Ranch Real Estate Blog

Farmers are typically in search of farmland to buy, but Farm Journal Economist Bob Utterback thinks maybe farmers should also consider selling.

It’s hard to find any area of the country that isn’t seeing increases in farmland values. Mike Walsten, editor of Pro Farmer’s LandOwner newsletter, keeps close tabs land values with his blog, Your Precious Land.

Here’s an overview of some recent land surveys:

Central Corn Belt Farmland Up 15% Annually, 4% for Quarter: The value of “good” Central Corn Belt farmland rose 4% on a quarterly basis during the first quarter of 2013, according to the Federal Reserve Bank of Chicago.

Great Plains Farmland Jumps 19% – 21.5%, Ranchland up 14% Q1: The value of farm and ranchland across the Great Plains rose by double-digits on an annual basis through the first quarter of 2013, according to the Federal Reserve Bank of Kansas City.

Mid-South Sees Slight Decline in Farmland Values Q1: Farmland values slipped 2.3% and ranchland fell 5.1% across the Mid-South, according to the Federal Reserve Bank of St. Louis.

Southeast Farmland Value Rises 6% in 2012: The value of good southeastern farmland rose 6.2% for calendar year 2012, according to the quarterly survey of agricultural bankers served by the Federal Reserve Bank of Richmond.

Texas Rural Land Market Sees Growth in 2012: The Texas rural land market saw a “modest expansion” in both the number of sales and total acreage transferred in 2012, reports Dr. Charles E. Gilliland, Real Estate Center, Texas A&M University.
A basic rule of investing that you do not want to sell on the way down. So if farmland is reaching record-high prices, should you be on the bidding or selling end of the transactions?

Bob Utterback, Farm Journal Economist, says an overall trend he sees coming for farmers is constantly increasing cost of production. With that figure increasing and the average price of corn trending down, Utterback believes land values will slip.

So, he asks: If you are an aggressive farmer and can tolerate it, should you let go of land right now?

“I am in the camp,” he says. “It’s probably a good time let go of land that doesn’t really fit into your operation, to build up your war chest so you can take advantage of dips in values to come back and buy the market.”

March 29, 2013 (CHICAGO, ILLINOIS) – Professionals in diverse segments of the land business including agriculture, timber, ranch, recreation, appraisals, auctions, farm managers, and investors were in full force at the one-and-only 2013 National Land Conference in Las Vegas, Nevada, March 18 through 20. Presented by the REALTORS® Land Institute, an affiliate of the National Association of REALTORS®, the best-in-the-business convened to learn, network, make deals, and have fun.

The “buzz” is that this was the best conference and is the “place to be” for land professionals. Expert speakers included world-renowned economists, a climatologist, an expert in wind and air rights, investment strategists, a mineral and gas surface use and development expert, auction professionals, timber and ranch and recreation experts, and more. The final keynote presenter, Brian Binnie, a civilian astronaut, shared his journey on SpaceShipONe.

As an attendee at the national RLI convention this year the face to face networking and discussions with peers from across the country was a wealth of knowledge everyone can carry into the remaining months of 2013. The land market continues to show incredible strength as consumers pent-up demand for real estate, goods and services is rolling along at a quick pace.

“Register for the Colorado Chapter May Marketing and Education Session”

For those of you who were not able to attend the national RLI conference we will be sharing some of this information at the Thursday May 9^th, 2013 chapter meeting in Grand Junction Colorado. Register for the chapter meeting today and send in your marketing materials early. We anticipate the meeting will be as informative, energized and positive as we experienced at the January meeting.

The market information shared and received from our peers in this type of collaborative environment is truly an accurate and real-time source of information we can all extend to our clients.  Our Colorado Chapter was represented well at the National convention with more than 13 attendees. Our chapter continues to be a model chapter for RLI National in their effort to bring new chapters together across the country.  Our collective participation as Colorado chapter members is what brings it all together!

“Accomplish the ALC…It’s yours!”

A special thanks to Todd Powers of Farm and Ranch Magazine.  Their continued support and effort this year to help members achieve the ALC by sponsoring several ALC classes is a tremendous opportunity for us all.   The Colorado chapter is working on several ALC and continuing education courses to be offered by the end of the year.

