Will Farmland Owners Pay Higher Property Taxes in 2014?

As 2013 winds down, farmers and landowners turn their attention to the Nebraska Legislature, which convenes for another Legislative Session in January. One of the main issues that the legislature will discuss is the need for property tax relief, a Landowner Property Taxtop concern of not only farmers and landowners, but also of Nebraskans as a whole. What is the outlook for property taxes in 2014? Will farmers and landowners finally see some relief?

Nebraska Farm Bureau president Steve Nelson hopes so, and he led a committee that presented a multi-year tax relief plan in October. The plan would reduce the state’s reliance on property taxes to fund government services and strive to better balance the contributions from property, income, and sales taxes. Its overarching goal is property tax relief, and Nelson hopes that property tax relief will be the main focus of any comprehensive tax reforms proposed in the Legislature.

Nebraska property taxes comprise 45% of all the taxes collected statewide, and the reliance on property taxes has steadily been mounting since the 90s. Farmers and landowners are increasingly feeling the pinch each year. According to the Nebraska Farm Bureau, agriculture land owners comprise roughly 3% of the population, but pay about 24% of the total property taxes across the state (“Nebraska Farm Bureau Plan Seeks to Balance Tax Structure, Provide Property Tax Relief.” Online posting. Farm Bureau –. N.p., 17 Oct. 2013. Web. 16

Dec. 2013). One part of the Nebraska Farm Bureau Committee’s plan would be to reduce the value of agricultural land for tax purposes from 75% to 65%, among other ideas for tax relief.

The Nebraska Farm Bureau committee presented its plan to the Nebraska Legislative Tax Modernization Committee, which also just released its own conclusions and recommendations. The Tax Modernization Committee was formed at the end of the last legislative session, its goal to study tax reform options and present their recommendations for the 2014 session.

In a report released Friday, the committee recommended no major changes. “The report says taxes are higher than average in some areas. Property taxes are greater than both the national average and that of most of Nebraska’s bordering states. Lawmakers also concluded that income tax brackets have not kept pace with inflation.” (Young, JoAnne. “Tax Modernization Committee Makes Recommendations, Some Members – KHGI-TV/KWNB-TV/KHGI-CD-Grand Island, Kearney, Hastings.” Tax Modernization Committee Makes Recommendations, Some Members – KHGI-TV/KWNB-TV/KHGI-CD-Grand Island, Kearney, Hastings. Lee Enterprises, 15 Dec. 2013. Web. 16 Dec. 2013.)

Four members of the committee have refused to sign the committee’s report, and two of these four members are seeking Governor Heineman’s seat. Charlie Janssen and Beau Mccoy each say that a greater need for more overall tax relief—including both property and income tax relief—and less spending is necessary, and Janssen plans on releasing his own alternate proposal.

In the meantime, committee chairman Galen Hadley did stress that despite no recommendations for major changes, there would still be a focus on property tax relief. This will come as welcome news to farmers and landowners across Nebraska. However, it is anyone’s guess as to if this relief will actually materialize, and if so, how quickly it may come. For now, all eyes will be on what transpires during the 2014 Legislative session.

The professional land managers at United FArm and Ranch Management can help you make wise business decisions for your land.  Contact UFARM today!

Can Your Land Benefit From Cover Crops Like Turnips And Radishes?

Planting Cover CropsWhile corn and soybeans are the dominant crops grown in Nebraska, many farmers are also looking toward maximizing their land’s efficiency and productivity by adding cover crops like turnips and radishes to their usual crop rotations.

There are multiple benefits to planting a cover crop. Planting cover crops to fallow fields improves soil structure, reduces weeds, adds and retains moisture, prevents erosion and runoff, adds important nutrients to the soil, builds up organic matter, and prevents compaction. They are used to feed cattle, as well. Increasingly, Nebraska farmers are recognizing these advantages and incorporating them into their fields as much as possible.

After a field is harvested, there is less residue remaining to protect the soil from the elements. In a drier year, many farmers harvest the residue as forage for their livestock or cut silage, so the residue remaining is even less. Less surface residue leaves fields more vulnerable to erosion from rain and wind. Research has shown that fields left open to the elements lose much more moisture to evaporation than fields that have a cover crop.

