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Senior Contributor

Sell Land to Build Up Savings?/ From "BIG BOB" Himself

Well, we all know "BIG BOB" from watching his advice on the markets. But now "BIG BOB" has branched out to giving advice to Farmland owners. His advice to farmland owners is listed below:

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Sell Land to Build Up Savings?

 

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:

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.

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.


Southern Corn Belt/Mid-South See 4% Rise in Farm and Ranchland Values: The value of southern Corn Belt and Mid-South farm and ranchland rose by 4% during the final quarter of 2012, states a recent report from the Federal Reserve Bank of St. Louis.


Central Corn Belt Farmland Values Jump 16%: The value of central Corn Belt farmland rose 16% in 2012, according to a quarterly survey of ag bankers conducted by the Federal Reserve Bank of Chicago.


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."

For More Information
See what land is selling for in your areas. Search property listings nationwide, provided by Lands of America. Narrow your search by state, county, property type, price or acreage.
 

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Advisor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

rsw - aren't you glad the kicked us off Ag-Web farm journal is a joke, merely a house organ for BTO's, Monsanto, and all of those who farm the farmer.  The jokers the solicit opinions from (like this one) have been wrong more times than they were right.

 

Utterback is a joke, however I would value his opinion on the best eating joint in Chicago, he has never missed a meal, but has missed everything else.  

 

I just love how they actually believe USDA and readily espouse their theories on markets.  He was FOS in the grain markets, and of course he is FOS in the land market.  I wonder why he and his buddies were not buying land the past 20 years instead of taking commissions on puts and calls on the board of trade.   Please . . . gie me a break . . . this guy, as well as guppie Gulkie, and unprofessional farmer are nothing more than "Noise", they seldom have any information that most farmers do not already have.  I think Farm Journal should but Ann Barnhardt on their payroll, and let her carry here pink AR-15.   

 

No one knows where that market is going, more important most of us do not care, because we are not in the business of speculating on anything like Utterback is.  I

wonder how much land he has sold or even has to sell.

 

There is no one that is an expert in this land market, but there are more owners of farmland very comfortable holding it, that they are holding the fiat currency derived from a sale.  This is the kind of nonsense they have over there.  

 

The only opinion over there worth listening to, is . . . is . . .is. Well, there is no one over there worth listening to, they wear blinders, and it is truly the land of the blind leading the blind.  Farmland (if you own it) is probably the best asset to hold, at least it is keeping up with the deflation (my ass) that they say we are having in this country.  Funny tripple dipple beans went up another $5 this year, now only $55 a bag + $13 for cruizermax + $2 for innoculant, nice to see the deflation is in really taking effect in the costs those who farm the farmer are charging.   Adios Amigo. John 

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Senior Advisor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

The speculative mind set. You bought lower and you should take profits while they are good. Great idea if you are along term or short term speculator. However, many of us are buyers with no intent of ever selling. 

 

I suppose that doen't make sense to the guys that want cash in the bank but I prefer productive dirt that may pay dividends to generations for decades to come. One of the biggest drawbacks to cash is that it is so darn easy to spend.

 

 

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Senior Advisor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

I have to admit, I do like the Ag-Web Mobile App weather feature.  Makes in nice to be able to zoom directly in on a farm.  Haven't found another one I like any better.

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Honored Advisor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

If you are looking at taking a one-time windfall, he may just be right. Savings aren't earning anything now, though, so will not generate income, once laid down.

If margins are set to seriously shrink -and they probably will - then, more land slips to being marginal for production, too. At the same time, the more acres a farmer will need, to carry off debt and support a family. It is a sort of paradox.
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Honored Advisor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

If someone bought a farm for $3,000 and now sells it for $13,000, what kind of taxes would he or she be looking at on the capital gain in "federal reserve notes"?  Land would have to go down a fair amount just to break square after taxes. Like Buffet does with stocks, buying solid companies with the thought of owning them "forever" would probably be good advice with land . But every case is different, if someone bought a high priced farm and could sell it for a profit and be debt free, that might not be the dumbest idea they ever had.  I don`t care if land goes below $1,000, mine isn`t for sale, I wouldn`t shed any tears, I`m in love with it, it`s just been "paper gains". Easy come, easy go Smiley Happy

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Frequent Contributor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

A neighbor farmer who does mostly custom work for a local farm manager, sold out every thing he did own last week. The farm manager's overseas investors bought his family farm and 320 acres he bought four months ago. He got a good deal from his "friend" when he bought it for $5500 and sold it for $10000 which is pretty high for this area. He must be thinking the same thing.
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Senior Contributor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself

Yes Faust, sometimes I go back and forth about selling some of my farmland. When you can sell just an 80 acre farm for over $1.2 Million dollars it is awful tempting, an 80 is so small I wouldn't even miss it.  After taxes, it would still be a walk-away of over $1 Million. Guess I have everything I need except an Over/Under 12ga Shotgun, but a nice one is only $2,000. I think if corn gets down to $4 this fall it will be a good test of the Iowa farmland market to see if or how much the land drops in value. A drop to $4 corn would drop the ROI to around 2%, and the 75 year average ROI is in the 4-6% range. Probably around a $2,000/acre drop in farmland values would get the ROI back to the normal 4-6% range. A $2,000/acre drop really isn't a big deal if you bought most of your land in the 1986 to 1989 time period. Maybe just keep the land for now and give it all to the kids and let them worry about it. I will move to Florida and let my 2 boys run the show and see how much they can screw things up!!!!!!! LOL

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Senior Contributor

Re: Sell Land to Build Up Savings?/ From "BIG BOB" Himself-BADEERE A ?

BaDeere- what percentage of your corn do you have planted? MAY 16 is what they say is cut-off for getting 100% of your yield, every day after MAY 16 in North-Central Iowa means a 1 bushel per day yield drop. This is what the College Boys tell us from Iowa State University anyway.But we all know the College Boys don't actually farm, they only farm there corn test plots and then tell us that these little test plots are always right!!!!!! LOL

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