The Accredited Land Consultant (ALC) designation is an indication of the land professional who is the most accomplished, experienced, educated, and highest performing land expert.  It requires successful completion of a rigorous education program, a proven track record of performance, and are the most trusted professionals as a result of their commitment to professionalism.  Accomplish the ALC…It’s yours!

The REALTORS® Land Institute is the professional membership organization for real estate practitioners who specialize in land transactions. An affiliate organization of the National Association of REALTORS®, the Institute provides a wide range of programs and services that build knowledge, relationships, and business opportunities for the best in the land business. Through its best-in-class LandU curriculum, the REALTORS® Land Institute confers its Accredited Land Consultant (ALC) designation to only those real estate practitioners who achieve the highest levels of education, experience, and professionalism.

Last month, Landthink.com posed the question to their audience: Compared to other investments, how do you best describe land as an investment? LandThink.com, an authoritative online resource for advice, knowledge, opinions and trends related to land, is pleased to announce the February Pulse results. The informal online survey revealed that land is widely viewed as an excellent investment, compared to other investments. The results are not surprising; in a still uncertain economy, people commonly seek out safer, non-traditional ways to diversify their portfolio. Both small investors and seasoned, wealthy investors alike are making an educated decision to invest in land. Not only is land a relatively safe long term investment, but it offers folks one special thing other forms of investment like stocks and bonds cannot- enjoyment. Land owners can participate in outdoor family activities like hunting, camping, fishing and riding ATV’s, with peace of mind knowing their investment is safe and value is growing. An overwhelming 56.5% of respondents felt that land was an excellent investment.

LandThink subscribers, fans, followers and land industry professionals across the country voiced their opinion on where land stood, compared to other investments. Here’s how the results panned out:

• 56.5% said land was an Excellent investment
• 32% said land was a Very Good investment
• 8.6% said land was an Average investment
• 1.6% said land was a Below Average investment
• 1.3% sad land was a Poor investment

Source: This article was published in March 2013 Lankthink.com.

Linda Niebur put together more than $53,000,000 in farmland sales representing clients across the U.S in 2012! She has owned and worked in large farm operations, ran a successful chemical application business in the past and worked with local farmers and ranchers first hand. Her understanding of how things operate is an asset. She is a broker who is familiar with crop production, agricultural leases, water rights, conservation easements and mineral rights. Past experiences greatly enhance her knowledge of the farmland transaction processes. Email her at linda@ranchland.com.

THREE SEPARATE TRACTS WITH OVER 18,000 ACRES, PRIME RECREATION, TIMBER & GRAZING LAND

Don’t miss out on this end of year auction December 4th, 2012. The auction is three separate tracts with over 18,000 total acres. View and download maps for more details on each parcel. One of the last remaining large blocked privately held timber/recreation/hunting properties in Oregon. Timber is predominantly, Ponderosa Pine, with some Doug Fir as well. Excellent year round roads, making it accessible throughout the entire year no matter the season. The new owners will benefit from the annual growth of the timber and will be able to capitalize on the upturn of the economy as it brings about an increase in the housing starts and demand for lumber. New owners will be able to assess the highest and best use for the property which may well involve conservation easements, preservation of the steelhead and salmon streams, or harvesting of the timber. The property also includes a well-built cabin, used by the owner and outfitter, with two separate sleeping areas, kitchen, living room, and porches front and back.

TRACTS OVERVIEW

1. Stephenson Mountain Tract
• 16,980+/- acres 60 MMBF+/- of timber and excellent elk habitat
• Several springs & year round streams and creeks
• Timber is predominantly Ponderosa Pine, with some Douglas Fir
• Excellent all weather interior roads
• Cabin, used by owner and outfitter
• Leased hunting rights to same outfitter for 20 years
• Adjoins Ochoco National Forest

Privacy and seclusion, this is the property that has it all, beauty, resources, income potential. 35 miles North of Prineville, Oregon, this property is in the middle of the West’s best scenic wild lands

2. Heflin Creek Tract
• 1,000+/- acres recreation land and healthy timber
• 1.5 to 2 MMBF+/- of timber
• 40+/- acres of meadow land
• 26+/- acres of water rights
• Perimeter fenced
• Year around stream

Approximately 25 miles East of Prineville, Oregon, with access from HWY 26, in the heart of the Ochoco Mountains.

