for 2012.

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

Texas Cropland Values Rise; Ranchland Values Slip; Impact from Drought Expected

Aug 30, 2011

Mike Walsten

Drought in Texas is beginning to have an impact on the value of farm and ranchland as gains in the value of cropland slow and the value of ranchland slips compared to a year earlier. That's according to a survey of the state's agricultural bankers conducted by the Federal Reserve Bank of Dallas. The bank said dryland cropland values rose 5.5% during the second quarter compared to a year earlier. Irrigated cropland is 11% higher than a year earlier. However, the value of Texas ranchland eased 0.9% compared to a year earlier.

On a quarter-versus-quarter basis, dryland cropland rose 2.9%, irrigated cropland rose 2.2% and ranchland slipped 2.3%.

Expected impacts from the drought had banker expectations for farm and ranch land values going forward thinking slightly less positive than in recent reports. Less than 10% of survey respondents anticipate an increase in values during the third quarter.

Click here for the full report.

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

Central Corn Belt Farmland Posts 17% Annual Gain

Aug 18, 2011

Mike Walsten

The value of Central Corn Belt farmland rose 17% versus a year earlier, according to a survey conducted by the Federal Reserve Bank of Chicago. The bank serves the northern two-thirds of both Illinois and Indiana, all of Iowa, the lower peninsula of Michigan and southeastern Wisconsin. The survey found "good" agricultural land increased 4% during the second quarter versus the first quarter. Further, the survey found more than 60% of the 226 ag bankers responding thought farmland values would stabilize during the third quarter while about a third thought values would move higher.

On an annual basis, Indiana posted a 21% increased followed by a 20% gain in Iowa, 19% in Illinois, 12% in Michigan and 8% in Wisconsin. Click here for the full report.

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

Now It's $14,350 Per Acre for Northwest Iowa Farmland!

Aug 15, 2011

Mike Walsten

The northwest Iowa farmland market moved to a new price level today when a local farm family paid $14,350 an acre for 153.2 acres in O'Brien County in northwest Iowa. The farm is located a little south of Sheldon and has 150.3 tillable acres and a CSR (Corn Suitability Rating) of 73.2 versus a county average CSR of 71.8. It has farm program direct yields of 122 bu. per acre for corn and 42 bu. per acre for soybeans.

Rich Vander Werff, whose Sanborn-based auction firm handled the sale, says, "Bidding began at $10,000 per acre. It look less than five minutes to get to $14,000. We had five bidders up to $13,000 per acre with several more waiting in the wings around that number. I believe this is a record price for northwest Iowa."

"Interestingly enough the family was telling me this farm was bought by their father in 1956 for $538 per acre," he tells me, "which was a record price at that time. And they tell me the sales price at that time made the headlines in the Sioux City Journal." This might possibly make the Journal again.

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

Bank Survey Finds Pace of Gains in Plains Farmland Values Slows

Aug 15, 2011

Mike Walsten

The value of Central and Southern Plains farmland rose during the second quarter of 2011, but at a slower pace than seen in previous quarters. That's according to the quarterly survey of ag bankers conducted by the Federal Reserve Bank of Kansas City. The Fed bank serves Kansas, northwest Missouri, Nebraska, Oklahoma and the Mountains States of Colorado, Wyoming and northern New Mexico.

The survey found the value of non-irrigated and irrigated cropland climbed 2.3% and 3.9%, respectively, during the second quarter compared to the previous quarter and were 20% above values of a year earlier. Ranchland values edged only 1% higher in the quarter versus the prior quarter and held at 11% above values of a year ago. Survey respondents noted the slowdown in the rate of gain in land values since the start of the year; 75% said they felt values would level off in coming months.

Bankers said the severe, lingering drought had an impact on farm incomes in the region but that impact was not uniform across the district. Nebraska, which saw plentiful rain and favorable growing conditions recorded the largest jump in second quarter cropland values and noted cropland values were 30% higher than a year- earlier (non-irrigated values up 30.3% and irrigated value up 29.1%). Nebraska ranchland values rose 16.9%, the survey indicated. In Oklahoma, however, the drought cut wheat yields and prompted herd liquidation. These tended to restrain gains in the value of farmland. That state lists non-irrigated cropland at 10.5% and ranchland 6.4% higher than a year earlier. Kansas recorded annual gains of 21.4% in non-irrigated and 15.2% in irrigated cropland with ranchland up 8.4%. Northwest Missouri reported a 16.7% annual increase in farmland values and an 11% rise in ranchland (pasture) values. The Mountain States listed gains of 11% and 10.6% respectively in the value of non-irrigated and irrigated cropland and a 9.2% rise in ranchland.

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

Illinois Study on Farmland Values: 2011 Not Like 1980s

Aug 09, 2011

Mike Walsten

The price of farmland is high, but not necessarily out of line with current economic returns. As a result, "the situation in 2011 is not like the 1980s," says an analysis of farmland values and returns by University of Illinois ag economist Gary Schnitkey.

