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Determining a Fair Price for Farmland Rent

Farmland Rental LeaseAs we head into the final stretch of August, farmers are already looking ahead to harvest. While they focus on putting pivots to rest in the near future and begin pulling out the harvest equipment, it’s a good idea for farmers and landowners in rental agreements to remember that September 1st marks the date by which lease agreements must be terminated or terms and conditions changed, if it is so desired by either party.

In Nebraska and most surrounding states, an oral farmland lease begins on March 1st. Farm lease agreements are automatically continued year by year unless one party serves a termination notice or requests a renegotiation of the terms, and Nebraska law requires that this notice be served six months in advance of that date. Many rental agreements are oral agreements, and while it is always recommended that the terms of leasing agreements be on paper, it’s important for those without one to keep in mind that September 1st is fast approaching, should one desire to terminate or change a lease agreement. One of the most common disputes among parties with primarily oral farm rental agreements involve differing recollections of the terms of the lease; as such, farm managers strongly encourage that an agreement be put down in writing, even among family members, to avoid such disputes.

With that in mind, farmers and landowners each have an interest in ensuring that rental agreements are fair and mutually beneficial to both parties. Determining a fair price for farmland can be complicated, as many variables come into play, including farmland location, soil quality, land values, crop yields, personal goals, and the relationship between owner and tenant. Naturally, the factors that have the greatest effect on rental price are land values and crop yields. As these vary—sometimes quite a bit—from year to year, it can be difficult for owners and the farmers who rent the farmland to agree on a fair rental price.

To add to this difficulty, it’s interesting to note that a common way of determining a fair rental price—by comparing them with average county rents—isn’t always the best way. Illinois ag economist Gary Schnitkey found that, while the reported state and county land rent averages are accurate, they also mask a lot of variability among rents. From his findings, Schnitkey reports, “Only 35% of farm cash rents are within $20 of the average rent. This leaves many cash rents that vary significantly from averages.”

How then can farmers and landowners best determine a fair rental price for their farmland? Many are turning to professional land managers. Land managers deal with these types of situations on a daily basis, and are knowledgeable about all the tools available—such a flexible lease agreements—to farmers and landowners. They take into account each party’s unique circumstances and work with them to form a mutually agreeable arrangement, that best allocates risk and return for each. In situations involving family members, they are able to serve as an objective liaison who can effectively work out the rental agreement in a fair-minded way.

Are you wondering if your land leasing agreement is serving your best interests? Contact a UFARM land manager—they are happy to offer you sound advice regarding farmland rental agreements.

United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. 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.

 

Sources consulted:

Caldwell, Jeff. “What’s ‘fair’ cash rent for your land?” Agriculture.com. 15 Nov. 2011. Web. 18 Aug. 2014.

Edwards, William. “Computing a Cropland Cash Rental Rate.” Iowa State University Extension and Outreach. May 2014. Web. 18 Aug. 2014.

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Determining Return on Investment for a Farm

Return on Land InvestmentIt’s a question that occupies every farmer and landowner’s thoughts on a regular basis: What is the return on investment of my farm operation? Am I making the right decisions when it comes to my input costs? Am I marketing my crops effectively? These are important questions, and rightly so—any successful business owner knows that the key to making money and staying in business for the long term involves a high degree of attention to this key aspect.

A simple definition of return on investment (ROI) is “the ratio of money gained or lost on an investment relative to the cost of the investment.” This straightforward calculation allows one to analyze and compare investments in order to identify the best alternative for their situation. In essence, it helps one determine the best “bang for your buck.”

So, what is the best plan for ensuring a healthy farm ROI? First, it’s important to be mindful of all the different costs associated with owning and operating a farm. Simply staying on top of input costs, yields, and market prices is the foundational component for success. For many farmers and landowners, closely weighing the options regarding seeds, chemicals, fertilizer, and equipment is necessary when determining the return on investment.

Second, it’s often necessary to take the actual ROI into account when making farming decisions, because while a certain decision may seem too pricey initially, the actual ROI makes it a worthy investment. A good example of this is in precision technology, such as a GPS system for farm equipment, which can initially be quite expensive. This expense may be a hindrance, but by calculating the amount of planting overlap that could be cut as a result of a good guidance system, and the fuel and input costs associated with it, it could be determined that the cost of the guidance system could be covered in the first year of operation.

