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Agricultural site appraisal

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Stephen J. Vertin MAI

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Illinois
Over the years I have done some agriculture appraisals (maybe 20 to 30). Some years more than others and some years not at all. It has been about three years since my last. However, I recently took in a considerably large agricultural site as part of an estate I am working on.

The USDA Web Soil Survey is amazing. It has improved dramatically since my last visit. Great data but I need some help with cost. Hoping someone with recent agriculture cost information can help. This 400 acre site was farmed until 1999-2000. Farmer got old, retired and passed in 2007. Land was ok farm land but areas were rocky and not well irrigated. Only about 300 acres would be usable. It would be on the lower end of average for the county (lower western Michigan).

The 8 to 9 years that passed, since the parcel was last productive, has not been long enough to grow any substantial foliage but there would be cost to bring back to farming condition. Any estimates of cost (general rule type stuff), I fully realize there are a lot of variables but this is nothing unusual, would be greatly appreciated. The land is relatively level with few trees and or streams or low lying areas. There are wood lands but I am not valuing the timber.

Usable farm land in the area is still increasing in value (about the only thing in Michigan that is) but unused land such as the subject has remained stagnant. If it is financially feasible, the highest and best use is cultivation. Need some cost to determine this.
 

Howard

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Missouri
Over the years Ag appraisal is about all I've done....sometimes 15 to 20 per month.

First check to see if this place is maybe in the Conservation Reserve Program (CRP). A 10 year lease of sorts to the government. Local Farm Service Agency (or client) should be able to tell you. If not, I find it odd that a productive farm would have sat idle that long. With crop prices the way they have been, prospective tenants would have come knocking (unless the owner was a total whack job and nobody wanted to deal with him).

You don't say what crops, what the potential yields, etc. might be, but with the right manager, it might be possible to find tenants who will bring it back from the dead in exchange for a longer term lease, at no out of pocket cost to the landowner. Would be in our area anyway.

Beyond that, assuming no legal limitations on use (that CRP thing again...or something like it), comp it to similar farmed dirt at the low end of the range for condition. Or, if really marginal as cropland, consider a different HBU. Like deer pasture (recreation).
 

Terrel L. Shields

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Arkansas
The USDA recently posted a state by state report on land values and leases. Progressive Farmer mentioned it. think there are links to the report from PF. I don't remember which issue...within the past 4 - 6 or so.
 

Stephen J. Vertin MAI

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If not, I find it odd that a productive farm would have sat idle that long. With crop prices the way they have been, prospective tenants would have come knocking (unless the owner was a total whack job and nobody wanted to deal with him).
Never met the farmer. He may have been crazy or simply dying. His heir (his son) is a surgeon in Chicago (a hundred miles or so away). Of course this is not exactly conducive to renting farm land in a timely manner given distance. Further I am sure he had other pressing issues. With that said, people do not always act in their own best economic interest, in family matters.
You don't say what crops, what the potential yields, etc. might be, but with the right manager, it might be possible to find tenants who will bring it back from the dead in exchange for a longer term lease, at no out of pocket cost to the landowner. Would be in our area anyway.
Alfalfa hay 4 tons, Bromegrass-alfalfa hay 3 tons, Canarygrass hay 3 tons, Corn silage between 17 and 130 tons (weighted average 55 tons), Soybeans between 75 and 100 tons (weighted average 85 tons), Winter wheat 35 to 40 tons. All are non-irrigated figures. Soybeans have the highest yield. Thereafter it is price speculation.
Beyond that, assuming no legal limitations on use (that CRP thing again...or something like it), comp it to similar farmed dirt at the low end of the range for condition. Or, if really marginal as cropland, consider a different HBU. Like deer pasture (recreation).
As you pointed out crop prices are at all time highs driving up land value. All comparables sold within the last three years have been ready for planting. Land values for similar soil content sites is $1,800 to $2,500 per acre. However there are high humus sites (literally black soil) selling for as high as $4,000 per acre. There is no way to determine HBU without cost of re-tilling and fertilization. That is why I am asking cost. Since you do so many do you have a ball park figure?
The USDA recently posted a state by state report on land values and leases. Progressive Farmer mentioned it. think there are links to the report from PF. I don't remember which issue...within the past 4 - 6 or so.
Do you have more specific information. The USDA's web site is as big if not bigger than HUD's you could spend weeks researching the thing.
 

stefan olafson

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Apr 2, 2003
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North Dakota
Stephen,

I've appraised ag property since 1979 but haven't run into this specific type of problem?

I'm more of a realist when it comes to some appraisal problems, I like to take the math out of the equation, because it sometimes mucks up the water to the point you can't see where you're going.

In similar situations I've stopped at a few neighboring farms and asked the producers what they would charge to break up the ground for me, a potential new operator. I've let them know that I'm appraising the land for the estate and need to know if it's practical to reintroduce the land into a productive use?

Sometimes the neighbors or people in the neighboring community are your best source for information. Who knows, maybe the land is just not good land and hasn't been in production because it never produces a good crop? There are areas in my area of work where land adjacent to each other have dramatic different Productivity Ratings or yields, given similar farming practices.

Good Luck!
 

Stephen J. Vertin MAI

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Jan 17, 2002
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Certified General Appraiser
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Illinois
Tim:

In my first post I say:
The USDA Web Soil Survey is amazing
Your link is to said site but it is not working. For anyone interested a better link maybe:

http://websoilsurvey.nrcs.usda.gov/app/

You are correct. It is great. No doubt about it. But it does not have cost information. Not good for what I am trying to estimate.
 

Stephen J. Vertin MAI

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Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
Sometimes the neighbors or people in the neighboring community are your best source for information. Who knows, maybe the land is just not good land and hasn't been in production because it never produces a good crop? There are areas in my area of work where land adjacent to each other have dramatic different Productivity Ratings or yields, given similar farming practices.
Asking the neighbors is not a bad suggestion. Wish I would have thought about it while out there. I will keep it in mind next time. The USDA indicates yields to specific sites now. You should check it out if you have not been using the Web Soil Survey talked about above. All you do is out line your subject or comparables and it will tell you soil type, yields, and tons of other data. The only problem is it can only outline rectangles and squares. But the great thing is it is very site directed not just general to the area. My usable soil is not unlike many other sites in the area as far as yield content (see post #4). It just needs to be re-tilled and fertilized (of course some brush and very small tree removal also).
 

Jerry Dell

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Jan 28, 2002
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Alabama
Stephen, to the right of the rectangle window is another window which will let you draw irregular lines (much of time works better than rectangle button). Also I would talk to county agent about cost of improving land.
 

Stephen J. Vertin MAI

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Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
Jerry:

Thanks for the info. I will definitely call. I tried the window you are talking about and it did not work. Possibly it was down last time I tried. Have you used it in the past?
 
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