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February 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.

Southern Corn Belt/Mid-South See 4% Rise in Farm and Ranchland Values

Feb 28, 2013

Mike Walsten

The value of southern Corn Belt and Mid-South farm and ranchland rose by 4% during the final quarter of 2012, states a recent report from the Federal Reserve Bank of St. Louis. That quarter-over-quarter gain follows a 5% rise posted during the third quarter of 2012.

The St. Louis Fed bank joined other regional federal reserve banks in 2012 by issuing quarterly updates on agricultural credit conditions and farmland banks. In just its third report, the bank indicates the value of district quality farmland rose 7% from the previous quarter while the value of district ranchland rose 2%. The bank does not yet have the data to issue year-versus year comparisons.

The St Louis Fed bank district is broken into four regions:

St. Louis region -- the southern third of Illinois plus the eastern two-thirds of Missouri: The St. Louis region reports an average value of $6,340 an acre for quality farmland and an average cash rent of $214 an acre. It lists the average value of ranchland in its region at $2,728 an acre with an average cash rent of $71 an acre.

Little Rock region --the western two-thirds of Arkansas: The region pegs the average value of quality farmland at $2,557 an acre with an average cash rent of $91 an acre. Ranchland is listed at an average of $2,150 an acre with an average cash rent of $51 an acre.

Louisville region -- the southern third of Indiana and western half of Kentucky: The average value of quality farmland is reported at $5,000 an acre with cash rent at $202 an acre on average. Ranchland is listed at an average of $2,050 an acre with average cash rent at $82 an acres.

Memphis region --the boot heel of Missouri, western third of Tennessee and northern half of Mississippi: The average value of quality farmland is listed at $3,194 an acre with average cash rent at $139. Ranchland is reported at $1,894 an acre with average cash rent at $60 an acre.

For the district as a whole, the average value of an acre of quality farmland is $5,230 an acre with cash rent at an average of $187 an acre. the district-wide average of ranchland is $2,396 an acre with average cash rent at $67 an acre.

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.

Creighton Survey Finds Corn Price Tipping Points

Feb 21, 2013

Mike Walsten

A drop in corn prices below $3. 86 a bu. would threaten farm loan repayments, according to the survey of Midwestern rural bankers conducted by Creighton University's Dr. Ernie Goss. The regular 10-state monthly survey of rural community bankers asked bankers what corn price would put farm loan repayments in jeopardy. In addition, the survey asked bankers the breakeven corn price for farmers that rent their land. On average, bankers estimated that breakeven at $4.84 per bushel.

In his comments included with the release of the monthly Rural Mainstreet Index (RMI) conducted by Goss, he notes: "The University of illinois Department of Agricultural Economics projected 2013 corn prices of $5.73 per bushel. Given this projection along with current strong balance sheets and cash flow of farmers, agriculture repayments and profitability for farmers [in 2013] should be very similar to 2012. Even so, significant changes in Federal Reserve policy or international trade disruptions could pose a threat to the Rural Mainstreet economy in 2013."

In the February update, the RMI, which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to a healthy 58.2 from 55.6 in January. “The February RMI is down only slightly from the reading for February of last year. I anticipate that economic growth for the region will continue on a slow but positive pace,” says.

After peaking at 83.9 in November of last year, the farmland-price index has now declined for three straight months, observes Goss. "While the index declined, it was still strong at 67.0, down from January’s 71.5. This is the 37th consecutive month that the farmland-price index has been above growth neutral.  The farm equipment-sales index rose to 65.8 from 63.8 in January. Based on our surveys over the past several months, 2013 is stacking up to be a good year for farm income according to bankers.  This is showing up in healthy growth in farmland prices and the sales of farm equipment,” states Goss. 

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

Great Plains Farmland Values Surge 19% to 30%

Feb 15, 2013

Mike Walsten

Farmland values across the Great Plains boomed 19% to 30% higher in 2012, according to a survey of bankers conducted by the Federal Reserve Bank of Kansas City. The Fed bank, which serves Kansas, northwest Missouri, Nebraska, Oklahoma and the mountain states of Colorado, Wyoming and northern New Mexico, reports the value of district irrigated cropland exploded by 30% on an annual basis, Nearly half of that increase (14%) came during the fourth quarter alone, the bank states. In addition, the bank says cash rents on irrigated cropland rose 20% by the end of 2012 compared to a year earlier.

The bank says the value of non-irrigated cropland in the district rose 25% in 2012 and the value of district ranchland rose 19%. Cash rents for non-irrigated cropland rose 14.6% and 12.9% for ranchland. Survey respondents report farmers composed 74% of all farmland buyers. The bank observes that the value of irrigated cropland has out-paced the rise in the value of non-irrigated cropland by 3% since the onset of the drought. Prior to the drought, the value of both types of cropland rose at approximately the same rate, the bank says.

