From Progressive Farmer:

New economic drivers are emerging that will forever change the landscape of agriculture and the value of farmland.

Location and yield will always be important, but changes in crop and animal genetics, climate shifts and new technologies are escalating in importance. Subtle and decades in the making, these market movers will create opportunities and challenges for both buyers and sellers of farmland.

North Dakota’s Joe Morken has been watching land prices in the Red River Valley increase for more than 25 years. The third generation to farm in the Casselton area, Morken says a shift out of wheat and into corn has been pivotal for his family’s nonirrigated operation.

“You can’t understate the value of genetics when it comes to corn production here,” he says. “Back in the 1980s, if you could break 100 bushels to the acre on corn, that was really doing something. Today’s earlier-maturing genetics allow us to double that some years. Add to that the growth we’ve seen in the ethanol industries in this region, and we have good reason to keep planting corn. It’s changed the focus of our business model.”

Those opportunities haven’t come without challenges. Morken says extreme volatility in fertilizer prices has been especially tough to adapt to as a corn producer. Last year, he booked urea at $1,000 per ton; this year, he’s looking at $400 to $500 per ton. The other challenge is labor. Morken says hiring drivers to keep trucks and grain carts running for combines in a tight harvest window is a major hurdle. But, the area’s increased productivity and cropping options have positively impacted land values in the region, he believes.

“In the Red River Valley, it’s not just corn that pays the bills, it’s soybeans, and it’s sugar beets,” he notes. All of which has drawn more interest to this land market.

This year, the state’s annual report on rental rates showed a wide range for nonirrigated cropland, from as low as $29.20 per acre to up to $150.50 per acre. In Cass County, where Morken farms, average rents were reported at $120 per acre. The USDA’s annual “Land Values” report, released in August, put North Dakota cropland at an average price of $2,660 per acre, marking a 13.2% increase over 2022.

“Land prices have increased substantially,” Morken explains. “In my opinion, strong profits in 2022 are one of the key reasons. Beans, corn … all commodity prices have been up. So, there is more money out there. And, on the eastern side of the Dakotas, we see a strong investor side to the market pushing prices even higher. They come out of the cities, buy land and don’t even farm it.”

From Minnesota Ag Connection:

The U.S. Department of Agriculture Deputy Secretary Xochitl Torres Small today announced an investment of $27.9 million across 45 organizations that teach and train beginning farmers and ranchers, including programs for U.S. veterans who are entering into agricultural careers and starting new farming businesses.

“The next generation of farmers and ranchers hold the promise for future American agriculture and rural prosperity,” said USDA Deputy Secretary Xochitl Torres Small. “Under the Biden-Harris Administration, USDA is providing our newest producers with the support they need to succeed and the educational resources to guide their operations on the path toward long-term sustainability and profitability.”

This investment is part of the National Institute of Food and Agriculture’s (NIFA) Beginning Farmer and Rancher Development Program (BFRDP), which supports a wide range of professional development activities and topics, such as managing capital, acquiring and managing land, and learning effective business and farming practices.

“This investment reflects USDA’s commitment to helping new farmers and ranchers realize their dreams,” said USDA Chief Scientist and Under Secretary for Research, Education an Economics Dr. Chavonda Jacobs-Young. “As the average age of our U.S. producers continues to increase, USDA is accelerating efforts to provide meaningful support to a rising cadre of farmers and ranchers-including military veterans interested in starting new careers after their service-so they can cultivate the skills needed to be productive, profitable and resilient.”

According to USDA National Agricultural Statistics Service’s Ag Census data, one-third of the United States’ 3.4 million farmers are over the age of 65.

From Illinois Farmer Today:

U.S. producers tour a retail outlet in Cartagena, Colombia, during the U.S. Meat Export Federationââ ¬â„¢s Latin American Product Showcase in July. Photo courtesy Mark Read

Midwest farmers are popping up in Panama, Egypt, Colombia and South Korea more often these days. 

