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August 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.

Illinois Farmland Values Edge Slightly Higher

Aug 28, 2013

Mike Walsten

The value of Illinois farmland rose 2% to 3% the first half of 2013, according to a survey conducted the Illinois Society of Professional Farm Managers and Rural Appraisers and the University of Illinois. "On July 1, farmland prices averaged $13,200 an acre for excellent-quality farmland, $11,200 an acre for good-quality farmland, $9,000 for average-quality land and $8,300 an acre for fair-quality farmland," says survey coordinator Dale Aupperle, AFM, ARA, Heartland Ag Group LTD., Forsyth, Illinois. "This is an increase of 3% for excellent- and good-quality farmland, 2.5% for average-quality farmland and 1.9% for fair-quality land. These are not at the level of increases we've seen in recent years, but they are still upward," he notes.

"There was a tremendous push on land sales at the end of 2012 because of uncertainties concerning income tax treatment in 2013 and beyond," he comments. "This led to a great deal of farmland being sold last year that might have otherwise been available to the market in 2013. As a result, there is still a demand for farmland but not much available for sale." Looking ahead, 23% of survey respondents say they expect the volume of sales in the last half of 2013 to rise compared to the first half of 2013, while 43% expect the volume to remain the same and 34% expect less volume.

The survey, conducted in conjunction with Dr. Gary Schnitkey, University of Illinois farm management specialist, found 73% of farmland buyers are farmers and 12% are local investors.

Survey respondents are divided in how they expect prices will perform over the next 12 months. Twenty percent expect farmland prices will increase, 41% expect prices will remain unchanged and 39% expect farmland prices will decline. Of the 39% expecting a decline, 77% expect a price decrease from 0% to 5%.

Survey respondents also indicate they expect cash rents to decline slightly for 2014 compared to 2013. Respondents indicate that excellent-quality farmland had an average cash rent of $388 an acre in 2013 and expect that rent to slip to $374 in 2014. Good-quality farmland had a $332 average per acre in 2013 with an expected average in 2014 of $318 an acre. Average-quality farmland had a $318 average per acre in 2013 and is expected to average $278 in 2014. Fair- quality farmland had an average of $224 per acre in 2013 and is expected to average $212 per acre in 2014.

Note: In a normal year, excellent-quality farmland averages more than 190 bushels of corn per acre, good-quality farmland averages between 170 and 190 bushels per acre, average-quality farmland averages between 150 and 170 bushels per acre, and fair-quality farmland averages below 150 bushels per acre.

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

Growth Stalls in Central Corn Belt Farmland Values

Aug 16, 2013

Mike Walsten

Central Corn Belt farmland values stalled during the second quarter, according to the Federal Reserve Bank of Chicago. But values rose sharply on a year-over-year basis, the bank says. The bank serves the northern two-thirds of Illinois and Indiana, all of Iowa, the Lower Peninsula of Michigan and southeastern Wisconsin.

According to its quarterly survey of ag bankers, the value of "good" farmland rose 17% when compared to a year earlier but remained unchanged compared to the first quarter of 2013. On a quarterly basis, the survey indicates farmland values slipped 1% in Illinois, rose 5% in Indiana, held steady in Iowa, decreased 7% in Michigan and rose 1% in Wisconsin. On an annual basis, farmland values increased 17% in Illinois, 21% in Indiana, 18% in both Iowa and Michigan and 7% in Wisconsin.

Survey respondents also indicated they expect farmland values to remain flat during the third quarter of 2013. Eight-six percent of survey respondents said they looked for farmland values to remain steady during the third quarter while 7% expected values to decrease and 7% looked for values to increase.

Farmland values in the southern Corn Belt and Mid-South, however, rose during the second quarter compared to the first, according to the Federal Reserve Bank of St. Louis. That bank serves the southern thirds of Illinois and Indiana, eastern Missouri, western Kentucky and Tennessee and northern Mississippi. It's quarterly survey found quality farmland values across the district rose 11% compared to the first quarter of the year. It also shows values increased 20.6% compared to a year earlier. The bank also states the value of district ranch or pastureland rose 1% on an annual basis.

