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Nebraska Farmland Owner Survey Results

Nebraska Landowners

Last year, the USDA’s National Agricultural Statistics Service (NASS) conducted a survey of all landlord owners of agricultural land in the US. The survey, called the 2014 Tenure, Ownership, and Transition of Agricultural Land (TOTAL) Survey, was the first of its kind done by NASS since 1999.

The purpose of the survey was to provide updated information on land ownership income, expenses, debt, assets, and demographic landlord characteristics, in addition to survey questions addressing current farm issues. The results are representative of all agricultural land held by both operating and non-operating landlords in the contiguous 48 states.

The results provided a wealth of new information on landowners in Nebraska and across the nation. In Nebraska, 20.1 million acres of farmland are rented. There are 69,112 farmland landlords in the state, and of these, 11.864 are farmers, while 57,248 are non-farming landlords.

Some of the other TOTAL noteworthy findings include:

  • 39 percent of all U.S. farmland is rented or leased
  • 80 percent of all rented farmland is owned by non-farming landlords
  • Rented farmland is valued at $1.1 trillion in total
  • 91.5 million acres of farmland (or about 10 percent) are slated for ownership transfer in next 5 years
  • only 21 million of these acres are expected to be sold to a non-relative.

Of these results, more than half of the farmland rented out by non-farming landlords was inherited. Of those landlords, 87 percent indicated that they are not currently farming. These results are fairly consistent with the results of the 1999 survey, indicating that rental trends have stayed relatively the same. Similarly, results such as those above are not necessarily surprising, as rented farmland is often owned by family members who have received land as part of an inheritance and hold no farming interests themselves. Similarly, many of these rented acres are owned by retired or widowed farmers who are no longer able to farm the land themselves.

Along this line, the survey results indicated that, on average, farmland owners are older than farmers, with the average age of farmers in the US being 58.3, compared to 66.5 for landlords, or non-farming owners of rented ground. Overall, more than half of principal landlords were age 65 years or older, at 57 percent. 18 percent were under 55 years old.

Perhaps the most noteworthy take away from the survey is what this means for the next generation of farmers, and raises important questions regarding the transfer of rented farmland over the next two decades. According to the survey, landowners in Nebraska reported that they expect to transfer 4.45 million acres to different owners in the next five years. Of these, 362,462 acres are expected to be sold to non-relatives, while 445,253 acres are expected to be kept in the family.

As such, new prospective farmers will continue to face challenges in finding acres to buy, with few farmland acres available.  Our UFARM Land Managers can assist landowners, farmers and ranchers when looking for ways to lease, buy or sell land – contact us today!

Source consulted: “Who Owns US Farmland, and How Will it Change?” National Sustainable Agriculture Coalition. National Sustainable Agriculture Coalition. 18 Sep. 2015. Web. 30 Dec. 2015.

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September 30th Grain Report Recap

USDA ReportsThe USDA released its September 30 Grain Stocks report yesterday, reporting slightly higher bean stocks and less corn, leading corn to fall lower and beans to end slightly higher, due to the report data of 14 million bushels of beans lower than pre-report expectations.

At yesterday’s close, the December corn futures ended 1 1/4 cents lower at $3.87 ¾, while November soybean futures ended 7 3/4 cents higher at $8.92. Overall, the report showed corn stocks up 15 percent from June of 2014, and soybean stocks up 54 percent. In total, corn stocks were up 41 percent from September of 2014, and soybean stocks were up 108 percent.

Looking specifically at the numbers, old crop corn stocks in all positions as of September 1st, 2015 totaled 1.73 billion bushels. 593 million bushels of total corn stocks are being stored on-farm, up 28 percent from one year ago. Off-farm stocks are at 1.14 billion bushels, a number that is up 48 percent from one year ago. The June-August 2015 quarterly disappearance is at 2.72 billion bushels, compared with 2.62 billion bushels from the same time period last year.

The big news coming from the report stemmed from the soybean numbers.

Of the soybean market’s initial 18 cent rally following the report, and final ending of 8 cents higher for the day, DTN’s senior marketing analyst Darin Newsom argues, “The immediate reaction looked to be one of a market with an artificial ceiling finally removed.”

Old crop soybeans totaled 191 million bushels as of September 1st, a figure up 108 percent from one year ago. On-farm soybean stocks totaled 49.7 million bushels, up 133 percent from a year ago, with off-farm stocks at 142 million bushels, up 101 percent. Disappearance figures totaled 436 million bushels, up 39 percent from last year.