Kansas reports the highest percentage increases in the value of farmland with non-irrigated cropland up 29.2%, irrigated cropland up 33.8% and ranchland up 26%. Nebraska follows with gains of 26.8% for non-irrigated cropland, 32% for irrigated cropland and 27% for ranchland. Northwest Missouri reports a rise of 24.2% in the value of non-irrigated cropland and a 10.3% boost in the value of ranch/pastureland. The mountain states report a rise of 20.6% in the value of non-irrigated cropland, a 31% increase in the value of irrigated cropland and a gain of 10% in the value of ranchland. Oklahoma reports an increase of 9.3% in the value of non-irrigated cropland, a boost of 10.9% in the value of irrigated cropland and a rise of 11.6% in the value of ranchland.

Click here for the full report.

Send me an email if interested in seeing a copy of my newsletter, LandOwner.

 

Central Corn Belt Farmland Values Jump 16%

Feb 14, 2013

Mike Walsten

The value of central Corn Belt farmland rose 16% in 2012, according to a quarterly survey of ag bankers conducted by the Federal Reserve Bank of Chicago. It's survey found the pace of the increase in farmland values increased during the fourth quarter of 2012 -- a 7% rise during the quarter compared to the previous quarter. Iowa posted the strongest percentage annual increase, 20%, while Illinois and Michigan both registered 18% annual gains. Wisconsin reported an 11% rise while Indiana listed a 10% increase. On a quarterly basis, Illinois reported a 9% increase while Iowa listed an 8% rise followed by Indiana with a 7% gain, Wisconsin a 6% increase and Michigan a 3% rise.

The Federal Reserve Bank of Chicago serves the northern two-thirds of Illinois and Indiana, all of Iowa, the lower peninsula of Michigan and southeastern Wisconsin.

Bank business economist David B. Oppedahl states that after adjusting for inflation, district farmland values rose 14% in 2012. That percentage gain is the third largest in 35 years, he notes. District farmland values have posted a cumulative rise of 52% over the three-year period 2010-2012, which matches the fastest percentage gain of the 1970s boom (1974-1976), he observes.

Some 71% of responding bankers expect farmland values to be stable in the first quarter of 2013 while 28% expect values to increase during the first quarter. In addition, Oppedahl observes: "With the USDA predicting net farm income to rise 14% from 2012 to $128.2 billion in 2013, there
would seem to be at least another leg to be run as farmland values continue their upward race."

Click here for the full report.

Send me an email if interested in seeing a copy of my newsletter, LandOwner.

 

Huge Pension Co. to Fund Farmland Research Center

Feb 12, 2013

Mike Walsten

The massive TIAA-CREF financial services company has pledged $5 million to establish a center for farmland research on the campus of the University of Illinois, according to a published report in the Champaign-Urbana News Gazette. The newly created center will conduct research on farmland prices, rental agreements, taxation and more. The projected annual budget for the TIAA-CREF Center for Farmland Research at UI will be $200,000 funded, initially, by income from the endowment pledged by TIAA-CREF.

This is welcome news. Faculty and staff at the University of Illinois have a long history of excellent research on farmland prices and rents. (In addition, they have worked closely with the state's farm manager/rural appraiser organization - the Illinois Society of Professional Farm Managers and Rural Appraisers - ISPFMRA - in gathering and disseminating critical farmland values and rental information.) The same can be said for many of the land-grant universities across the Midwest, including Purdue University, Iowa State University, University of Nebraska and The Ohio State University to name a few.. This new dedicated effort will be welcome as we deal with the implications of $10,000-$15,000-an-acre cropland and $500 cash rents.

By the way, the ISPFMRA will hold its annual meeting this week in Champaign. Yours truly will be there because it features excellent content and outstanding networking opportunities with knowledgeable land professionals. The Iowa Chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA) held their annual meeting last week and it, too, was excellent with strong content and quality networking. These are excellent organizations if you are interested in learning more about farmland values and rental trends.

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

Irrigated Texas Cropland Rises 11% versus Year Ago

Feb 07, 2013

Mike Walsten

The value of Texas irrigated cropland rose nearly 11% versus a year earlier, according to a survey of ag bankers conducted by the Federal Reserve Bank of Dallas. The quarterly survey pegged the average value of an acre of irrigated Texas cropland at $1,966 an acre, up 10.7% versus a year ago and up 3.4% from the third quarter of 2012. The survey also found the value of of Texas dryland cropland rose 3.4% an annual basis and 0.8% for the fourth quarter of 2012. The lighter increase for dryland cropland versus irrigated cropland is due to the continuing drought that has enveloped most of Texas for more than a year. Texas ranchland, meanwhile, finished 2012 unchanged from a year earlier and up 0.8% versus the third quarter of 2011.

Click here for the full district report.

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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