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August 2009 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.

Corn Belt Land Values Post 3% Annual Decline But Remain Stable With First Quarter

Aug 28, 2009

Mike Walsten

Farmland values in Illinois, Indiana, Iowa, Michigan and Wisconsin slipped 3% on an annual basis in the second quarter of 2009. That's according to the quarterly survey of ag bankers conducted by the Federal Reserve Bank of Chicago. While values fell versus July 1, 2008, the survey found values held steady when compared to the first quarter of 2009. On an annual basis, farmland values in Iowa and Michigan lost the most ground, down 5% versus a year earlier, while those in Illinois and Wisconsin eased just 2%. Indiana, however, posted a 2% gain compared to July 1, 2008.

Looking ahead to the third quarter of 2009, most survey respondents anticipated farmland values to remain stable, the bank said. Only 1% of respondents forecast an increase in land values while 28% expected a decrease. Click here to read the complete report.

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

 

Analyst Waves Warning Flags On Export-Lead Recovery

Aug 27, 2009

Mike Walsten

We gladly admit we are happy that we are seeing some signs of recovery in our economic data. But we are still frankly concerned about how long it will take for the economy to really firm up and generate momentum. This analysis piece from Ambrose Evans-Prichard of The Daily Telegraph of London casts into question the idea that the U.S. and world economies will soon return to the level of activity which existed prior to the financial melt-down. The keys to his analysis are: 1) Japanese exports continue to decline, and 2) The Baltic Dry Index, which measures freight rates, has fallen almost continually for eleven weeks. The author sees these as signs the world economy is slowing, not firming, and that China's economy is cooling. These do not suggest that a return to robust global trade will occur any time soon. Click here to see the full story.

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

 

Colorado Bank Failure Could Mean Disaster For Farmers, Ranchers

Aug 27, 2009

Mike Walsten

There's no word yet on the fate of 418 bank loans held by farmers and ranchers that were set to be auctioned August 18 by the Federal Deposit Insurance Corporation (FDIC). According to The Denver Post, the auction was part of the liquidation process of New Frontier Bank in Greeley, Colo., which failed in April. The FDIC was set to auction the loans via the internet. The outlook for the farmers and ranchers holding the loans was not optimistic since 70% the loans were listed as non-performing, meaning they were 60 or more days deliquent at the time of the bank failure. Please click here for the full The Denver Post story.

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

 

Farmland Values Stable To Slightly Weaker Across Northern Plains, Northern Great Lakes and Texas

Aug 24, 2009

Mike Walsten

Two more Fed bank surveys show farmland values across the northern Plains, Minnesota and Texas were steady to slightly weaker during the second quarter of 2009. That's according to the quarterly surveys of ag bankers conducted by the Federal Reserve Bank of Minneapolis and the Federal Reserve Bank of Dallas. The Minneapolis bank serves Minnesota, Montana, North Dakota, South Dakota, northern Wisconsin and the upper peninsula of Michigan. The Federal Reserve Bank of Dallas serves Texas, northern Louisiana and southern New Mexico.

The Minneapolis Fed said non-irrigated farmland and ranchland declined 2% during the quarter while irrigated cropland held steady. Click here to see the report.

The Dallas Fed said dryland cropland held flat during the second quarter while irrigated cropland slipped 1%. The report also indicted ranchland rose 1.1%. Click here to see the Dallas bank's report.

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

 

Fed Survey: Farmland Values Stabilize In Plains

Aug 14, 2009

Mike Walsten

Farmland values across the central and southern Plains held firm during the second quarter of 2009, according to the quarterly survey of ag bankers conducted by the Federal Reserve Bank of Kansas City. The bank serves Kansas, northwest Missouri, Nebraska, Oklahoma, Colorado, Wyoming and northern New Mexico.

The bank says non-irrigated cropland values were flat compared with a year earlier. The survey found a 2.4% rise in irrigated cropland versus a year earlier. It reported a 1.5% increase in ranchland values versus a year earlier. The bank says the supply of farms for sale remained limited. Renewed interest from non-farm investors along with robust farmer demand helped support famland values, it says. The majority of survey respondents felt farmland values would hold steady over the next few months, with very few contacts expecting further value gains in value.

Click here to see the bank's report.

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

 

1,600 Acres Up For Auction In Illinois

Aug 13, 2009

Mike Walsten

1,600 acres of flat, productive Illinois farmland with excellent access to rail and interstate highways will go under the gavel September 10. The land is being sold by the bankrupt VeraSun Energy Corp., which put the land together with the intention of building an ethanol plant on the land located near Granite City. The land to be sold is located in three counties -- Madison, Montgomery and Vermilion. Just over half of the land is located near the St. Louis area.

The first offering features 487 acres, all contiguous, mostly all tillable, on the southern edge of Litchfield in Montgomery County. The land has easy access to I-55 and excellent rail access. The property, which is nearly all tillable, will be offered in 11 tracts, combinations and in its entirety. Tract sizes range from 2 acres to 83 acres. A farm home plus outbuildings and 17,000 bu. storage are included.

The second offering is 380 acres, all contiguous, mostly all tillable, wedged between two rail lines on the northern edge of Granite City in Madison County. It will be offered in eight tracts ranging from 1.2 acres to 230 acres, combinations and in its entirety. There are two homes on the property. The land is near a Lowe's and Wal-Mart so there is the opportunity for industrial or commercial development.

This third property is 733 acres on the south edge of Tilton, which is just south of Danville in Vermilion County. Like the other properties, the 733 acres is all contiguous and nearly all tillable. Tract sizes range from 35 acres to 250 acres and will be offered by tract, in combination and in its entirely. Like the other tracts, there is rail and interstate highway access.