3. Garden Creek Ranch
• 640+/- acres with excellent grazing ground
• 1.2 to 1.5 MMBF of timber
• 100+ acres of meadows with excellent grass and abundant water
• 165+/- acres of water rights
• Half mile+/- of Ochoco creek runs through the property

The largest tract, the Stephenson Mountain ranch, is 16,980+- acres of thick timber, excellent elk habitat and several year round streams. 35 miles North of the town of Prineville, Oregon, this property is in the middle of the West’s best scenic wild lands. Considered a recreation paradise the property has supported an outstanding record of hunting success, with an outfitter for over 20 years. Returning clients continue to have a world class hunting adventure with overall success rates second to none.

Timber is predominantly, Ponderosa Pine, with some Doug Fir as well. The current owner has an excellent reputation in the field of forest management in the Central Oregon area and this tract is one of several they own. Excellent year round roads are on the property, making it accessible throughout the entire year no matter the season. The new owners will benefit from the ongoing growth of the timber and will be able to capitalize on the upturn of the economy as it brings about an increase in the housing starts and demand for lumber. In addition to the timber and hunting opportunity, the tract has been looked at for wind energy, as well as carbon offsets. New owners will be able to assess the highest and best use for the property which may well involve conservation easements, preservation of the steelhead and salmon streams, or harvesting of the timber.

The property also includes a well-built cabin, used by the owner and outfitter, with two separate sleeping areas, kitchen, living room, and porches front and back.

Wildlife is plentiful, with elk, mule deer, turkey, coyotes, and black bear. Whether hunting, or photography is your interest this property has a variety of terrain, from mountains to stream beds to open vistas, it is private inside this very nearly squared block of private land. With a manned lookout tower on top of Stephenson mountain (approximately 6,000 feet elevation) your investment is likely the safest property for miles.

Privacy and seclusion, this is the property that has it all, beauty, resources, income potential, and low overhead, it’s worth the look!

PROPERTY INSPECTION

Auction representatives will be on-site at the Auction Office 10:00 am – 5:00 pm daily between now thru December 4th, 2012. Roger Dryden at (541)480-4818 will be available for on-site showing of each parcel. The Auction Office is located at Sleep Inn & Suites located at 1847 N. Hwy 97, Redmond, Oregon. To schedule an appointment for a private tour please contact our office at 866-673-9270.

PROPERTY DIRECTIONS

Stephenson Mt. Tract: This tract is approximately 35 miles north of the city of Prineville, OR. Property is accessed from paved Hwy and well-maintained Forest Service Road. Tours are available through the auction office listed above (Roger Dryden @ 541-480-4818) .

Heflin Creek Tract: Take US Hwy 26 East, from Prineville, for 34.5 miles to the property on left, just beyond the Ochoco summit, at the National forest Boundary.

Garden Creek Tract: US Hwy 26 East of Prineville, go for 16 miles, turn right on Road 123, go 6 miles, property is on your left, bordering the Ochoco Ranger station.

AUCTION SITE

December 4th, 2012 the Auction begins at 4:00 PM. The Auction will be held at Phoenix Inn Suites, 300 NW Franklin, Downtown Bend, Oregon.

AUCTION REGISTRATION

Registration begins at 3:00 PM. To bid at the auction, you must first register and receive a bid number. A Bid Deposit of $5,000 (1,000 acres or less) or $20,000 (over 1,000 acres) will be required at registration and will be refunded at the close of the auction, or applied to the earnest money deposit, as appropriate. The Bid Deposit may be in the form of a certified check made payable to the auction company, or a personal or company check with a bank letter of guarantee.

AUCTION TERMS

A ten percent (10%) down payment will be due immediately upon being declared the Buyer of the real estate. The Bid Deposit will be credited toward the down payment. The balance of the purchase amount will be due at closing on or before December 31, 2012.

