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Senior Contributor

Land values up slightly in central Plains, western Corn Belt, Fed says

Just filed a report about the Fed's latest land values survey in the 10th district (from Wyoming and Colorado to western Missouri and eastern Nebraska):

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"More district bankers than in the last quarter reported that farm incomes fell slightly. Lower crop prices due to the prospect of additional corn and soybean supplies and an improved winter wheat outlook trimmed banker expectations for crop incomes," Fed economist Brian Briggeman says. "In contrast, declining feed costs and rising livestock prices spurred profits in the livestock sector. District bankers expect farm incomes to improve slightly in the second quarter, but remain below year-ago levels."

 

Farm ground remains in pretty tight supply, and that's one reason for values that rose between 1.6% and 2.8% (ranch land to nonirrigated ground, respectively). Though ranch land saw the slightest increase, that sector's home to the most optimism in the market, especially in Nebraska, Briggeman reports.

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Read more >> 

 

Does this sound accurate to you?

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4 Replies
Honored Advisor

Re: Land values up slightly in central Plains, western Corn Belt, Fed says

Jeff, seeing that land values are holding up and even rising slightly is a good economic sign.  I am starting to see some of these around the landscape, from business contacts in VA, and in the hog business, too.  Honestly, I am trying hard to be hopeful, and managing it better some days than others.   

On the flipside, our county announced that the proposed budget for the coming fiscal year is slightly over $3 million short on the revenue side.  First proffered solution, a 17 cent raise in the tax rate...which would cost us thousands per year in additional real property and equipment taxes.  Not too attractive to me, and I think the average homeowner would revolt. 

Second possibility, cut spending all the while way back to breakeven with revenues.  Not likely, given the thrlll of putting up new public buildings in the past few years, and a movement afoot to replace two existing high schools with one new one, a beautiful historic courthouse with something more modern, and dissatisfaction with the present Social Services facility.  A million of the excess was for new positions...in a full-out recession. 

Third possiblity, which will probably be where we end up, is somewhere in between, with $2-3000 a year in new property taxes on our family's farm...in a year when the hog industry has taken it in the teeth for the last two or more straight.    So, our trash pickup - the only direct public service we receive - will cost us $1250 a month, instead of $1000. 

Advisor

Re: Land values up slightly in central Plains, western Corn Belt, Fed says

$1250 a month for trash service?  For your farm?  Is that correct or a typing error?  Dude, there's gold in them thar' trash piles!  :-)

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Advisor

Re: Land values up slightly in central Plains, western Corn Belt, Fed says

The report might be a fair asessment, though I believe there are some really big unknowns that loom over the horizon. 

 

In my area, realtors indicate land prices are very firm, if not rising a bit.  We've seen land prices move from the usual $1,000 - $1,200 range to $1,500- $3,200, depending on land quality and urban interest.  Most farm balance sheets appear to be sound, however, financing new land purchases at this price is reviving fears of the '80s bubble.  Land prices might be approaching an unsustainable level, especially if commodity prices remain flat or trend downward. 

 

Our county government is struggling to balance the books, but has never given in to adding high cost overhead.  Our schools are surviving as most were able to squirrel away funds for a rainy day.  Some schools in the state are broke and have had to face severe cutbacks or consolidate with nearby districts.  Ironically, most schools are adamant in funding competitive athletic programs while cutting teaching staff and restricting transportation outlays.  Yep, that's showing where our "edumacational" priorities should be.Smiley Sad  State legislators recently passed a 1% sales tax increase plus some minor tax increases in vehicle registration fees, etc., to get the budget back into the black in three years.

 

I do have mixed opinions on price and production reports, especially in Wheat.  There are 6 million (6,000,000) fewer acres planted to wheat nationwide this year, translating into 200 to 250 million fewer bushels at harvest.  I believe external factors neutralize this slightly bullish factor, namely, a strong dollar, plus the EU financial crisis that threatens to spread from the PIGS countries and the sluggish recovery in the U.S.. 

 

In addition, China has yet to discover the humbling economic reality of the price bubble in real estate speculation, which will impact everybody when that bear hits the markets in a year or two.  If it weren't so serious, it would be laughable watching Chinese investors (on television) taunting American home owners for their supposed ignorance of how to make money in speculative real estate.

 

Back on the plus side, Australia is floundering in low quality wheat discovered in recent shipments which has ruined their reputation as a reliable supplier of high quality wheat, leaving the US., Canada as the only suppliers of high quality wheat.  The Ukraine may also benefit from the price conscious buyers.

 

So it goes. 

 

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Honored Advisor

Re: Land values up slightly in central Plains, western Corn Belt, Fed says

Not a typo, just a "gripe-o."  

The only direct public service we consume is trash pickup...and our taxes now are over $1000 a month. 

If this new budget is passed with the tax increase, that will rise by about $250 a month at least....That increase alone is enough to cover 8-9 months of our family health insurance premium for the year, so I tend to notice amounts of that magnitude.  

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