There is a lot of research going into microorganisms in soil, and the importance of feeding them. Just as humans benefit from consuming a diverse diet, so too do soil microorganisms. Cover crops provide this added nutritional diversity. Farmers who have grown cover crops for several years have seen the organic matter of their soil drastically improve as a result. They find that there is less need to apply nitrogen to their fields, as the radishes mine the depths of the ground for the existing nitrogen deep in the soil and make it more readily available on the surface for future crops such as corn.

Cover crops help prevent soil compaction that can occur in particular types of soils. In particular, this is why the root vegetables like turnips and radishes are useful; they naturally dig in and create soil channels where moisture and nutrients can then penetrate. Fields where farmers have planted radishes are often less susceptible to soil compaction, since the radishes produce a very long tap root that breaks through the tough, deep soil. The plants break up the soil while they are in the ground, like a natural plow.

Turnips are an excellent cover for farmers who graze cattle on their fields after harvest. They are a high moisture plant, and cattle favor them due to their high sugar content. They are packed with protein, as well, and so make a great forage plant for cattle through the winter months.

Turnip and radish seed are relatively inexpensive, and producers that have utilized them as cover crops say that the positive results they see are worth the cost.

As farmers and landowners endeavor to maximize their land, as well as to increase their yields, they are using any means available to get the most out of their ground while keeping input costs down. They are learning that planting beneficial cover crops like turnips and radishes are a great way to do just that.

The land managers at UFARM can help you maximize your land’s potential.  Contact UFARM today.

How To Get An Accurate Land Appraisal

Land Appraisals

When it comes to many aspects of farm ownership, having a good idea of what the farm is worth serves as the basis from which many important decisions are made. Estate planning, dividing land among children, determining fair rental fees or lease terms, and tax or legal issues all depend on an accurate farmland appraisal. Especially in the last several years, which have seen burgeoning farmland values, it is more necessary than ever to have an accurate assessment of land value.

Since knowing the value of the farm and land is such an important part of managing it, it is to the benefit of all involved to seek an expert appraiser to aid in determining its value. Land appraisers are rigorously trained and are licensed or certified in all aspects of property appraisal, and can help walk you through the steps in determining the value of your farm. “The role of the appraiser is to provide objective, impartial, and unbiased opinions about the value of real property—providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate” (Appraisal Institute, www.appraisalinstitute.org.). They do this by putting together various aspects of the property—its physical characteristics, size, uses, and location—and develop a value based upon those specific characteristics.

As with any professional, experience is key. Experienced appraisers can help determine the most accurate value of a property, which is of vital importance. For instance, the failure to accurately price the property is cited as the number one mistake that is made when selling a farm. Failure to accurately assess the value of the farm and surrounding farmland results in less interest from potential buyers, and the maximum value attainable from the farm may be missed.

Another mistake that is frequently made is to determine the value of a property based on a biased appraisal—such as one from a favored lender who sets the appraisal value higher based on the desire to lend money based on that higher value. As a result, the market value of your farm is inaccurate. The best way to determine the value of a farm property is to seek the unbiased opinion of a professional appraiser.

When looking for a qualified appraiser, check that they meet at least the minimum state requirements for property appraisal. Licensed appraisers are better, while certified appraisers have attained the highest level of educational requirements. Both licensed and certified appraisers must pass a rigorous examination that is administered by the state’s appraisal board.

Experts and those who have learned the hard way agree: Don’t miss out on the knowledge that an experienced farm appraiser can offer. Decisions about your farm are among the most important you will make.

UFARM offers appraisal services from experienced, licensed and certified appraisers. They possess years of practical, local land market expertise and combine it with the latest appraisal technology in order for you to gain a clear and accurate value of your land.  Contact UFARM for your appraisal needs.

Estate Planning: Successfully Transferring Land to the Next Generation

Estate Planning: Successful Transferring Land to the Next GenerationWhen it comes to land management, one aspect that many landowners often put off for “tomorrow” is planning their estate’s transfer to future generations. However, estate planning is one of the most important actions landowners can take to ensure that one of their greatest assets is handled in a smooth manner once retirement age is reached or in the event of unexpected death or injury. It is essential for all parties involved to know what to expect, and having a plan in place offers peace of mind for both benefactors and those who will inherit land in the future.