BUYERS PREMIUM

A 7% (seven percent) Buyer’s Premium will be added to the high bid to establish the Final Contract Price. The bidder with the high bid will be required to sign a Real Estate Sales Contract at the Final Contract Price.

BROKER PARTICIPATION

United Country–Redfield Group Auctions, Inc. in conjunction with Mason and Morse Ranch Company encourages buyer broker participation and will pay a fee to the purchaser’s Realtor/broker-subject to certain guidelines. A Broker Registration Form is required and must be received by 5:00 pm, Monday December 3rd. For information regarding broker participation guidelines please contact Susan Browning at (866) 673-9270 or e-mail: sbrowning@Redfieldgroup.com

The prognosticators looked and sounded pretty confident when they were making their predictions at the start of 2012. I suppose they can be forgiven because nobody predicted a drought at least not one as sever or so widespread. Nevertheless, drought has become the defining driver in virtually all the agricultural markets in 2012, especially on the livestock and grain side of things.

This drought has proven to be one of the most unique of recent times, as it has grown to encompass the majority of the Corn Belt.  From a historical standpoint in the grain markets the drought is most commonly compared to the drought of 1988.  Record acres were planted and another record crop was expected until hot and dry conditions have caused yield estimates to be reduced significantly.  The crop is expected to be as much as 30% smaller than anticipated and with a growing mandate for ethanol, ensuring demand prices have soared. At the time this was written December corn futures were atop of $8/bushel, and reasonable people are still predicting more upside to these historically high prices.  The beauty of grain production is that drought means higher prices, and while some in particularly hard hit areas will capture nothing more than insurance payments, the majority of producers are facing a situation where decreased yields have roughly been offset by increased prices.  Supplies are tight enough, and demand is strong enough that the market seems committed to ensuring supply and that means not only purchasing acres for next year’s planting but rewarding those who followed the market signals this year. As a result, many producers will see per acreage revenue figures exceed projections despite sharply lower yields.

While it is not difficult to see the downside to drought, some of the consequences are not so obvious.   Projections for higher food prices and the devastation that feed prices will reek on the livestock industry, has led for some to call for a suspension of the ethanol mandates. Recent studies have indicated that a suspension of the mandate could result in a reduction of corn prices by as much as $2.50/bushel.  However, the gasoline industry has structured itself around the mandates and there is simply not enough refining capacity to replace ethanol. The result is that with or without the mandate, ethanol will be more competitive with gasoline then what many people would expect, and the infrastructure of subsidized ethanol is such that it would be nearly impossible to rescind at this point. On another front, there is already a lot of discussion about whether there will be sufficient seed corn next year. Corn acreage plantings are expected to be as high as or higher than last year’s record, and the drought has reduced seed corn availability as well.

From a livestock industry standpoint, the drought has had far greater economic consequences with longer lasting effects. Drought equates to a perfect storm for the livestock industry. The market moves lower as liquidation increases, plus feed costs increase, reducing margins and cattle values at the same time.  Additionally a producer sees reduced production for several years after a drought as they must rebuild their numbers and as their land resource takes time to regain its full production capabilities after a drought.  Calf prices are inversely related to corn prices and producers are looking at increased input costs, decreased production, and reduced prices. Plus, they have the added “whammy” of selling inventory in a depressed cattle market, and when moisture conditions improve demand is expected to drive a significant bump in replacement prices. These trends are especially true in widespread droughts, which is certainly the case.  Approximately 80% of the nation’s cowherd located in areas experiencing moderate to extreme drought conditions.

