Nebraska Land Manager

It’s no secret to farmers and landowners that current farm economics are tough. Profit margins are tight this growing season, and myriad reports corroborate this fact. From 2011-14, US farm income experienced a golden period, driven by good commodity prices and strong exports.

Now, according to the Congressional Research Service’s 2016 Farm Income Outlook, it is projected that exports are set to be 6 percent lower from 2015 and well below 2014’s record $152.5 billion, a fact attributed to a strengthening US dollar and weakening economies in several major foreign import countries, including China.

The report also found that national net farm income is also projected to be down—$54.8 billion in 2016—a 3 percent decline from last year. This means that US farm incomes, a key indicator of US farm well-being, will be the lowest since 2002, and is the third year in a row that farms have experienced a decline.

As Nebraska farmers and landowners can attest, land values comprise a significant portion of a farm’s asset base. As such, a change in farmland values is an important gauge of a farm’s finances. Naturally, lower farm incomes mean lower land values, and in this way, the report found that overall farm wealth is likewise set to decline for the second straight year, about 2 percent from 2015.

In this way, reports have found that farmland values of both non-irrigated and irrigated cropland decreased 4 and 2 percent respectively, from 2015. It is expected that cash rents, too, will decrease in 2016, this according to the University of Illinois’ Gary Schnitkey

“However,” Schnitkey says, “projected rent decreases are not large enough to cause farmers to have positive returns in 2016 given current projections of commodity prices and costs. The lagged relationship between returns and cash rents still exists.”

While the outlook is most certainly a pessimistic one, there is always a small silver lining—a mild decline of 3 percent in farm cash expenses in 2016 is expected. Government payments from the 2014 farm bill in the form of revenue support programs are also expected to trigger payments upwards of $9 billion in 2016.

Overall, though, farmers are resilient. Paul Pittman, CEO of Farmland Partners Inc. says that, as tight as things are getting, “Farmers won’t see the same kind of economic crisis they did in the 1980s.” After years of high prices, and only very slight increases in interest rates, most farms in the US are in better financial shape in which to weather the storm.

In summary, the reasons for the tough times are many—production outpacing consumption, a strong US dollar’s effects on exports, lower commodity prices, and a drop in land values—but all boil down to the fundamentals of supply and demand. In a world with a growing population, people must eat, and farmers optimistically hope to weather through this storm until the scale tips in their favor once again.  The recent uptick in soybean prices is a positive sign and corn is trending upward as well.  The summer weather is the wildcard that no one can predict for sure.

Sources consulted:  Bjerga, Alan. “The Crop Surplus is Bad News for America’s Farms.” Bloomberg. 11 Jan. 2016. Web. 23 May 2016.  Schnepf, Randy. “US Farm Income Outlook for 2016.” Congressional Research Service. 16 Feb. 2016. Web. 23 May 2016. Wright, Kevin. “Tightening in the Ag Belt.” Federal Reserve Bank of Kansas City. Spring 2016. Web. 23 May 2016.

Farmland investment

If you farm in Nebraska, or anywhere across the Midwest, chances are you have chosen to plant genetically modified crops on your land. According to the U.S. Department of Agriculture, 88 percent of corn, 94 percent of cotton, and 93 percent of soybeans planted in the U.S. in 2012 were genetically modified. Adoption rates in Nebraska and Iowa were higher in 2013: 93 percent of corn and 96 percent of soybeans in Nebraska and 91 percent of corn and 93 percent of soybeans in Iowa.

As a producer, you have determined to adopt GM seed because they increase your yields, production, and bottom line. Farmers find they apply less pesticide, herbicide, and water to their GM crops, and use less fuel. As a producer, adopting GM crops on your operation makes sense. However, the use of GM crops is a controversial topic, often among those who have very little ties to agriculture. As such, it is helpful to be well-informed on the topic in order to fairly address the issues raised, and to ensure that the best interests of all are met.

GM crops have exploded on the agriculture scene over the last 20 years. Humankind has selected for certain traits in plants and animals for centuries. Since the discovery of the double helix model for DNA in the 1950s, scientists have been modifying genetics in the lab; as such, they are able to see results more quickly than ever before. It wasn’t long before the scientific applications of the new technology were recognized for the agriculture industry.