Grain and livestock farmers frequently travel with national organizations and state commodity groups to explore export opportunities and to tout the value of U.S. commodities.

Mark Read, a central Illinois corn and soybean farmer, says his time has been well spent on trade missions representing the U.S. Soybean Export Council and Illinois Soybean Association.

“We need exports other than to China,” he said.

Since 60% of Illinois soybeans are exported, if something goes wrong with the main trading partner, there need to be other strong markets for soybeans, he said.

Read was in Egypt this year when the Soy Excellence Center celebrated its 100th workforce training session there. In this case, the training helped Fish World workers cut costs in feeding tilapia by 25%. And at the University of Cairo, students celebrated getting their SEC certificates in poultry production.

From farmprogress.com:

The long-anticipated farm bill extension may be in sight. On Saturday, House Speaker Mike Johnson, R-La., introduced a continuing budget resolution to avoid a Nov. 17 government shutdown. The legislation includes a provision to extend the 2018 Farm Bill for one year.

Shortly after the legislation was announced, Senate Agriculture Committee Leaders Debbie Stabenow, D- Mich., and John Boozman, R- Ark., issued a joint statement with House Ag Committee Leaders Glenn “GT” Thompson, R- Pa., and David Scott, D- Ga., praising the decision.

“As negotiations on funding the government progress, we were able to come together to avoid a lapse in funding for critical agricultural programs and provide certainty to producers,”  the Nov. 12 joint statement says. “This extension is in no way a substitute for passing a 5-year farm bill and we remain committed to working together to get it done next year.”

From agupdate.com:

Recent crop budget and return projections for the 2023 and 2024 crop years show the potential for much lower, and potentially negative, returns to corn and soybeans across Illinois.

Lower corn and soybean prices in 2023 and 2024 lead to lower returns than in 2020 to 2022, despite some declines in fertilizer costs. Production costs remain high, such that break-even prices are near $5 per bushel for corn and $12 per bushel for soybeans for 2024, assuming trend yields.

Reducing land costs, specifically rental rates, often is needed during periods of lower returns. Fixed cash rent leases, where the farmer pays the landowner a fixed rental rate, can be difficult to re-negotiate to lower levels. Traditional share rent leases provide natural risk sharing between the farmer tenant and landlord but require more intensive management by the landlord and more coordination between both parties.

The variable cash lease has been suggested as a sort of middle-ground approach that provides risk-sharing benefits while also minimizing the management requirements for the landlord.

            Graphic courtesy University of Illinois farmdoc daily

Today’s article provides a historical comparison of the fixed cash, variable cash and share lease designs.

The variable cash lease adjusts to fluctuating revenue levels, however, the traditional share lease is more highly correlated with returns since it incorporates both revenues and direct costs in rental determination.

Projections for the 2023 and 2024 crop years are for negative farmer returns under both fixed and variable cash leases, but modest positive farmer returns under a traditional 50/50 share agreement.

From farmprogress.com:

After two years of 40% and 50% gains in farmland values, the Illinois land market has stabilized in 2023.

That’s according to the Midyear Snapshot Land Values Survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers, in conjunction with Gary Schnitkey, University of Illinois ag economist.

“The market appears to be catching its breath,” says Luke Worrell of Worrell Land Services, Jacksonville, Ill., and chair of the ISPFMRA report.

In the first half of 2023, Class A and Class B farmland values have held steady, with little to no change in the “cream of the crop” land. Subsequently, there’s only been a 1% to 2% decline in marginal Class C and Class D land.

“From a values perspective, not much has changed since the calendar rolled into 2023,” Worrell adds.

Of those responding to the survey, 44% expect prices to remain the same for the rest of the year, while 36% expect prices to drop 1% to 3%.

Celebrating our Midwest State of Nebraska.  We are proud to share their efforts towards investing in the future of our youth and agriculture.