For landowners, and especially for landowners who have bought land as an investment, determining the ROI is no less important. They wonder whether land values will remain high, or if they will start to level off and even see a decrease. While experts offer varying opinions about the future prospects of land values, all agree that farmers and interested investors should carefully assess land values and farm financial health before doing any sort of investing.

According to Purdue Extension Agriculture economist Craig Dobbins: “The next couple of years for farmland values are going to be a little less certain than the last few years have been. Commodity prices have come down significantly in the last year, so these large returns we’ve kind of become accustomed to for the last few years have now shrunk. The probability of farmland values staying flat or seeing a small decrease is much bigger than the probability that we’re going to see another double-digit increase.” As such, Dobbins cautions prospective land buyers to make certain that there are sufficient cash reserves to withstand a downturn for the next two or three years, and if so, to go ahead with the purchase.

If you need help determining the ROI for your farming operation, contact UFARM. We have years of experience in helping landowners make the most of their land asset.

United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. 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.

 

 

Sources:
Frye, Justin. “Consider Expense vs. Return On Investment.” Farm and Ranch Guide. 12 Oct. 2013. Web. 12 Jun. 2014.
Stewart, Jennifer. “Farmland Value Shift Signals Need for Cautious Purchasing.” Purdue Agriculture News. Purdue University. 13 Feb. 2014. Web. 12 Jun. 2014.

 

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A Landowner’s Guide to the Conservation Reserve Program (CRP)

Ag Landowner's Guide to CRPWhen it comes to deriving an income from their farmland, landowners have a variety of options from which to choose. For many, farming it themselves is suitable. For others, leasing their land to others to farm is a good option. Another alternative for many landowners is to enter some of their land into the Conservation Reserve Program (CRP).

The Conservation Reserve Program is a land conservation program that offers an annual rental payment and cost-sharing to landowners who agree to remove the selected piece of land from agriculture production and agree to incorporate certain types of beneficial plant species to the land. The CRP’s long term goals are to improve environmental and water quality, prevent soil erosion, and improve natural wildlife habitat. A typical CRP contract lasts 10-15 years.

The CRP is administered through the local Farm Service Agency (FSA) office. The USDA periodically holds a general signup for entering land into the program on a competitive basis, based upon environmental ranking and cost. The general sign up is announced by the Secretary of Agriculture, but there is no set schedule.

Additionally, the USDA offers a continuous CRP signup, known as the CCRP, which offers farmers and landowners payment for more specific land improvements, such as contoured grass strips, riparian buffers, grass waterways, and the like. These improvements, chosen by the farmer or landowner, may be adopted and implemented on the selected parcel of land at any time, hence the name “continuous” sign up.

The Conservation Reserve Enhancement Program (CREP) exists as well. In the CREP, the state offers funding in addition to federal CRP funds to farmers and landowners in order to address more targeted environmental issues within the state.

The benefits of the CRP for landowners as well as the improvements to the nation’s environmental quality are wide-ranging. There are myriad success stories throughout the state of Nebraska and across the nation as a whole. Thanks to the voluntary participation by farmers and landowners, vast improvements have been made to soil and water quality, as well as to wildlife populations and habitats.

To be eligible for the CRP, a farmer or landowner must have owned or operated the land for at least 12 months prior to the previous sign up period, with the exception of land that has been acquired due to the previous owner’s death, a change in ownership as the result of foreclosure, or any land that was purchased by the new owner without the sole intention of placing it in CRP.

For the CCRP, you may sign up at any time. The annual rental income offered through the CRP, in addition to the improvements to the quality of your land, are two important reasons to consider the Conservation Reserve Program. If you are a landowner looking to find additional ways to maximize your land income, and think that entering some of your land into the CRP sounds like a good option for you, contact a UFARM Land Manager for help evaluating your options.

United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. 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.

 

Sources:  “What is the Conservation Reserve Program?” Farm Service Agency. USDA. 02 May 2014. Web. 12 May 2014.