There are many factors that must be taken into account when estate planning. Most obviously, experts emphasize the importance of having a legal plan in place, no matter how “settled” the land’s future is among the family. If there isn’t an actual legal document outlining the transfer, the state has the authority to allocate the assets according to state law. Having an estate plan that both outlines the distribution of assets as well as addresses business organization issues is essential for the successful transfer of the land to the final beneficiaries.

When estate planning, it is important to know how best to allocate farm ground among on-farm and off-farm children. Many initially conclude that the most equitable solution is to divide assets equally among all children. However, this avenue fails to take into account the difficulty the on-farm child would have in having enough money to buy-out his siblings, and often results in the land having to be sold to an outside party. Estate planning can address this situation, and allow the family farmland to remain in the family, as well as for all children to benefit as well.

In addition to the transfer of ownership, good estate planning helps reduce and avoid unnecessary taxes. Here it is especially important to have a trusted and competent advisor who is well-versed in tax law to avoid the considerable transfer taxes that can be incurred if not overseen carefully.

An estate plan also addresses many other key issues. It ensures practical ways to generate retirement income. It addresses how a spouse will be supported in the event of an unexpected death or injury, and covers medical and/or funeral costs. It also provides ways to secure a solid financial future for the next generation, including living and educational costs.

Experts agree: It’s never too early to establish an estate plan. In fact, waiting until retirement age can limit the ability to address tax concerns that may arise for heirs should they suddenly find themselves inheriting a large portion of land or other farm-related asset.

Ideally, estate planning is revisited often, since tax laws change frequently, and other factors such as land values can change greatly from year to year. It is important that landowners have trusted advisors to work with through the years in order to help them make these important decisions and to decide how best to manage the transfer of assets to the next generation.

United Farm and Ranch Management can provide complete solutions for your land.  Whether you need assistance with day-to-day management or long-term planning, our farm mangers can help.  Contact UFARM today for a free consultation.

How Will 2014 Crop Input Costs Affect The Bottom Line?

input costsAs farmers reach their last rounds in the combine harvesting 2013’s crop, most are already thinking ahead to 2014. One of their top concerns is input costs and how best to manage them to maximize their bottom line.

The drought of 2012 and its resultant high-demand and low supply of crops led to high commodity prices, but with some drought-relief in major corn and soybean areas of the country in 2013, it is expected that commodity prices will adjust to reflect a better grain supply. With grain prices on the general decline, farmers expect to contend with potentially tight profit margins in the coming harvest year. As a result, analysts expect changes in the money they pay for 2014 input costs such as fertilizer, fuel, chemicals, and seed.

On the whole, fertilizer costs have declined. In particular, potash and phosphate are down 15-17% since last spring, and nitrogen has declined 22% this fall. Depending on how much the weather will allow farmers to get their fertilizers applied this fall will further determine the price of fertilizers next spring. The decrease in the price of nitrogen reflects potential lower corn acres in 2014, as well as an increase in domestic production of nitrogen.

Likewise, fuel costs are expected to be down slightly in 2014. The price of the diesel fuel that runs most farm machinery is expected to be down by 4%. Similarly, the price of natural gas, which is commonly used to dry corn, is projected to be down by 4% as well.

The price of chemicals—in the form of herbicides, insecticides and fungicides—will be mixed. Purdue University farm business management specialist Alan Miller contends that chemical prices will be up slightly, with a 1% increase, with the exception of herbicides, which will remain flat. Experts urge farmers to try to buy chemicals in bulk when possible in order to cut costs. Another way to cut input costs is to consider purchasing seed and chemical package deals when making seed-buying decisions.

Seed prices are predicted to be up in 2014, perhaps as much as 2-3% for the 2014 planting season. However, while producers always attempt to watch their pricing inputs, they will not cut corners when it comes to selecting the type of seed they choose to grow. With the technology that goes into seed genetics and the beneficial ways these hybrids can maximize yields and overall profits, farmers realize that it is in their best interest to choose the right type of seed for their ground, regardless of cost.

Finally, experts predict land and rent prices to remain where they are in 2014. Machinery costs, which have increased an average of 7% per year from 2002-2012, could fall as a result of lower commodity prices, especially if these lower prices are sustained for a longer period of time.