From agupdate.com:

Raising livestock of any kind requires making a substantial financial investment.

Those families who want to show animals through 4-H or FFA at their county fair know the extra expense to purchase and feed an animal, not to mention the equipment and time invested to train and prepare the animal for the show ring.

With the extra financial commitment for families, it’s no wonder that participation in the 4-H and FFA livestock projects continues to dwindle.

The Madison County Livestock Boosters has designed a unique way to lessen the financial burden of showing animals. Youth in 4-H and FFA who exhibit a large or small animal at the Madison County Fair and Rodeo receive a bonus premium, thanks to the fundraising efforts of caring adults and the unwavering support of local businesses and individuals.

Bonus premiums are given for class placings and participation in showmanship, which is a direct reflection of the time and effort an exhibitor has put in before the show.

“Less kids are in production agriculture. Our main purpose is to increase participation in showing animals at the Madison County Fair,” said Troy Patzel, one of the original founders of the Madison County Livestock Boosters program.

Patzel has seen first-hand the decline in livestock numbers at the county and state fair level. He himself showed sheep, hogs and broiler chickens as a member of the Cookies & Critters 4-H Club and Newman Grove FFA at the Madison County Fair in the mid-1980s through the 1990s.

From farmprogess.com:

In a remarkable turn of events, Missouri set a new benchmark in the farmland market this fall. A seemingly unremarkable 115 acres in Saline County, Mo., recently sold for an astonishing $34,800 per acre in late September, shattering the previous record held by Iowa at $30,000 per acre. This rapid sale, which concluded in a mere 15 minutes, was the result of a fierce bidding war between two farmers. The victor, Jeff Baxter from Carroll County, Mo., isn’t an investor but a neighboring farmer.

In August, an auction of 60 acres of Adams County, Ill., farmland brought $30,000 per acre with little fanfare.

The difference with that sale is that it was considered development ground. High prices on development ground are expected and not really newsworthy. What makes the Missouri sale stand out is that the reason for the demand for that piece of ground is not so obvious.

                         Photo by Holly Spangler

My farm management colleagues who were closer to the event don’t have much insight either. Some say it could have been 1031 exchange money; others think that perhaps ground nearer to the buyer was not as readily available. Only the buyer knows, for sure. From my perspective, it seems like a lot of money for dirt you gotta drive to.

What other reasons would drive someone to pay that much money for farmland? Here are five motivations that farm managers know can impact sales and push prices higher.

In the October 5, 2023 article from Successful Farming senior economist, Cortney Cowley of the Kansas City Federal Reserve, explains that “farm profit margins were expected to be thinner this year because of lower commodity prices and higher expenses.” According to recent surveys, there are some signs of softening in values, despite farmland values being higher than expected given the current interest rates environment. “A steady supply of land sales and strong demand from farmers has likely supported broad resiliency of real estate values.”

From fca.gov:

By unanimous vote, the Farm Credit Administration board approved a final rule governing the Farm Credit System’s service to young, beginning, and small (YBS) farmers and ranchers. The final rule, which becomes effective Feb. 1, 2024, revises YBS regulations at 12 C.F.R. part 614.

The rule has several objectives:

•  To expand the YBS activities of direct-lender associations to a diverse population of borrowers.
•  To reinforce the supervisory responsibilities of the banks that fund the direct-lender associations, and require the banks to annually review and approve the associations’ YBS programs.
• To require each direct-lender association to enhance the strategic plan for its YBS program.

“Today’s approval of a final YBS rule is the culmination of many years of hard work by FCA leadership, staff, and System institutions,” said Board Chairman and CEO Vincent Logan.

“I’m especially pleased to see the emphasis this rule places on outreach to and engagement with all populations of YBS farmers and ranchers. The System was created to serve as a safe, sound, and dependable source of credit for all creditworthy and eligible persons in agriculture and rural America,” said the chairman. “This rule will help the System better achieve that important mission.”