“Conservation Reserve Program.” National Sustainable Agriculture Coalition. Sustainable Agriculture. Web. 12 May 2014.

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Effects of Dry Winter Weather on Nebraska Farmland

Dry Winter Effects Nebraska farmlandIt’s planting season across the Midwest, and Nebraska farmers are eager to get their crops into the ground. A colder than normal winter with low levels of snowfall has left soil moisture at a premium, and while recent rainfall is a welcome remedy to lower than optimal soil moisture, the rain and cool temperatures are also doing their best to reign in planting across the area.

According to some, the rain that has fallen over Nebraska farmland the last week has been in areas which have needed it less, and as a result, the drought conditions in many parts of the Midwest remain. While this might allow planters to move, temperatures remain unseasonably cool, and many farmers are reluctant to plant when such low temperatures could affect the viability of the seed in the ground. This phenomenon, called “imbibitional chilling,” can occur when the seed takes in water that is too cold, and is damaged as a result.

Corn and soybeans are at greatest risk of being damaged due to cold soil temperatures within the first 24 to 48 hours of being planted, this according to University of Nebraska Lincoln CropWatch analysts. To reduce the risks of imbibitional chilling, they advise to plant when soil temperatures are in the high 40s, and the weather forecast for the subsequent 48 hours is higher.

CropWatch analysts also stress that while cooler soil temperatures are a threat to seed health, for soybeans, cold soil temperatures combined with high soil moisture content pose an even greater risk. “Cold soil delays the time between germination and emergence, but cold soil plus saturated soil conditions can substantively reduce soybean and corn emergence because soil-borne pathogens thrive in water-saturated soil.” Thus, they say, since the cold temperatures delay germination and emergence, the pathogens have more time to infect the seed, and as such, they highly advise the use of a fungicide seed treatment if planting in cold, wet conditions.

Area producers are also encouraged to assess the condition of their alfalfa fields after the cold, windy, and dry winter. Lack of snowfall left little protection for many alfalfa stands, and while some fields seem to have come through okay, other farmers are reported significant winter kill. Many may decide to turn these fields over to corn should the damage be too great.

After the late spring planting of 2013, farmers are anxious to be in the fields consistently, but it appears that the odds of having an “on time” corn crop across the area are shrinking. According to Agriculture.com’s Jeff Caldwell, the average date after which planting is considered late is May 20th. That leaves producers roughly three weeks to get approximately 80% of the corn crop into the ground. “Of the 21 days left, history teaches us your chances of having even half of that time under conditions favorable for planting corn aren’t the greatest,” says Caldwell.

As usual, Mother Nature will have the last word. If temperatures ever decide to move into the normal May averages, and should periods of moisture hold off, great gains can and will be made in planting progress. Do you have unanswered questions regarding your planting progress, or your land and crops? Feel free to contact UFARM at your convenience.

 

Sources:

“Factors Influencing Cold Stress in Corn and Soybeans.” CropWatch. University of Nebraska Lincoln Extension. 25 Apr 2014. Web. 01 May 2014.
Caldwell, Jeff. “The Shrinking Odds of An On-Time Corn Crop.” Agriculture.com. 30 Apr 2014. Web. 01 May 2014.

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Demand for Quality Farmland Remains Strong in 2014

Real Estate Auction Sign-croppedDespite a downturn in grain prices and lower net farm income expectations among farmers and investors across the Midwest, demand for high quality farmland remains strong. A limited supply of such quality ground is contributing to a healthy demand for premium farm acres, even though prices for farmland in general seem to be moderating following the five year boom in land values.

While the primary competitors for such ground are farmers themselves, local investors seeking to expand their portfolios continue to show great interest in obtaining these valuable parcels of ground. When such land become available, both parties show healthy interest and appear willing to pay top dollar for it.

Even with this stable demand, landowners and farmers themselves remain cautious when it comes to investing in more ground. While many are better positioned now, with less debt, than during the 80’s land bust, they are seeking to invest smartly. For many, this means putting more effort into finding only the best quality farmland.

Mike Walsten, editor at Landowner, projects that farmland values in general will fall about 10% this year, based on current expectations. He says that demand for quality farmland will remain fairly stable, while demand for less quality farmland will continue to weaken, especially should profit margins further weaken at the same time.

