Ag News this Morning Rural Dirt up 16% to 25% How do you.

[Ray Miller]

On the Ag New this morning, the report is out from the Farm Bureau that Rural Dirt is up 16% to 25% across the state last year. Areas around Madison, Milwaukee, Appleton, La Crosse showing a 33% to 40% increase in some cases.

The reasons given were increase demand for row crop ground and competition from people wanting to live on the outskirts of the larger cites with some acreage.

Will it continue?? What say you?

Food and Feed Grains down the limit on Friday. Overnight trading over the weekend show this same. They are saying the Markets will open down again today.

Reason given is China was dumping on the futures market Sounds like traders/middlemen/investors taking the profit on the up swing in the market over the last several months. If this continues what will that do to AG ground value? With the cost of production another point made on the Ag News this morning. Will the farmer/rancher still be able to show a profit and pay for the high price ground?

Are middlemen playing in the grain and oil markets the real cause of this run up in value? Just like they did in the sub-prime real estate market?

How are you really able to establish a future value on rural property for ERC work with this kind of roller coaster in the market place?

 

[Crunch Hardtack]

How are you really able to establish a future value on rural property for ERC work with this kind of roller coaster in the market place?

An appraisal is an opinion, just collect as much relevant data as you can and then offer your opinion of what will happen in the future as far as price trends go, but remember, in some parts of the nation we are in uncharted territory.

There was an article recently that mentioned Ohio had a net loss of 209,000 jobs since 2000. In some parts of our state a certain percentage of homes will not sell until the price drops to an absurdly low level. So I do an ERC appraisal and indicate the future value of a home is going to be 200k. Other houses sell but that one just sits there due to a lack of buyers. Finally, somebody picks it up for 90k. Does that make you a bad appraiser? Not necessairly; provided you did your homework but the ERC outfit that hired you may see it differently. Such is life.

Although not a farmer, I can do basic math and I cannot for the life of me figure out how farmers can remain profitable paying some of the ag land prices they pay for acreage in my area. That's a bubble that may end up bursting as well.

 

[MNRural]

Our ag. land market, 50 miles west of the Minneapolis area, has been driven by 1031 tax deferred investors. Their only motivation appears to have been long term appreciation, tax savings, and no plan for future disposition. Prices went up 10-15%/year during the peak of the last building boom, 2003-2005.

Currently, prices appear to have stabilized, but the volume is down so low that it is difficult to track any trends, up or down or flat. Assessors indicate values are still increasing (as they (assessors) always do).

I dont see a rush of expansionist ag buyers due to the high land prices. The small farmer doesnt appear to be making more; they are just shuffling more money in and out. Ask any farmer how much it costs per hour to run a tractor or combine. They now know exactly. (I know, they will find a way to complain about something, even when times are at their best!).

 

[stefan olafson]

In NE North Dakota it appears the larger farmers are getting larger and the smaller ones are leaving the business. It's the same in NW Minnesota also, but there haven't been as many high sales on the Minnesota side for some reason?

You can bet you bottom dollar that spring wheat will be fence row to fence row this spring, hard red was selling over $20.00 a bushel mainly because there was none available. Next fall I'm betting some farmers will store their grain for the run up and hopefully it will happen?

Agricultural operations are starting to resemble large multi national companies with operations in North and South America, separation between the production side of the operation and the selling side with specialists either hired or on contract.

Prices are higher on food, fuel, and ag inputs, which will in turn remove some more small operators. Back in the early 1960's where I grew up there was a farmstead of active farmers every mile or so. Now it's between ten and twenty five miles between farms. My elementary grade school class, in the small town of Mountain ND had seven members. Now the schools have consolidated with five or six towns and still only six or seven students. The rural landscape of North Dakota is getting more and more vacant.

 

[Stone]

Around the bigger cities, it isn't just folks who want to live nearby, it is frequently investors who buy the ag lands then hold them while renting them out. The rent doesn't have to be high, either, as they continue to get assessed under the use-value regs. Land that is worth a ton of cash doesn't hardly get taxed at all. I love when I appraise a large tract that is worth a multiple of my property's value, yet I'm paying more taxes due to the use value laws that now include ag-forest lands.

 

[Michigan CG]

http://www.nass.usda.gov/Data_and_Statistics/Quick_Stats/

Jan 31, 2003 Corn $2.13/bu Soybeans $4.64/bu
Jan 31, 2008 Corn $5.37/bu Soybeans $11.73/bu

Iowa farm land price up 13.6% from 2006-2007.

On a state wide basis high grade fields with averages over $160/bu/acre (which is wimpy for parts of the state) sold for $2,790/ac in 2003; $4686 in 2007. I have seen close to $7,000/ac in counties where yields are around 220-240/bu/ac for corn.

Average bu/ac for Iowa corn: 2003 -- 157 bu, 2007 -- 171 bu. soybeans 2003 -- 32.5 bu, 2007 51.5 bu.

For Ray, Wisconsin corn 129 bu in 2003 and 135 bu in 2007. Soybeans have remained virtually unchanged.