As a result drought mitigation has been the focus of 2012. They say hindsight is 20/20 and this drought has emphasized how important it is to have both a grass and drought management plans in place prior to a drought.  It is those preparations that allow a producer not only to maintain their production capacity coming out of drought, but provides one with both the flexibility and tools to manage their way through a drought, rather being forced to simply react. The drought of 2012 has been especially challenging not only because of its severity but the market dynamics surrounding it. 2012 was supposed to be the first of 4-5 years of expansion and significant profits for the cow/calf sector. We entered the year with the smallest cowherd since the 1950’s and strong demand. The drought means that numbers will grow even tighter, expansion will take even longer, and that the period for record prices while delayed will also be extended by at least a year. So while the long term outlook for agriculture is extremely bullish, the short term outlook is equally exciting.  Most importantly, producers must make the right decisions about how to maintain, liquidate or rebuild inventories.  When moisture returns, bred cow prices are expected to see price levels never before attained, combine that with record calf prices and it becomes obvious that the one that emerges from this drought with the most cows and the most production capacity in tact will be huge winners. Throw in record feed prices and the uncertainty about when the drought will end and you have the makings for what is a very high stake game of poker.

Nobody at this point can say with any certainty whether 2013 will be a continuation of drought, or a return to more normal precipitation patterns.  What nearly everyone agrees on is that both grain and livestock prices should be at or near historically high price levels. From a grain production standpoint, the course is clear, plant and hope for rain. From a livestock producer standpoint, it is a much more complicated dynamic. If the drought was to persist for another year, the livestock industry would likely shrink to the point that industry infrastructure would permanently be retired and the structure of the industry altered. The short term and long term prospects for agricultural land and agricultural production have never looked better on either a macro or micro level, which creates tremendous opportunities. The key question is how one positions there operation to take advantage of those opportunities in order to maximize short term profits and long term gains.

The drought of 2012 has created a situation where the opportunity to get in on the ground floor of what promises to be a golden era for agriculture has been extended, at least for those with the wherewithal and plan to take advantage of the opportunities that exist.   A grizzly veteran of many cattle cycles and the whims of Mother Nature quoted Vincent van Gogh – “The fishermen know that the sea is dangerous and the storm terrible, but they have never found these dangers sufficient reason for remaining ashore.” He went on to explain that most of the success he had acquired was stepping forward boldly in times like these when others stand on the sidelines paralyzed by fear, or waiting for uncertainty to pass. He laughed and said I take solace in the fact that “it rains on the just and unjust alike.”    The drought of 2012 will eventually end, and with it will fade the opportunities that have been created.

Land markets keeps farm credit solid.

Compiled by staff

Published: Jan 31, 2012

The Federal Reserve Bank of Kansas City reports that strong farm income propelled farmland values to record highs and strengthened loan portfolios at agricultural banks at the end of 2011. Jason Henderson, Omaha Fed branch executive, says cropland values across the Corn Belt and northern Plains soared to all-time highs with many states posting annual value gains between 20 and 40%.

In addition, ranchland values rose sharply compared to last year as high feed costs boosted demand for prime pasture ground. Even drought-stricken areas of the southern Plains posted modest farmland value gains.

The Kansas City Bank also reports agricultural bank profits improved as borrowers repaid farm debts. In the third quarter, the return on assets at agricultural banks rose further and remained stronger than their banking peers. The share of delinquent farm real estate loans fell, and delinquent non-real estate loan volumes hit their lowest level since 2009. Bankers reported fewer loan renewals and extensions, so the downward trend in delinquency rates will likely continue.

Rising farm incomes boosted liquidity in the farm sector and slowed non-real estate lending in 2011. Agricultural bankers reported soft operating loan demand throughout the year. Meanwhile, commercial banks struggled to maintain market share. According to call report data, farm real estate loan volume at commercial banks for the third quarter was up just 0.6% compared to last year. In contrast, third quarter financial statements from the Farm Credit System reported 4.4% growth in farm mortgage loan volume year-to-date.

Looking ahead, Henderson says the number of farms on the market will likely grow in the coming year as more farmers look to capitalize on the continued surge in land prices. The economist doesn’t expect that bump in land inventory on the market to chip away at prices, though.

“Even with substantial gains so far this year, many bankers in the Kansas City and Chicago Districts anticipated that farmland values would rise further in the coming months. With farmland values reaching record highs, several survey respondents noted more landowners were putting farms on the market to take advantage of strong demand from farmers and nonfarm investors,” Henderson says. “The cost of financing farmland purchases dropped as interest rates on farm real estate loans trended down in all districts.”