According to the report:

Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2014 soybean production is revised to 3.93 billion bushels, down 41.7 million bushels from the previous estimate. Planted area is revised down 425,000 acres to 83.3 million acres, and harvested area is revised down 470,000 acres to 82.6 million acres. The 2014 yield, at 47.5 bushels per acre, is down 0.3 bushel from the previous estimate.

Trade reaction to the release of the latest report numbers was predictable, although Kluis Commodities analyst Cory Bratland expects the numbers to be shrugged off quickly, and for the markets to resume trading based on harvest activity. Average trade guesses were quite similar to actual numbers for corn, even though they were lower than pre-report trade expectations, hence higher close.

Randy Martinson with Progressive Ag Marketing based in Fargo, N.D., does expect to see corn and soybean prices to see pressure due to the quick pace of harvest and higher-than-anticipated yields.

How is your harvest progress? Are you surprised by the latest Grain Stocks Report numbers? Feel free to contact UFARM with any questions or concerns you may have—we are glad to work with you to make the most of your farming operation.  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!

Sources consulted:  Howard, Fran. “Big Carryouts as Farmers Head Into New Crop Season.” Agweb.com. Farm Journal. 30 Sep. 2015. Web. 01 Oct. 2015.  Newsom, Darin. “We’ve Seen This Show Before.” DTN The Progressive Farmer. DTN. 30 Sep. 2015. Web. 01 Oct. 2015.  USDA. “Grain Stocks Report September 30, 2015.” National Agriculture Statistics Service. United States Department of Agriculture. 30 Sep. 2015. Web. 01 Oct. 2015.

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Higher-Than Anticipated WASDE Report Numbers Result in Bearish Grain Markets

USDA Reports

On Tuesday, August 12th, the USDA released its latest World Agriculture Supply and Demand Estimates, and as usual, had some unexpected numbers for analysts and producers. Higher-than-anticipated yield estimates in both corn and soybeans resulted in lower grain prices for both crops.

Most of the pre-report analysis was based on the USDA’s latest weekly Crop Progress report, released just prior to the WASDE report, which rated the U.S. corn crop at 70 percent good to excellent, similar to the previous week’s rating. That similarity had many analysts expecting the USDA to release similar yield estimates as in July.

Other pre-report analyses had based their little-to-no change projections on the tough growing conditions that have plagued producers in the Eastern Corn Belt this growing season.

Looking at the numbers, for corn, the USDA estimated that 2015-16 corn yield at 168.8 bushels per acre vesus 166.8 bushels per acre in July and the average trade guess of 164.5 bushels per acre. As a result, the total US corn production increased to 13,686 million bushels, up 156 million bushels versus July estimates and 359 million bushels higher than the average trade guess.

For soybeans, the USDA had similar yield increase estimates, pegging the 2015/16 US soybean yield up to 46.9 bushels per acre. This is in comparison the 46 bushels per acre estimate in July, and the average trade guess of 44.7 bushels per acre. As a result, the US soybean carryout increasing to 470 million bushels, or 169 million bushels higher than the average trade guess. In turn, November soybean futures closed down 61 ½ cents per bushel.

As with corn, the pre-report analysis of similar estimates was based on poor growing conditions in certain parts of the country, and the crop condition report good-to-excellent rating of 63 percent, versus 70 percent one year ago.

Are the USDA’s numbers to be believed? Only time will tell, though the September WASDE report should have some actual harvest numbers to figure in. Analyst Marcus Ludtke of Commodity Marketing Co. firmly places himself in the skeptical camp regarding the latest WASDE estimates.

He writes,

“What’s potentially misleading about the USDA’s yield decreases relative to a year ago? 2014 was a record corn yield year for a number of states including the four states of IL, IN, MO, and OH. Illinois’s record yield in 2014 eclipsed the previous record by 20 bpa (previous record was 2004 – 180 bpa), Indiana’s by 11 bpa (2013 – 177 bpa), Missouri’s by 24 bpa (2004 – 162 bpa), and Ohio’s by 2 bpa (2013 – 174 bpa). Therefore 2014 in my opinion should almost be considered an outlier based on just how remarkable and unprecedented of a growing season it was. I don’t think it should be used as an accurate representation of trend of even slightly above-trend line yield potential.”

Ludtke similarly considers 2012 an outlier as well, due to the extreme drought that plagued the entire Midwest.

In light of those considerations, he hypothesizes: “If we’re to make any sort of sound comparison to the USDA’s yield estimates on Wednesday, I think we need to measure them versus the 4-year average corn yields from each of those states during 2013, 2011, 2010, and 2009.”

Until then, farmers will keep doing what they do best, and start preparing for harvest.