He studied actual Illinois farmland values versus the projected value based on capitalized value using the interest rate of the 10-year Treasury note. He found that "capitalized values closely tracked actual farmland prices since the mid-1980s," he writes. "In 2010," he continues, "farmland price was below the capitalized value by $438. In 2011, the $5,800 per acre farmland price was $221 above the capitalized value of $5,579 per acre. The switch to price being above the capitalized values suggests that farmland prices are increasing quicker than there discounted returns. However, the $221 higher farmland price in 2011 is not without historical precedents. Between 2005 through 2008, the average farmland price in Illinois exceeded capitalized value."

"The last time farmland price exceeded capitalized value by a large margin was in the early 1980s, immediately prior to the large decline in Illinois farmland prices that occurred from 1982 through 1987," he continued. "Currently, the situation in 2011 is not like the 1980s. This suggests that either farmland returns have to decrease or interest rates have to increase before farmland prices fall."

Click here to read his full analysis.

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

USDA: Farm Real Estate Values Up 7%

Aug 04, 2011

Mike Walsten

The value of all farm real estate, which includes farm buildings as well as land, rose 6.8% over 2010 reaching an average value of $2,350 an acre, reports USDA. In its annual Land Values Summary, USDA said regional changes in the average value of farm real estate ranged from a 15.9% increase in the Corn Belt region to a 2% decline in the Southeast region. The highest farm real estate values remained in the Northeast region at $4,690 per acre. The Mountain region had the lowest farm real estate value, $923 per acre.


The USDA report said the value of U.S. cropland value increased by $260 per acre, 9.4%, to $3,030 per acre. Strongest gains were reported in the Northern Plains and Corn Belt regions where the average value of cropland increased 17.2% and 16%, respectively, from the previous year. However, in the Northeast and Southeast regions, cropland values decreased by 1.3% percent and 1.1%, respectively, USDA said.

Pasture values increased to $1,100 per acre or 1.9% above 2010. The Southeast region had the largest percentage decrease in pasture value, 8.4%  below 2010. The Corn Belt and Northern Plains regions had the highest percentage increase, both 6.6% above 2010.which selling some of their current holdings and buying farmland in other states and other land types.

The values reported by USDA may seem muted compared to other surveys, but the USDA report is looking at values closer to the first of the year. That means the strong run-up in the value of Corn Belt cropland that's occurred since Jan. 1 is not fully reflected in this report.

USDA did report the value of Iowa cropland rose 23.9% -- the strongest increase for any state. Other Corn Belt states reported: North Dakota, up 19.5%; Illinois, up 18.4%; Nebraska, up 17.9%; South Dakota, up 16.0%; Minnesota, up 13.5%; Kansas, up 13%; Indiana, up 9.1%; Ohio, up 8.6%; Wisconsin, up 8.2%; Michigan, up 6.1%; and Missouri, up 5.9%. In the south, Louisiana reported a 9.4% increase; Texas, 7.1%; Arkansas, 6.5%; and Mississippi, 6.3%. Oklahoma reported a gain of 2.6%. Colorado rang in a 3.9% rise in cropland values, Wyoming, 6.1% and Montana, 3.6%. Alabama registered a decline of 2.1% in value of cropland while Georgia listed a 0.6% gain. Pennsylvania reported a decline of 1.8% and New York listed values as unchanged. Washington listed a 3.7% increase; Oregon reported cropland values remained unchanged and California listed a 1.1% increase.

Click here for the full report.

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

New Trend? Investors "Adjust" Land Portfolio

Aug 02, 2011

Mike Walsten

Some savvy land investors are "adjusting" their land portfolio by selling some of their current holdings and buying farmland in other states and other land types. That's according to long-time land pro Murry Wise, CEO of Murray Wise Associates LLC, Champaign, Illinois. "An overlooked result of today's vibrant farmland market is that agricultural land now has more liquidity than ever," he states in a press release. "And that is enticing more owners to sell land they currently own and -- in some case -- buy other farms to fine-tune their land portfolios for the long run." That means lightening up on their concentration of Illinois cropland, for instance, and buying wheat-ground in the Northern or Central Plains or irrigated cropland in western Kansas.

"Farmland has always been a long-term investment, and it probably always will be. But because agricultural land has become an important component of may investment funds and individual portfolios, there is now a ready market made up of local farmers and outside investors alike," says Wise. "This makes it possible to diversity a farmland portfolio by region, crop, quality and other criteria."

"Even though recent prices on agricultural land have raised some eyebrows," Wise continues in his press release, "demand continues to strengthen. Investors and farmers frequently square off in auctions, especially when the land is offered in tracts."

Wise says his firm is gearing up for a series of seven August and September auctions featuring more than 6,000 acres in Indiana, Illinois and Missouri for a group of landowners that are making adjustments to their land portfolios. Click here for the full press release.

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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