In the longer term, Walsten is confident that farmers and landowners will weather these market corrections if they show restraint in adding more debt. He cautions that adding more debt to maintain spending will create problems—something that many producers learned the hard way during the 80s land boom and bust. Another factor that could greatly influence landowner decisions are rising interest rates, especially in the latter half of 2015. Higher interest rates would further dampen land values.

Still, investing in farmland remains one of the best and safest long term investments—something that landowners and especially outside investors recognize. One of the main drivers of recent interest in investing in farmland is based on the burgeoning world population, which is expected to peak at 9 billion by 2050, up from 7 billion today. Growth, especially in developing nations, will substantially drive up demand for food. In addition, the quest for biofuels remains a contributing factor to the high demand for quality farmland. In the US, for example, corn grown to produce ethanol accounts for 23 percent of total corn use.

It’s no secret that owners of quality farmland are poised to benefit from such trends, and while land values are currently softening, many experts remain bullish on land values going forward, especially for high quality farmland.

Are you seeking to make the most of your farmland, or are you looking to expand your portfolio and think that land ownership would be a good fit for you? Let the experienced professionals at United Farm and Ranch Management help you determine the best plan of action to benefit your unique situation.

Sources:

Birt, Nate. “Farmland Prices: Demand Ticks Up for Good-Quality Ground.” Agweb.com. Farm Journal. 07 Apr. 2014. Web. 24 Apr. 2014.

Murphy, Richard McGill. “The Best Long-Term Real Estate Investment: Farmland.” CNBC.com. CNBC. 24 Mar. 2014. Web. 24 Apr. 2014.

 

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An Alternative to Leasing: Custom Farming

Tractor-Baling-smallerLandowners have many decisions to make when it comes to their land, the most important of which is deciding who will farm it. Do they farm it themselves, or should they offer it for lease? The options vary depending upon the situation of individual landowners. Lease agreements may be the best option for some landowners, who might not have close ties to their farms, or who are geographically distant from their land. However, if one of these options doesn’t seem like the right fit, are there any alternatives? For many landowners, custom farming is the answer. In cases where a landowner might desire to remain in control of all the farming decisions himself, but might not have the time or physical resources available, custom farming offers a practical alternative.

In a custom farming arrangement, the landowner pays a set fee to a farm operator to perform all the labor in crop production. The farm operator provides the machinery needed to farm the land and assumes only the costs associated with machinery repair and maintenance. All the other decisions are made by the landowner, who also pays for all input costs, including chemicals, seed, fertilizer, and crop insurance. The landowner also receives all the income from sales and all eligible farm program payments.

There are obvious advantages to custom farming for both the landowner and the farm operator. For the farm operator, there are significantly less price and yield risks than in a leasing situation, and little to no additional operating capital is needed. Custom farming provides extra income at a set rate. Landowners benefit from not having to invest in expensive machinery, or in its maintenance and upkeep. Many landowners favor not having to negotiate rental rates or collect lease payments.

If a custom farming agreement sounds like a good fit for you and your land, it’s important to have a written agreement in place that provides specific details of what is expected of each party. Knowing ahead of time the amount of acres and type of soil that will be farmed, the farming practices—including tillage, watering, and fertilizer practices—that will be used, and the tentative planting and harvesting schedule, is key to a good business relationship. It’s a good idea to outline a payment schedule as well. Clear, open communication will prevent any potential misunderstandings.

Determining the appropriate custom farming rate can be the most complicated part of the custom farming agreement. Reports that list the average rate for your area and crop are available from various sources.

Another option for landowners includes custom leases, where the tenant gets a share of crop, anywhere from 15% to 25%. This gives the tenant a vested interest in the crop. The tenant is responsible for the cost of all mechanical operations on the farm. Custom leases allow both tenants and landowners to share in the good years.

Many landowners turn to professional land managers to help them with these considerations. Land management companies are able to match up landowners with those who are seeking to do custom farm work. They are also able to draft the agreement and help to determine an appropriate and mutually beneficial rate for the work supplied.