While it is impossible to predict yields and prices for the 2014 growing season, it is necessary for farmers to make input decisions now in order to maximize profit and lower risk where possible.

If you have questions about how input costs will affect the profitability of your land or operation, please contact one of the professional farm managers at UFARM for a free consultation.







Nebraska Fall Wheat Planting Update


 Along with corn and soybeans, wheat is one of the top crops in Nebraska. Many Nebraska farmers take advantage of wheat’s unique growing capabilities in order to maximize their land use and profitability.

Nebraska is one of the top ten wheat producing states in the country, and Nebraska farmers have produced as many as 84.28 million bushels in 2007, the same year that saw the greatest acreage of wheat planted in the state at 2.05 million.

In Nebraska, wheat is primarily grown in the western half, although farmers from all across the state plant it in the fall to harvest in the spring, known as winter wheat. The recommended winter wheat planting dates vary across the state. The north and western parts of the state have an earlier planting time, while the south and eastern areas can see the fall planting into later parts of September and even early October. Generally, fall planting of wheat in Nebraska is recommended between September 1st and October 1st.

Wheat is also a popular choice of cover crop in Nebraska. The seed is readily available and relatively inexpensive, and it is easy to establish and fast growing. Planting a cover crop has many advantages. It prevents wind and water erosion, can increase yield, improves soil, and adds or preserves soil nutrients that might otherwise be lost to leaching. Animals may also be grazed on the cover crop before spring planting takes place.

Despite its advantages as a cover crop, however, wheat does use up excess soil moisture, and some agriculture experts caution against growing it as a cover crop in the Nebraska Panhandle, since the average rainfall is less and evaporation rate is generally higher than in other parts of the state and country. As a result, the disadvantages of its use as a cover crop in this area of the state may outnumber the advantages.

Winter wheat benefits from snow coverage in order to prevent winterkill. Studies have shown that a blanket of snow 3 inches deep is sufficient to protect it from the cold, and 4-6 inches of snow cover offers the best winterkill protection.

Fall wheat planting across Nebraska was slowed by rains for a week or two in late September, and while proper timing is key for wheat planting, a moist soil profile is still a welcome change to last year’s dry planting conditions for winter wheat.

At the end of September, the USDA reported that 65 percent of Nebraska’s winter wheat planting was complete, compared with a 72 percent average for the end of September. The moisture improved the overall prospects for Nebraska’s next wheat crop. Overall, the USDA reports 56.52 million acres of wheat planted for 2013-14, up slightly from last year’s 55.74 million acres.

As with any crop, weather conditions have the most significant effect on crop growth, yields, and the planting and harvesting of crops. With the majority of Nebraska’s wheat sown, farmers will wait to see what winter weather conditions will manifest.

United Farm and Ranch Management can provide year-around care for your Nebraska property.  If you would like a customized plan for your farm or ranch, please contact a UFARM professional today.


When is the Right Time to Sell the Farm?

“Don’t sell the farm,” or “I wouldn’t bet the farm on it,” are well-known idioms, and for good reason: They are a very fair representation of the high stakes that accompany such a venture. Over the last decade in Nebraska, with a growing number of farmers and landowners at an advanced age, knowing how to go about selling their farming enterprises or passing them down to their children is fraught with difficulty, and there are many issues farmers must take into account when going about estate planning and passing along their life’s work to the next generation.

Selling the Family Farm

One such issue that must be taken into account is quite obvious, but often overlooked: Do the children actually desire to carry on the family farm? Often, this fact is simply assumed, and parents make arrangements early-on, only to find out too late that the sons or daughters have very little interest in farming. If this is the case, it is in the best interest of all involved that they hire a professional farm management company or sell the asset to an interested party, so that the money is able to benefit the family and allow them to pursue their own aspirations.

Many experts advise that parents sell—rather than gift—the farm to their kids. This ensures that the kids do, in fact, desire to farm since they are buying it with their own capital. This way, there is “skin in the game,” and the farm benefits as a result.

