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rswfarms
Senior Contributor

Farmland Ceiling Raised…Again/Faust

Say Faust, another farmland value report, don't think I posted this one. Appears 2013 will be another year of farmland value increases, but the weather will probably come into play in 2013. I am thinking of buying just an 80 that is supposed to come up for sale in my area in the next few months. Kinda goes against my grain buying in a market like the one we have today in Iowa. The last farm I bought was in 1999, a 1/2 section for only $712,000. Now, that $712,000 will not even buy 80 acres. This 80 would be a nice addition to my operation and level out my Estate Planning. It's a 84 CSR dirt farm, so it is high-quality. Lot's of Niccolent Loam dirt which is very good corn soil, easily 200+bu in normal weather. Let me know if you think it's a big mistake adding acres at this time period. I have a feeling it will go for a pretty penny. Thanks!!!

 

 

Farmland Ceiling Raised…Again

 

The value of Corn Belt farmland shot up 16% in 2012 and is expected to rise further.

Central Corn Belt farmland values are continue to surpass expectations. According to a quarterly survey of more than 200 agricultural bankers conducted by the Federal Reserve Bank of Chicago, the yearly increase in "good" farmland values was 16% in 2012.

"In spite of the drought last year, the annual increase for 2012 was just a notch below those of 2007 and 2011," says David Oppedahl, Federal Reserve Bank of Chicago business economist. "On the whole, respondents anticipated farmland values to rise further during the January through March period of 2013."

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.

From Jan. 1, 2012 to Jan. 1, 2013, Iowa was the winner in the highest percentage annual increase. The state’s farmland showed an increase of 20% in the past year. Illinois and Michigan both registered 18% annual gains. Wisconsin’s farmland values increased by 11% and Indiana listed a 10% increase.

2012 marked the third consecutive year of momentous jumps in agricultural land values. From 2010 to 2012, the area’s farmland values showed a cumulative rise of 52%, which matches the fastest gain of the 1970s boom, in real terms. After adjusting for inflation, the District’s 2012 annual increase in agricultural land values (14%) was the third largest in 35 years.

For now, the sky is the limit for farmland values. Oppedahl says 43% of the responding bankers anticipate higher levels of land purchases or improvements in 2013. "With 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."

Recovery from the drought will remain a key factor in 2013, Oppedahl says,. Even though drought conditions have diminished in the District, changes from last year’s drought-influenced crop prices will affect both crop farmers and livestock producers

 

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47 Replies
Faust100F
Advisor

Re: Farmland Ceiling Raised…Again/Faust

rsw - buying an 80 would not hurt your operation, besides the "new son in law" would probably require at least that for your daughters dowry. lol.  

 

Clarion-Nicolet soils are about as good as one can get in Northern Ioway.   Besides with class II land bringing around $8 to $10K according to your recent post, Class 1 land may be cheap at $12,000, if you have a substantial or all cash downpayment.  

 

I guess . . . if a person has the cash or substantial downpayment and wants to add on a small parcel, it is better to have your money in land than in the stock market, or the bank earning 1%.   Let me know how the sale goes.   Goina be an interesting year.  But really . . . this land price run up is really getting out of hand.  

 

I am about to give up drinking Corona and move up to your preference in beer "Grain Belt", I think if I make that move, I will become more acceptable in the gated community on the West Side of DSM.  I posted this little song elsewhere, but with the 70's and 80's being the best and worst years in farming it kinda relates to success and failure. lol. I bet you remember it. "The Walk of Life".   Adios Amigos. John    

 

http://www.youtube.com/watch?v=cvQ-IJihrJM

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rswfarms
Senior Contributor

Re: Farmland Ceiling Raised…Again/Faust

Yes Faust, we both have extra money from the excellent per acre profit levels from 2012 and the years before that. The past 50 year data shows that farmland does 2-4% better than the stock market, and if you bought most of our land in the 1986 to 1989 time period as both of us did, the ROI figure is much, much, better than the SP500 Index ROI over the 1986 to 2013 time period. So, yes, I need some place to park this money and I enjoy buying farmland much, much, better than just owning a piece of paper with the shares of the SP500 Index Fund I own. I can probably pay cash for just an 80 acre farm so that helps. I still remember when an 80 was just chicken feed to buy, less than $100,000, yes the good ole days. Even if it turns out to be a mistake to buy an 80 at today's prices, with no farmland bank mortgage payments, it isn't painful as making payments on borrowed money to the bank. Plus an 80 isn't like buying a 1/2 section, screwing up on just an 80 acre farm, isn't too painful. Yes, unless something changes Big-Time, I will probably not sell any of my farms in the future, so with it being a long-term investment that helps level things out. Yes, I think I will make an attempt to buy this 80 when it comes up for sale. It is within 7 miles of my other farms and it is not every day that comes up.One of my kids wants to go to Iowa State and major in Agriculture, so that is even more of a reason to hang onto the land. You know when I bought a 1/2 section in 1999, I thought farmland was overvalued. Seems every darn time you buy land it seems overvalued, kinda funny that way. Thanks for the opinion.

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Mike NCIA
Veteran Contributor

Re: Farmland Ceiling Raised…Again/Faust

Hey Faust, why don't you give this RSW slacker your e-mail so we don't have to wade through all the clutter he puts on here.  Seems you are the only one who talks to him anyway, or you can ignore him and he might get the hint to leave.