As a landowner, it’s important to know all the options available to you. Custom farming provides yet another way for you to manage your investment. Do you have questions about custom farming? Let UFARM supply the answers! We’re here to help.

Source: Edwards, William. “Custom Farming: An Alternative to Leasing.” Iowa State University Extension and Outreach. Iowa State University. Sep. 2009. Web. 13 Mar. 2014.macld they lease it to anoth

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Irrigated Nebraska Farmland: What’s the future for water?

Sacramento RiverNebraska is known for its Cornhuskers, but perhaps a more likely mascot would be the Irrigators? According to the results of the 2007 Census of Agriculture, Nebraska is ranked first in the entire nation for total irrigated acres, even falling ahead of the state of California. The Census of Agriculture is conducted every five years, and while the newest 2012 numbers are yet to be released, other statistics corroborate this agriculture trend in irrigation.

Specifically, areas in the north and northeast portions of Nebraska have seen the most irrigated acres expansion, where fewer restrictions have been in place up until the last year or two. Antelope and Holt Counties are ranked one and two, respectively, in their expansion of irrigated acres since 2008. Nebraska’s irrigation expansion makes sense, since our state just happens to lie on top of one of the largest freshwater seas in the nation, the Ogallala Aquifer. Combined with higher commodity prices and land values, producers have sought to expand their crop ground.

Some, however, aren’t as optimistic when it comes to water management in our state. Drought concerns, especially after the 2012 growing season, coupled with the news that certain areas of the state are being classified as over appropriated when it comes to the water supply, are keeping area farmers keenly attuned to all things water-related. When an area is deemed over appropriated, it means that the water demands on the area aren’t sustainable with existing supply. This is when the state’s Natural Resource Districts put restrictions on new applications for irrigated acres, transfers, and supplemental irrigation wells, as the Lower Elkhorn NRD board voted to do in November. The board did provide one caveat: It will grant up to 10 acres per project for those who want to complete a full circle for a pivot, up to 400 acres total, this according to Farm Journal Editor Nate Birt, on agweb.com.

While we have a collective interest in maintaining good stewardship of our water resources, it’s also in our state’s economic interest to provide farmers the opportunity to make the most of their land, and the ability to irrigate helps not only them, but the Nebraska as a whole. A study by the Nebraska Farm Bureau found that irrigation helped both the state jobs outlook and the economy in 2012. More specifically, the study found that farmers’ ability to irrigate their crops contributed $11 billion to the economy that same year.

Regarding the important findings of the study, Nebraska Farm Bureau President Steve Nelson explained, “The major take away from the study is that water used for irrigation in agriculture plays a critical role in the state’s economy, whether it’s direct financial benefit or helping protect Nebraska jobs. Given that reality it’s critical we as a state continue to recognize its importance as we talk about future management of our state’s water resources and the role of irrigation in Nebraska agriculture.”

Potential limits on the amount of water producers are allowed to put onto the ground are putting pressure on farmers to become ever more efficient with their irrigation systems. Farmers are researching the best practices for irrigating their crops, whether it’s being smarter about when and how to apply water, to investing in the latest irrigation technology, such as soil moisture probes and variable rate pivots, to help them irrigate as efficiently as possible.

Meeting the needs of our own land and preserving our state’s natural resources is a delicate balancing act. Don’t go it alone—let UFARM help you make the best decisions for your land in light of changing demands.

Sources: (“Study Showed Irrigation Protected Jobs, Fueled Nebraska Economy in 2012.” Nebraska Farm Bureau. 23 Jul. 2013. Web. 19 Feb. 2014.)

(Birt, Nate. “Nebraska Water Woes.” Farm Journal. Agweb.com. 20 Nov. 2013. Web. 19 Feb. 2014.)

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Emerging Technology Trends in Agriculture

Center PivotAs with any industry, technology is changing the way farmers manage nearly every aspect of their farming operations. New developments in technology are making it possible for farmers to be more productive, from the seeds they put into the ground, to the machinery they use to plant and harvest their crops, to the data they obtain about their fields, to the ways they monitor and grow those crops. Keeping up to date on the latest technology in each of these areas is critical to staying ahead of the curve, and to caring for the land in the best way possible.