Handling the auction is Schrader Real Estate & Auction Co., Inc., Columbia City, Ind., and Westchester Auctions, LLC, Champaign, Illinois.

The land will be auctioned in two sessions with the Madison and Montgomery County tracts sold at 9 a.m. at the Staunton Knights of Columbus Hall in Staunton, Illinois. The Vermillion County property will be sold at 6 p.m. (CT) at the Beef House restaurant near Covington, Indiana.

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

 

Investors Size Up The Land Market

Aug 07, 2009

Mike Walsten

It's instructive to see what non-farm investors think about farmland ownership. Here are a couple of recent blog postings about Canadian and U.S. farmland selected by the website SeekingAlpha.com. Seeking Alpha is a website read heavily by money managers, research analysts, investment bankers and individual investors. It selects articles for posting from market blogs, money managers, investment newsletters and from other financial experts. Seeking Alpha says they have more than 3,000 contributors. Keep in mind all items represent opinion and analysis by the author.

I'm highlighting to two recent blogs posted on the website. The first is written by a blogger named Kalpa reflecting on the 3.2% decline in U.S. farm real estate values in 2008 reported by USDA this week. (Check my August 4 blog.). You can read her comments here. I posted an earlier blog from Kalpa on July 20 in which she explained why she thought farmland values would decline. I offered my tempering views on her negative analysis in that blog, which you can read here.

The second blog features an investor who looked at the investment performance of Canadian farmland. You can read his analysis here. His analysis does a good job of telling the Canadian land market story. Keep in mind that the data he uses is "as of" Dec. 31, 2008 so it does not catch any setback in values which have likely occured in 2009. Farm Credit Canada will release that data soon and I will update you when they do.

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

 

USDA: Farm Real Estate Declined 3.2% in 2008

Aug 04, 2009

Mike Walsten

The value of all farm real estate, which includes all land and buildings on farms, averaged $2,100 per acre as of January 1, 2009. That's down 3.2% from 2008, according to USDA's annual survey of land values and cash rents. Keep in mind the eight-month lag in releasing the data from the "as of January 1" date. But the survey does pick up the weakness that swept across the farmland market the last third of 2008. It also shows the Plains states held values firmer than areas more heavily impacted by the overall economic downturn and floundering housing market, such as the Northeast, Cornbelt and Mountain regions.

The full USDA/NASS report can be found here.

The report also indicated that cash rents for cropland rose $4.50 per acre, or 5.3%, while pasture rents remained unchanged for the 2009 crop and grazing year. Cropland cash rents paid in 2009 average $90 per acre, compared with $85.50 per acre in 2008. Pasture cash rents average $10.50 per acre, consistent with the 2008 price but above the 2007 price of $10.00.

USDA said the 3.2% decrease in the value of all farm real estate from 2008 is the first decline since 1987. Regional changes in the average value of farm real estate ranged from virtually no change in the Northern and Southern Plains regions to an 11% decline in the Mountain region. The highest farm real estate values remained in the Northeast region at $4,830 per acre. The Mountain region had the lowest farm real estate value, $922 per acre.

Both cropland and pasture values are also down from the previous year, USDA said. Cropland values declined by $110 per acre (3.9%) to $2,650 per acre. In the Cornbelt region, the average value decreased 4% from the previous years, to $3,870 per acre. However, in the Northern Plains and Delta regions, cropland values rose 1.6% and 0.6%, respectively.

Pasture value declined by $20 per acre (1.8%) from 2008 to $1,070 per acre. The Mountain region had the largest percentage decrease in pasture value, 16% below 2008.

The contraction in the overall economy has caused less commercial and residential development in many regions. Livestock and crop commodity prices have decline from a year earlier, thus producers and investors are less optimistic than a year ago, said. A decrease in the demand for recreational land has also contributed to the overall decrease in land values, said USDA.

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

 

Business Week Looks At Investment Funds Buying African Farmland

Aug 04, 2009

Mike Walsten

Here is an in-depth look at governments and funds investing in agricultural land in third-world nations. The story originally appeared on Spiegel Online, Europe's largest newsmagazine. The piece was translated into English by Business Week, which you can read by clicking here.

It is intriguing. It highlights the benefits to both investors and local countries from the infusion of capital, technology and management skills as African nations try desperately to upgrade their ability to feed their own people. But it also highlights the potential cultural distruptions that can result with the arrival of these new landowners, a "new colonization" it is suggested. Plus, the story highlights the potential political risks faced by these large investors, whether private individuals or nations.

There are lots of take-aways from the article. Here are two:

1) Large amounts of new money are being or will soon be poured into boosting agricultural production in Africa. This means demand for inputs used everyday by U.S. farmers will go up. Most critical will be demand for fertilizer. That doesn't bode well for the price of fertilizer in the years ahead. And, if "cap and tax" becomes law, the extra penalty tax levied on anhydrous ammonia, etc. will only drive up costs further -- costs non-U.S. farmers will not have to pay. That means tighter margins for U.S. farmers and that's negative for land values.

2) Thank goodness for our mature political and judicial system. Yes, there is plenty of uncertainty right now. So far, though, we can trust our land deeds and titles and know there is a court system available for redress. One of the basic issues facing the governments and investment funds looking at African land is simple -- it's clear title to the land. Who really owns it. And, where do you go when someone has taken your property illegally or failed to honor a contract? Those are uncertainties I cannot imagine operating a farming operation under and I'm thankful I don't have to face.

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

 

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