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rswfarms
Senior Contributor

Re: Farmland Ceiling Raised…Again/Faust

Thanks Mike for the compliment. Yes, I am a slacker, but this costs me around $240,000 a year in Custom Farming bills to pay for the labor and equipment. It is not my fault that the wife didn't want to live on a Iowa farm so I could do the farming myself, she was raised on an Iowa farm and wanted to live in the "Big City". Maybe when all the kids leave home for college in 2 years we may build a house on one of my farms and move back to Iowa. Or maybe buy an existing old Iowa farm house and fix it up. I had to marry the wife so she didn't become an Iowa "Old Maid", the 160 acre Iowa corn farm that her father gave her for a wedding present didn't have anything to do on why I married her. LOL!!!!

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Blacksandfarmer
Veteran Advisor

Re: Farmland Ceiling Raised…Again/Faust

RSW, last week I went to a seminar that hosted economist Dr. David Kohl. One of the many things he talked about was land values. He mentioned that although land values have shown a profit 83 of the past 100 years, we could be nearing the end of a super cycle. The end of the war, weather, China's economy, and a shift in crop insurance policy all could affect land values in the next couple years. He specifically mentioned the epicenter of a land value crash would be northern Iowa and southern Minnesota. The advice given by Dr. Kohl was if you plan on buying land with these inflated prices to make darn sure you have the capital to back it up and don't leverage too much of your owned land to back up the new purchase. IMO in your situation you would be fine with a land purchase if you can buy it with cash. I only farm a couple hundred acres and I am glad I have a good off farm job. There are just too many things up in the air regarding commodity prices and farm policy right now.

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kraft-t
Senior Advisor

Re: Farmland Ceiling Raised…Again/Faust

Aw mike, I think our guy has to recalculate his net worth on a daily basis to get that feel good feeling of his own self importance.Whether land is $10K or $15K doesn't mean much if you don't sell.  Those of us that had the good fortune to buy land during the mid 80's just after land did a dynamic price correction should be more impressed with our good luck than dazzled with our brilliance.

 

There was nothing to keep land that had declined from $3200 to $900 from declining to $500. All we needed was the assurance that we could pay for that $900 land one way of another. No I've got enough humble in me to know that $900 land that is worth $10k today might be $5K in a year or so and it will be the same "brilliant" guy that bought it cheap that didn't sell it today

Blacksandfarmer
Veteran Advisor

Re: Farmland Ceiling Raised…Again/Faust

RSW, I found an article in mid February Successful Farming magazine with Dr. Kohl's take on whether we are in a land supercycle or bubble, its a pretty good read. Being that one of your kids may end up a farmer, that 80 could be a nice legacy buy rather than the best investment choice.

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idalivered
Advisor

Re: Farmland Ceiling Raised…Again/Faust

Rsw , years ago a successful farmer from between ft.dodge and eagle grove told me "all i had when I got married was a hard on".

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Faust100F
Advisor

Re: Farmland Ceiling Raised…Again/Faust


@Mike NCIA wrote:

Hey Faust, why don't you give this RSW slacker your e-mail so we don't have to wade through all the clutter he puts on here.  Seems you are the only one who talks to him anyway, or you can ignore him and he might get the hint to leave.



Mike, I will tell you what!  When you own this site, you can tell me what to do, absent

that you Norhern Iowa crybabies are going to just have to suffer.  

 

It must  be kind tough on you Madison Avenue Farmers North of I-80 when another farmer up there has a passion for land and farming 'and does not have to live in one of the most poluted farming regions in the United States.

 

I know a number of farmers in Sioux, Wright, Grundy, and Tama counties, and you know what when we get together our main topic of conversation is land and land prices, and how high land was when they paid $4,000 a acre for it a few years ago.  So I do not know what planet you are residing on but this is Iowa . . . farming is what we do . . . and land is near the top of any farmers agenda.     

 

Lets see you have had 77 posts . . . I think maybe you belong on Ag-Web where the  conversation now consists of Yep! and Nope! since the spammers now own it.  I find it amusing that you have migrated to this site to continue the predation of rsw.  What has he ever done to you? But more important why should I even care what your background is or the background of any other poster on here.   Since when has it become policy to muzzle posters and limit their thoughts being expressed here. Since when has that become relevant to gaining access to a web site. 

 

.  rsw has never done anything to me, tell me . . . how do I know you are a real farmer?   How do I know you are not just an "inheritor" instead of a "self made man"?  Kinda looks to me like there are an awful lot of people accessing his posts to see what he has to say, so he must be relevant.

 

  Rsw was raised in my neighborhood in DSM.   Rsw keeps me up todate on a mutual interest we have and one of those is "land".  I guess most "real farmers" have that as a major interest in their life and few find that subject boring.

 

I really think that if the sole purpose of you being here is to "try to tell" others who they should be conversing with, you are probably on the wrong ranch.  This is an ag site and maybe any other type of site you want to make it.

 

I see it is 7:14AM, isn;t it time for you to get down to the co-op for that cup of coffee with the rest of the woulda coulda crowd.   I also find it amusing that others have responded to rsw posts and also have an interest in land values.    LMAO!  Have a great day.  John 

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