Some of the most innovative technological advances in agriculture are in the area of crop biotechnology. Scientists now understand more about seed genetics than ever before in history, and are creating highly specialized seeds that are able to perform in many varying types of fields with an astonishingly high degree of specificity. Faced with a growing world population, farmers in the US and around the world will need to double food production to meet the demand by 2050, according to United Nations figures and reported by Robert T. Fraley, executive vice president and chief technology officer for Monsanto Company.

Speaking to a group at a Farm Journal forum last year, Fraley explained how biotechnology and communication technology will converge to create even more remarkable innovations in the industry. “‘The farm tractor today has more computer power than the first spaceship that went to the moon,’ he said, explaining that DeKalb will launch a FieldScripts program in 2014 that will help farmers vary planting within 10-by-20-meter grids. The program will match the best seed and planting rate with zones on a farm.”

As Fraley reported and many producers can already attest, technological advances in machinery go hand in hand with the types of seeds that are being planted. Farmers are taking advantage of different software programs and GPS technology that work together to help them plot their fields, dividing them into specified groups based on characteristics such as soil type. These software programs also keep track of yields and many other types of data.

Aside from these innovations, farm machinery is also steadily advancing, making planting, spraying, and harvesting more efficient and accomplished with greater ease. For instance, farmers are now able to use direct injection sprayers that can apply different chemicals at variable rates. These sprayers eliminate the need to mix chemicals in a separate tank, thereby eliminating the need to clean the tanks. They also lessen exposure to the chemicals by the operator, and put less excess product on the ground. An in-cab control console allows the farmer to control the rates at which the chemical is applied.

Technological advances are also present in irrigation and drought management practices. Especially after 2012’s drought, farmers are focused on using their water resources as efficiently and economically as possible. They are taking advantage of software that monitors their pivots’ output and texts them when the pivot has completed its circle or has encountered a problem, saving time and money. Innovations that peek under the soil in the form of highly advanced soil moisture probes are increasingly being utilized by farmers to ensure that their crops are getting the right amount of moisture at the correct depth and at the right time during the plant’s growth cycle. These moisture probes are able to communicate directly to a computer or smartphone, so that producers can stay on top of their crop’s progress at all times and from any location. Another developing irrigation technology are variable rate pivots that can be programmed to water less or more based on different aspects of the field.

Today’s advancing farm technology makes it an exciting time to be in agriculture, and farmers are doing important work by using it to grow the crops that feed their families and the world.  Our UFARM managers understand the importance of this emerging technology and can help landowners determine what kinds of technology are valuable to have on their farm.

Sources: (Thompson, Boyce. “Fraley: Technology Will Be Key to Feeding the World Population.”Farm Journal. Agweb.com. 5 Dec. 2013. Web. 6 Feb. 2014.)

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When Will Farmland Values Moderate?

corn chart

Courtesy of USDA

Nebraska landowners and farmers are always on the lookout for trends and forecasts of what they can expect for weather, commodity prices, and farmland values. The prospect of rising interest rates and lower commodity prices have many wondering if the high land value they’ve grown accustomed to over the last ten years is about to change.

Opinions vary, but many analysts agree that, for now, farmland values have reached their zenith. While most don’t expect there to be a bubble burst, it is generally agreed that the going rate for acres won’t continue to rise, and may have reached a plateau for the time being.

According to Iowa State Economics professor Michael Duffy, “It’s going to be more akin to a tire that gets a nail in it, a slow letdown,” he says. “A lot of it will depend if commodity prices stay in this downward trajectory or they flatten out.”

Grain prices tend to cycle from high-profit to low-profit. Corn prices have averaged $4.77 a bushel between 2006-2012, which is likely a new plateau in comparison to what they were prior to 2006. While the recent USDA report held bullish reports for corn, the corn price could still drop lower should the 2014 crop yield higher than average, resulting in the possible lowering of land values. In turn, should grain prices remain lower or recede, farmers will have less net cash income—a major driver of farmland values.

On the other end of the opinion spectrum is Terry Kastens, an agricultural economist at Kansas State University. He contends that “U.S. farmland values are at a ‘tipping point’ and could fall as much as 10 percent in 2014 as commodity prices flatten out.”