This was most evident with the introduction of the Roundup Ready soybean by the Monsanto company in 1996. In essence, biotechnologists used GM technology to introduce herbicide- and insecticide-resistant traits found naturally in other organisms into crops. In this case, they inserted an herbicide resistant gene into a soybean, thus making them resistant to the popular Roundup herbicide. As a result, farmers were able to apply the herbicide to their crops without harming them. Producers were eager to adopt the crop since it saved them significantly on input costs and increased their yields. Producers, scientists, and consumers were happy that so much less pesticide had to be applied to the crops, citing health concerns of doing so.

Now, the topic of GM crops has drawn new public concern. While studies from reputable sources have determined trace amounts of GM organisms in food are safe, many groups are demanding that foods containing them be labeled. While consumers are right to want to know what is in their food, labeling prejudices GM technology. Agriculture advocates are asking farmers to educate themselves on the issue, and point out the benefits of GM crops. Scientists themselves overwhelmingly support the use of GM technology, and in the face of an increasing world population, the use of GM technology is imperative.

While that GMO controversy persists, farmers will continue to keep an eye on the headlines as they park the combines this fall. Contact UFARM if you have any questions about applying the latest technology on your operation.

Source consulted:  Aspnes, Sam, & Angela Hensel. “The explosion of genetically modified crops has changed agriculture, but not without controversy.” Omaha World-Herald. 18 May. 2014. Web. 11 Nov. 2015.

Randy in field-cropped

Farmers across the Midwest are in the thick of harvest activity, and the weather has been favorable enough in Nebraska over the last week for producers to make good progress in the fields. It’s a busy time of year, and no exception for land managers, who are also working harvest hours for their clients. We checked in with one of our own land managers here at UFARM for an update on his harvest activities:

“I’ve been out in the country doing farm visits to see how harvest is progressing. While doing the visits, I’m making sure that the grain is getting to the right elevators if we have grain contracted, checking on the moisture content of the grain, and also getting a feel for what the expected yields might be on that farm.”

Strong winds swept through the state Sunday evening and all day Monday, when northeast parts of the state were in a red flag wind warning. Producers and farm managers were on the lookout for green snap on their corn as a result of the high sustained winds and the few very strong gusts. Any damage sustained may be turned into insurance, if necessary.

UFARM land managers are also undertaking much of the paperwork required for various farm programs, as well as the more basic accounting that must take place at the end of the growing season.

“In my area there are wheat acres that are being drilled and I’m in the process of getting those acres and plant dates from the tenants for Federal Crop Insurance reporting. There are always invoices that are being sent to the offices to finish out the expenses that were incurred during the growing season. Those need to be approved and paid. [Over the last month,] we finished up enrolling our farms in the most recent farm programs (ARC/PLC). We’re currently in the process of getting AGI’s (adjusted gross incomes) forms from the owners that have a share of any government payments that are to be paid.”

For many producers, enlisting the help of a land manager to take on these types of tasks provides peace of mind and takes away some of the workload, especially during busy times of year when they are needed in the field. Other landowners, who may rent out their ground, might have other full time jobs and simply don’t have the time to dedicate to these extra duties. Farm managers step in at this point to lend a hand.

Farm managers also help landowners look ahead to the coming growing season.

“As the crops get harvested and sales of the grains come into our offices we will be budgeting for the next calendar year to cover the input costs that will be needed for that year. For some owners the balance of the funds will be disbursed this fall and for some it will be in the spring.”

UFARM land managers are also dedicated to staying sharp and up-to-date with the latest educational opportunities available to them. They are ready to help clients interested in buying and selling land as well.

“This morning I just finished doing continuing education that is required by the Nebraska Real Estate Commission. The Commission requires licensee’s to have at least 18 hours of continuing education every two years.”

At UFARM, we strive to do our best for your farming operation. If you’re feeling the stress of harvest, and interested in delegating some of your necessary tasks to a qualified person, please don’t hesitate to contact UFARM for a free consultation at your convenience.

UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact us today!