Perhaps the largest factors affecting the sale of farms are the tax consequences. Navigating the myriad federal and state capital gains, estate and inheritance taxes is tricky. Inheritance taxes, aka the “Death Tax,” can be an especially difficult tax to handle, especially for small businesses and for family farmers and ranchers. Often, those on the receiving end of farmland from the previous generation are forced to sell that land in part or whole just to pay the taxes. Nebraska is one of only six states nationwide that has a separate state inheritance tax, so Nebraska farmers must contend with this extra tax as well. Experts emphasize the importance of seeking sound legal counsel as well as to obtain advice from those with expertise in farm management in order to minimize the often crippling tax burdens that can accompany the inheritance of the family farm.

Above all, it’s important for farmers to have a plan. It’s never too early to start planning one’s own future business succession, and it’s simply another part of farm management.  If working with a farm  management company, have copies of reports sent to adult children, so they can learn about the farm before the parents are gone. A lack of planning can put huge amounts of stress on families, and even sometimes tear them apart due to bickering among siblings about what to do about the farm or land that they’ve inherited, in part or whole. This plan will need to be reviewed often, and perhaps will change many times due to varying outside factors, but at least there will be a plan in place to guard against such instances.

If you need assistance managing your farm or transitioning your land for the future,  please don’t hesitate to contact us at United Farm and Ranch Management .


Fall Tillage on your Land: Pros and Cons

Just as the old adage, “A woman’s work is never done,” rings true, so too could one say this about farmers. With Nebraska farmers at or approaching the midway point of the 2013 harvest, most have already thought ahead to the ways they will manage their fields after the crops are out and before winter sets in. There is a wide array of tilling practices across the state, and even among smaller geographical areas. It seems that tilling practices are as individual as farmers themselves, and many factors influence where a farmer will be on the tilling/no-tilling spectrum.

There are two main factors all producers take into account when it comes to tillage decisions. One is soil type, and the other is soil moisture. As such, fall tillage practices vary from operation to operation, and even within operations, since one must consider the soil characteristics of each individual piece of ground. Weather conditions also have a considerable effect on how producers deal with fall tillage of their land.

Fall Tillage

Many farmers think that fall tillage is better than spring tillage, since the soil moisture profile is usually more suitable. Generally, less moisture in the ground during fall tillage leads to less soil compaction, more efficient soil fracturing, less smearing of soil, and less large soil clods, resulting in better soil quality and yields. Experts stress that staying off of wet soils has a tremendous effect on soil structure, as very wet soils compact very easily, in turn affecting yields down the line.

There are many different ways farmers till as well, and these practices also depend upon the type of ground with which they are dealing. There are certain advantages and disadvantages associated with these various forms of tilling, including their effects on soil erosion, moisture loss, fuel  and labor costs, soil structure and temperature, compaction, and dependence on herbicides. This chart illustrates the major advantages and disadvantages associated with the major tilling systems: http://cropwatch.unl.edu/web/tillage/advdisadv.

Many farmers also have livestock to consider, and tilling before putting out livestock to graze the stubble is, of course, not an option. More and more farmers are relying on cover crops to supplement their livestock during the fall and winter months, as well as to control soil profiles, add nitrogen, control erosion, and prevent runoff. Many producers find that not only do cover crops provide excellent forage for their cattle, but they also help soil to retain nutrients and moisture in the long run. Of course, large-scale grazing  of cattle can lead to soil compaction, so farmers must take into consideration both the pros and cons of putting their livestock out on various fields.

Farmers and livestock producers are continually making decisions about what is best for their operations, and realize that just because the crops are out does not mean that work stops until spring planting.

To learn more about how land tillage practices affect the long-term value of your farm, set up a free consultation with one of our experienced farm mangers.

Nebraska Harvest in Full Swing

Combines across Nebraska have been running the month of October, even if the government hasn’t been. With the 17% government shut down, the USDA confirmed that the Crop Estimate and World Supply and Demand report will not be released as usual, since the data analysts and those who compile harvest data from Farm Service Agencies were furloughed the majority of October.  Since being reinstated there is now a back log of data. This leaves market analysts and farmers wondering about the particulars of the harvest data, including projections about corn and soybean acres.