After a somewhat surprising USDA farm report on January 10th, that reported more bullish than expected corn bushels, it would seem that Duffy’s statement is more accurate, and that a leveling off of commodity prices might sustain current farmland values.

In Nebraska, farmland values rose 13 percent in the third quarter, according to the Kansas City Federal Reserve branch, whose area includes Nebraska. Some agricultural bankers said these figures, while still an increase, illustrate a moderating of prices from other recent values.

With so many variables at play, it is next to impossible to predict with certainty what Nebraska farmland values will do next, but the broader context seems to support a slow-down when it comes to money for farm acres.  In the meantime, the 2014 growing season and subsequent yields for the new crop will further determine if farmland values will continue to moderate in our state.

Let the land management professionals at UFARM help you stay on top of all the latest business and marketing trends for your farmland.  Contact United Farm and Ranch Management today.

Sources: (Martin, Andrew. “Iowa Farmland Values Hit a Record High.” Bloomberg.com. Bloomberg Businessweek. 12 Dec 2013. Web. 31 Jan. 2014.) (Schafer, Sara. “3 Reasons Farmland Values Could Head South.” Agweb.com. Agweb.com, 21 Nov. 2013. Web. 31, Jan. 2014.) (Hubbard, Russell. “Farmland Values Increase for Nebraska, Iowa in Quarter.” Omaha.com. 25 Jan. 2014. Web. 31 Jan. 2014.)

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What Makes Organic Farming A Fit For Your Farmland?

Land Management for Organic Farming in NebraskaDemand continues to grow in the nation for organically produced foods and grains, and many farmers and landowners across the nation are joining the growing organic trend. Nebraska farmers have also been taking notice. The increasing demand for certified organic products and food are opening up new markets, and many Nebraska farmers are stepping in to fill the niche. Have you ever considered the benefits of using your land to produce organic grains or foods? Would organic farming be a good fit for you and your farm?

The term “organic,” when applied to farming, means that foods and grains are produced without using pesticides, non-organic fertilizers, antibiotics, and hormones. Organically grown foods and grains must comply with mandated specifications and regulations set forth by the National Organic Program. Farms must meet specific requirements and be certified by the NOP in order to be considered organic. One of these requirements is that their fields be organic (free from certain synthetic fertilizers and chemicals) for three years before they are able to be certified.

Those applying to be certified must include an application to an accredited agent specifying the four following things:

• The type of operation to be certified
• A history of substances applied to land for the previous 3 years
• The organic products being grown
• The organic system plan describing practices and substances used in production

A drawback at the beginning of the process is that the grain they are producing for the first three years is unable to be sold at the organic prices, even though they are grown using organic practices. Despite the initial hurdles, the payoffs can be substantial; organically produced corn and soybeans can be very profitable for farmers, as they can sell for larger premiums.

Growing organic grains requires different practices than conventional farming, specifically in areas relating to soil composition, weed control, yields, and prices. In particular, weed control for organic farming is perhaps the area which is most divergent from conventional farming, since organic farmers are unable to use conventional methods of weed control, such as spraying herbicides on their crops. Instead, they use other means, such as mowing weeds when they are small, increased cultivation, and adding another crop to the rotation to discourage weed growth, such as rye.

In order for organic farming to be profitable, it is important to make certain that the price premium exceeds the yield loss and higher input costs associated with the practice. While organic farmers traditionally have lower yields, the price of organic grains can be expected to offset those lower yields.

If you’re thinking of moving your farmland into organic farming, it is necessary to be aware of the vast differences in farming practices that accompany the venture as opposed to conventional farming. It is also important to keep in mind the nature of your farmland, and if its soil composition is conducive to growing organically produced grain. Finally, consider the geographical location of your land and decide if it is in decent proximity to markets that seek out organically produced grains and food.

Let UFARM help you decide if organic farming is the right fit for you and your land. They have the expertise to match you with the right operator, and the insider’s knowledge of the specifics that go along with expanding or changing your landowning goals.

Contributing source: Schober, Marc. “Organic Trends Benefit Farmland.” Agweb.com. 15 Dec. 2010. Web. 23 Jan. 2014.