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

Central, Southern Plains Post Strong Annual Gains in Farmland Values

Aug 15, 2013

Mike Walsten

Farmland values in the Central and Southern Plains continue to post sharp annual gains, according to the Federal Reserve Bank of Kansas City. In its latest survey of agricultural bankers in Colorado, Kansas, western Missouri, Nebraska, northern New Mexico, Oklahoma and Wyoming, the value of nonirrigated cropland rose 18.3% through the second quarter of 2013 while the value of irrigated cropland surged 25.2%. Ranchland values also jumped, up 14.4% versus a year earlier.

Leading gains was western Missouri which saw the value of nonirrigated cropland boomed 25.8%. Kansas follows with an increase of 22.2% followed by gains of 14.9% for Nebraska, 14% for the Mountain States of Colorado, northern New Mexico and Wyoming and a 10% rise for Oklahoma. The strongest percentage increases were reserved for irrigated cropland values. The Mountain States report an annual increase of 33.2% followed by Kansas with a 29.9% gain, Nebraska, 22.6% and Oklahoma with a 19.3% increase.

In its report, the bank says: "The expectation of weaker farm income, however, does not appear to be a main factor underpinning farmland values. In ranking factors that contribute to farmland values, more district bankers pointed to the overall wealth level of the farm sector, the current low interest rate environment and a lack of alternative investment options. Fewer bankers cited farm income expectations as a primary driver. Land-lease revenue from mineral rights was noted as a lesser factor and, while real-estate tax policies may influence the timing of farmland sales, they were not seen as a major contributor to farmland values."

"While most bankers expected farmland values to remain at current levels, an increasing number of respondents felt farmland values may have peaked," the bank states. "Compared with previous surveys, fewer bankers expected farmland values to keep rising. More bankers also expected farmland values to drop after harvest likely due, at least partially, to expectations of lower farm income. Among bankers anticipating a decline, though, a majority estimated farmland values would fall less than 10% during the next year. Very few bankers expected that farmland prices would drop more than 10%."

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

Indiana Farmland Value Rises 15% to 19%

Aug 08, 2013

Mike Walsten

The value of Indiana farmland rose 14.7% to 19.1%, depending on soil productivity, for the year ending in June. That's according to the June 2013 Purdue Farmland Value Survey released today. The survey, conducted by Purdue extension agricultural economist and Kim Cook, research associate, also found statewide cash rents rose 9.4% to 10.9% annually.

According to the survey, the value of top-quality farmland posted the strongest increase -- up 19.1% to an average value of $9,177 an acre. Average-quality farmland rose 17.1% to a value of $7,446 an acre. Poor-quality ground increased 14.7% to an average value of $5,750 an acre. Top-quality farmland averages 193 bu. per acre while average-quality ground averages 160 bu. and poor-quality farmland averages 127 bu. per acre.

The survey found top-quality farmland posted the largest increase in average rent, up $29 an acre, or 10.9%. Average rent for average-quality farmland rose $21 and acre, up 10.1%, and rent for poor-quality farmland rose $15 an acre, up 9.4%. The estimated cash rent was $294 an acre on top-quality farmland, $229 an acre for average-quality farmland and $174 per acre for poor-quality farmland. Cash rent per bushel of corn ranged from $1.37 to $1.52 per bushel.

The West Central region of the state continues to have the highest per-acre farmland values, the survey indicates. The value of top-, average- and poor-quality farmland was $10,948, $8,955 and $7,206 per acre, respectively. The lowest farmland values are in the southeast region where top-, average- and poor-quality farmland have values of $4,873, $3,904 and $3,065 an acre, respectively.

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

U.S. Farm Real Estate Posts 9.1% Gain

Aug 02, 2013

Mike Walsten

The value of all farm real estate in the U.S. rose 9.4% on an annual basis through June, according to USDA's Land Values Report released today. According to the survey, the value of all land and buildings on farms averaged $2,900 an acre versus a revised $2,650 last year. Regional changes in the average value of farm real estate ranged from a 23.1% increase in the Northern Plains region to no change in the Southeast region. The highest farm real estate values were in the Corn Belt region at $6,400 per acre. The Mountain region had the lowest farm real estate value at $1,020 per acre.

The United States cropland value increased by $460 per acre, 13%, to $4,000 per acre. In the Northern Plains and Corn Belt regions, the average cropland value increased 25.0% and 16.1%, respectively, from the previous year. However, in the Southeast region, cropland values decreased by 2.8%.

U.S. pasture values increased 4.3% to an average of $1,200 an acre. The Southeast region had the largest percentage decrease in pasture value, 1.5%, while the Northern Plains had the highest increase at 18.4%.
 

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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