In particular, due to the late, wet spring planting conditions, analysts were interested in seeing the prevented planting acreage numbers that were to be included in this report, and how this data might affect the overall corn and soybean markets. In mid-September, FSA reported that 3.57 million acres of corn and 1.69 million acres of beans were prevented from being planted. For the time being, though, life does go on, and the crops don’t care how soon Congress gets its act together.

Timing-wise, the start of the Nebraska harvest has been average to slightly later, although it has been much later than last year’s atypically early harvest. As of Oct. 8th, the overall corn harvest nationally was at 12% vs. the historical average of 23%. Beans were further behind at 11% vs. 20% historical average. Nebraska farmers were out in force, before a large rain system moved through the eastern half of the state, dumping significant amounts of rain in many areas and stalling harvest for several days. Frost was forecasted for certain areas, but stayed away the first part of October.

So far, corn and soybean yields have been higher than predicted or expected. Private analysts continue to report higher-than-expected yields for corn, with the average September corn yield higher than the 155.3 bushels/acre that was previously estimated. Higher than expected yields have resulted in rather bearish corn market. While soybean yields are also good so far, the USDA already raised last year’s crop size by 19 billion acres, so market adjustments to use should be minimal. Additionally, while early yields from early-planted fields have been favorable for both corn and beans, it’s still questionable whether or not these yield numbers will hold up as farmers begin to harvest from later-planted fields.

Favorable yields have also brought down the basis of both corn and beans, with the bean basis 5 cents lower than the 5 year max average and the corn basis is even with the 5 year max average. (dtn.com)  Some analysts believe the basis will continue a downward trend as harvest continues.

To date, the markets have coped fairly well without the smaller, weekly USDA reports. However, as we approach additional government budget issues, all the markets may feel the effects, including the grain markets. Hopefully negotiations on Capitol Hill will move forward and further shutdowns can be avoided.

If you’re looking for assistance managing the constant changes happening with your farmland,  contact a UFARM manager for a free consultation.


Nebraska Farm Land Prices: When’s the right time to buy or sell?

Land PricesIt’s a popular topic at every rural coffee shop: Will land values remain this remarkably high? It’s a good question.  With values that have been rising steadily over the last 20 years, and that have seen even larger gains in the last two to five years, farmers and landowners wonder if conditions will remain in place that will maintain these rates for the foreseeable future.

Rising land values have especially impacted farmers and landowners in Nebraska.  According the USDA, Nebraska’s all-land average value has doubled in the last five years, and in some areas has increased more than 125%. Additionally, the USDA’s land value survey reported a 33% increase for Nebraska farmland—the highest percentage gain of any state in the nation.

Conversations that involve record value gains in any market will include references to booms, bubbles, and bursts, and farmers and landowners in Nebraska are particularly aware of this. Many current producers experienced—or saw their parents experience—the farmland bubble burst in the 1980s, and are keenly sensitive to this issue today. Is the current farmland value bubble about to burst?

The answer to this question requires a basic understanding of what factors affect the rise and fall of prices. What has contributed to these record gains in Nebraska farmland values?

One is the current US monetary policy, with record low interest rates and a weak dollar. The weak dollar encourages agriculture exports, while the low interest rates discourage landowners from selling their land, thus creating a scarcity-driven land market and rising land values. Some agricultural economists predict that land values are set to go down, just because interest rates cannot go any lower than they are currently.

Another factor that affects land values is the US and global economies. Poor economic gains in both the US and global economies will eventually affect the disposable incomes of American households, and will in turn affect food prices.

Finally, and perhaps most obviously, commodity prices affect land values. Last year’s record drought forced commodity prices up, which in turn brought even greater land values to Nebraska and area states. Favorable weather conditions for the 2013 growing season will bring commodity prices down, which in turn might end up bringing farmland values to lower levels.

The outlook for Nebraska land values is up to debate. Some economists think that while there will be some more significant corrections in the land market—especially in states like Nebraska that have seen the most dramatic value increases—the chance of another burst is far less likely, simply due to the fact that today’s farmers are not as seriously leveraged as they were in the 1980s.

One thing is certain: Farmland prices are sure to remain a top concern for Nebraska farmers and landowners as we head into the 2013 harvest season. Please don’t hesitate to give us a call at United Farm and Ranch Management for any questions or concerns you may have when it comes to your land values and rental income.