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October 2013 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.

ISU's Duffy Asks "Have Iowa Farmland Values Reached the Top?"

Oct 22, 2013

Mike Walsten

Whether or not farmland is in a bubble or have topped out has been a popular question for the past four years. Land values have roared higher as people attempted to answer the question. But now it we are seeing real weakness in portions of the Midwestern market -- primarily in Iowa and southern Minnesota where growing conditions have been especially difficult this year. Meanwhile, farm incomes are expected to decline in 2014 and possibly beyond. With that backdrop in mind, Iowa State University Extension Economist Mike Duffy takes a long look at whether or not farmland values have topped. Click here to read his analysis.

Hint: Farmland values have probably topped out for now. How far they far is another question. It looks like the market is positioned for a correction, which it can handle, rather than a full-scale collapse like the market experienced in the 1980s and the 1920s-30s.

Get the full report here.

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

Big Test Ahead for Illinois Farmland and Central Plains Ranchland Markets

Oct 16, 2013

Mike Walsten

Upcoming auctions of large, unique properties in central Illinois and in western Kansas and Nebraska will prove interesting tests for each area's land markets. On Nov. 1, The Loranda Group of Bloomington, Ill. will auction the 960 contiguous acres of the Roller Trust Farm located near Newman, Douglas Co., Illinois. The farm contains approximately 947 tillable acres and is improved with grain bins and storage sheds. It features high-quality soils with a topography that ranges from nearly level to gently sloping and recently installed underground tile. The farm has a long history in the area, dating to the late 1800s. It is famous for producing corn yields in excess of 200 bu. per acre during the mid-1960s and hosted several farm field days as a result.

Meanwhile, the Central Plains will see the auction of more than 40,000 acres of western Kansas and Nebraska ranch and farmland starting Oct. 22. Offered by Hall and Hall Auctions, Eaton, Colo., the first auction on Oct. 22 features the Bliss Ranch located in the Sand Hills of Nebraska. The ranch, west of Valentine, will be offered in three tracts ranging from 1,466 acres to 2,842 acres, all comprised of heavy grass. A ranch-style house is included as well.

Following that on Nov. 7 & 8, the 33,667-acre Hager Farm and Ranch will be auctioned. It is comprised of 16,346 acres of farmland and 17,321 acres of ranchland located in six counties throughout Western Kansas. The auctions will be held in Leoti, Meade and Scott City, Kan., with the equipment auction set for Dec. 4.

The size of these offerings makes them especially notable. It will be interesting to see how each area's market handles the sudden availability of quality farm and ranchland.

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

Banker Survey Continues to Find Slowdown in Farmland Price Growth

Oct 08, 2013

Mike Walsten

An index of banker sentiment continues to show a decline in the pace of growth in farmland prices. The farmland-price index maintained by Dr. Ernie Goss, Creighton University economics professor, as part of the monthly Rural Mainstreet Index (RMI) declined for the ninth time in the past ten months. The September index fell to 54.0 from 55.8 in August, he reports.

"Our farmland-price index has been above growth neutral (50) since February 2010. However, lower farm commodity prices are slowing growth in farmland prices," he notes. "The Federal Reserve's decision to make no changes to their expansionary monetary policy is definitely bullish for agriculture. Most economists, including me, expected the Fed to begin tapering QE3. Thus, the Fed's lack of action in September will be supportive of agriculture commodity prices, farm income and farmland prices in the weeks and months ahead," says Goss.

The growth in the RMI also slowed in September, Goss reports. The index, which ranges between 0 and 100 with 50 representing growth neutral, declined to 52.4 from 55.8 in August. "Lower grain prices this year are slowing the growth in the Rural Mainstreet economy," Goss states. "Additionally 39.4% of bankers this month indicated that lower grain prices have encouraged farmers to store grain and hold for higher prices later. This strategy is likely to payoff for the farmer given the Federal Reserve's decision this week to continue their current stimulus program. This $85 billion per month Fed bond program will be supportive of higher agriculture commodity prices and the farm economy in the months ahead," states Goss.

This month bankers were asked how much farmland cash rents expanded in their area over the last year. On average, bankers reported cash rents grew by 9.9% from this time last year.

Farm equipment sales for September once again declined. The index slumped to 48.3 from 49.2 in August. "Lower agriculture commodity prices are weighing on farmer confidence and their willingness to purchase big ticket items such as agriculture equipment," said Goss.
 

The Rural Mainstreet Index (RMI) covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy, says Goss who, along with Bill McQuillan, president of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.

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

Iowa's CSR Gets a Makeover

Oct 02, 2013

Mike Walsten

A mainstay in evaluating Iowa farmland is undergoing a makeover, which has resulted in many questions and confusion on the part of landowners, real estate pros and county tax assessors. The item in question is the Corn Suitability Index or CSR which rates Iowa soils from 5 to 100. The system was originally developed in 1971 as a tool in tax assessment for real estate tax purposes and is used throughout the state by county tax assessors. Tinkering with such a widely used and long-held standard is precarious.

But that is what has happened as improved technology in rating soils has become available along with improvements in the corn-growing climate in north-central and northwest Iowa. As a result, a new index has been developed by Iowa State to replace CSR. It is called CSR2.

We've written about the coming shift to CSR2 in previous issues of LandOwner over the past few years. And portions of the state got a preview of the new CSR2 last year as it was unveiled in portions of the state. But the full roll-out has been held off until now. So hence the statewide focus on CSR2.

Jim Jensen, an extension farm management field specialist with Iowa State University, has written an excellent explanation on the CSR2. You can read his piece by clicking here.

Full article:

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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