Election effect on Nebraska landowners

After a stunning upset, Republican Presidential candidate Donald Trump is preparing to take the reins from President Obama in January. His election was propelled by overwhelming support from rural voters—many among them farmers and landowners, who hold out hope for policies that may help ease the burdens that are falling on themselves and their fellow agriculture producers. Rural voters backed Trump over Clinton 62 percent to 34 percent, at the same time rural voters increased in this election. That, combined with the depressed urban turnout, sealed the deal for the business magnate.

Now, as Trump is picking out his cabinet members and preparing for his Inauguration, the same farmers and landowners are wondering how  a Trump presidency will play out not only in terms of agriculture policy, but in others such as immigration reform, trade, regulations, and healthcare.

While obviously there is only conjecture at this point, farmers and landowners can look to a few key points that Trump spelled out during his campaign and in an interview with Farm Futures magazine.

First, the President-Elect was quite clear in stating his support for agriculture, saying, “The Trump Administration will be a pro-agriculture administration.” He went on to state that he has assembled an Agriculture Advisory Committee comprised of top leaders in agriculture communities, who will provide key insight into the specific needs unique to farmers and landowners in rural areas.

Another issue that may impact large-scale farms deals with the many illegal immigrants who are employed by them. Noting concern that such a workforce may suddenly be taken away, Trump responded by emphasizing the perils of the Obama system of open borders on rural communities. “I recognize the unique labor challenges facing the American farm community and will include farmers and ranchers in the process of determining the best possible immigration policies. Enormous stresses are being placed on state and local government services, while jobs for American citizens and wages for American workers are in decline,” Trump said.

Additionally, many farmers are hoping for a new farm bill that addresses unpopular terms of the current bill, passed in 2014. Among them, the disparities associated with the Agricultural Risk Coverage payments are cited as a top concern. While this may be prioritized, farmers and landowners should be cautioned, as many conservative lawmakers are urging cutbacks on agricultural subsidies —about which many farmers may think twice, although many see the reasoning behind such a move.

Similarly, conservation programs and efforts may be altered, as well as the recently passed legislations regarding GMOs and food labeling.

Most importantly, perhaps, is that Trump’s election may spell the end of the regulations that burden both small- and large-scale farmers and landowners, a hope that the agricultural community immediately expressed the morning of November 9th.  Trump had strong words regarding these burdensome regulations, saying, “Terrible rules are written by unelected, unaccountable bureaucrats who often know nothing about the people they are regulating. The regulators have all of the power, and our nation’s farmers are often forced to endure costly, burdensome and unwise regulations that are bad for American farmers and consumers.”

Landowners and their families will welcome Trump’s proposed end to the controversial estate tax.  The double taxation this law causes has been a burden for many families.

Looking forward, America’s farmers and landowners are cautiously optimistic in the face of Trump’s forthcoming term, but will have to wait and see if the Trump administration will deliver on those promises.

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. If you have questions about yields and productivity on your rented farmland, give the UFARM managers contact us today!

Sources consulted:  Clayton, Chris. “Farm Voters’ Expectations of Trump Presidency Face Hard Realities.” Agfax.com. Agfax. 10 Nov. 2016. Web. 21 Nov. 2016.
Spangler, Holly, and John Vogel. “Clinton and Trump: Where They Stand on Ag.” FarmFutures.com. Penton. 20 Sep. 2016. Web. 21 Nov. 2016.

Nebraska Land Values

We’ve written a lot about land values—their steady rise over the last decade, their leveling off in 2014-15, and their continued substantial portfolio value to farmers and non-farmers alike. With lower commodities prices, combined with an interest rate increase and more likely to come, will farmland values continue to be a sought after asset? What do experts forecast for land values in 2016?

It’s not news to stockholders that 2016 is off to a poor start: It was the Dow’s worst five-day start to a year on record, according to Dow Jones. Individual stock holders are worried about the trend, even though experts caution stockholders not to panic. Another tip they’re offering: Diversify in real estate.

This means that farmland may continue to be an attractive alternative to stocks for those looking to revive their stock portfolios. While farmers and big outside investors are still eager to buy land, they are also being more realistic in the timing of their purchase, especially with continued lower commodity prices. While the small interest rate increase announced in December—the first of several projected increases to come over the next 5 years—will likely have an impact on land values, economists believe that investors will continue to look to land as a stable long term investment, despite various downward pressures.

In the longer term, continued world demand for water, food, fuel and fiber will determine commodity prices which will affect future land values. Most economists agree that, as long as the supply of land for sale remains low and demand continues to be present, land values will be supported.

In this way, those worried about a market bubble burst, such as the five year long burst in the 1980s, may allay their fears.

Delving further into this theory are Gary Schnitkey, Bruce Sherrick, and Todd Keuthe of the University of Illinois Ag Economics department. In a recent 2016 Farmland Price Outlook report, they looked at capitalized values of farmland, where capitalized value represents the “discounted sum of future cash flows, capturing the impacts of both farmland returns and interest rates on farmland price.”

They found that while there will continue to be downward pressure on farmland values in the coming year, the capitalized values do not suggest that current prices are in a bubble condition.

“Stated alternatively,” they conclude, “capitalized values relative to farmland prices do not point to a situation like the 1980s in which the driving forces of farmland prices directly suggesting farmland prices were above their fundamental values.”

In the meantime, farmers and landowners still face challenges, operating under tight profit margins and lower farm income.

Sources consulted: Gustke, Constance. “Farm to Market: Taking Stock of the Agricultural Land Grab.” CNBC.com. CNBC. 21 Jan. 2016. Web. 11 Feb. 2016.  Schnitkey, Gary, Bruce Sherrick, and Todd Keuthe. “2016 Farm Price Outlook.” FarmDocDaily. University of Illinois. 20 Oct. 2015. Web. 11 Feb. 2016.