Source consulted:  Ludtke, Marcus. “US Corn Weekly Update: August WASDE Rattles Market.” See It Market. See It Market. 13 Aug. 2015. Web. 20 Aug. 2015.

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Farm Bill 2014: Updating Payment Yields and Reallocating Base Acres

Farm-BillThe Agricultural Act of 2014, more commonly known as the Farm Bill, brought with it some changes that will have an impact on producers’ pocketbooks. Specifically, the latest Farm Bill specifies that producers will have a one-time opportunity to adjust their base acres and update their payment yields, thereby potentially increasing their program payments. The Bill also stipulates that producers elect the type of coverage they would prefer for crop years 2014-2018. The deadline—February 27, 2015—is fast approaching.

The opportunity to evaluate and make these changes shouldn’t be ignored; they are few and far between, and might not come along again for a matter of years. An update allows a realignment between a farm’s current production pattern and the payment formulas for commodity programs. Many farms’ base acres and yields are still operating by data obtained during the 80s. Any producer can attest that much has changed since then, and thus an evaluation is in order.

Looking more closely at program payment yields, if elected, the new payment yield for a crop will be 90 percent of the average yield planted and considered planted acres during the years 2008-2012. If the newly calculated payment yields are higher than current payment yields, producers will likely want to follow through and update to the new standards, as higher program payment yields will improve their options when it comes to the new Farm Bill commodity support programs.

Similarly, producers will be able to reallocate their base acres, based on their 2009-2012 cropping patterns. Most producers’ current base acres reflect cropping patterns for the years 1998-2001, and their planting decisions may have changed significantly since then. While the total number of acres cannot be increased, reallocating these acres based on crops planted will have an impact on program payments received for the 2014-2018 seasons. Additionally, it’s important to note that reallocating base acres doesn’t affect the choice of what to plant in a specific year, only the program payments received.

After evaluating whether or not to update payment yields and reallocate base acres, producers will then need to determine which of three options the new Farm Bill provides for commodity support: PLC, County ARC, or individual ARC. PLC, or Prices Loss Coverage, is essentially the same as previous payment programs, but with higher target prices. ARC, or Agriculture Risk Coverage, is a revenue support program that makes payments based on crop-by-crop revenue on either a county basis (County ARC) or based on whole farm revenue outcomes (individual ARC). The Farm Bill allows producers to annually decide in which program they’d like to enroll for the 2014-2018 growing seasons. However, the decision to update yields and base acres must be decided within the coming weeks.

Do you have concerns about the impact the latest Farm Bill could have on your farming operation? Please don’t hesitate to contact a UFARM professional; we are happy to listen to your concerns and point you in the right direction.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!

 

Sources consulted:  Mitchell, Paul D. “Updating Base Acres and Payment Yields Under the New Farm Bill.” Integrated Pest and Crop Management. University of Wisconsin. 05 Aug. 2014. Web. 05 Feb. 2015.  Olson, Kent. “Updating Payment Yields and Reallocating Base Acres.” University of Minnesota Extension. University of Minnesota. Nov. 2014. Web. 05 Feb. 2015.  Plastino, Alejandro. “Base Acrage Reallocation and Payment Yield Update.” Iowa State University Extension and Outreach. Iowa State University Extension. Aug. 2014. Web. 05 Feb. 2015.

 

 

 

 

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Latest Farm Bill’s Effects on Landowners

2014 Farm BillThe Agricultural Act of 2014, more familiarly known as the Farm Bill, was finally passed in February, and since then the changes made in the final iteration of the bill are out in the open. Among the most significant changes for farmers and landowners—besides the end to direct payments—are the expanded insurance and revenue protection programs available. In place of DCP and ACRE programs, the new farm bill will offer:

• Price Loss Coverage (PLC), a price protection program that triggers payments when market year average prices fall below target levels, which are called reference prices.

• Agricultural Risk Coverage County (ARC-C), a revenue protection program that triggers payments when the county revenue per acre falls below a benchmark revenue guarantee per acre set for the county.

• Agricultural Risk Coverage Individual (ARC-I), a revenue protection program that triggers payments when there is a revenue-per-acre shortfall on the individual farm that falls below a benchmark revenue guarantee per acre for that farm.

Producers taking advantage of the ARC program will have to choose either the county or farm option. The county option pays up to 85 percent of the base acres, while the farm option is limited to a maximum of 65 percent of base acres.

The PLC option will work much like the previous DCP program. The PLC payment results when the covered commodity’s marketing price falls below the reference price.

While the initial analysis of these new program options seemed a bit more clear-cut last spring, the falling grain prices and bearish markets coupled with the record volume of harvested grains forecasted this fall, the options become a bit muddied. In addition to the current market trend, it’s important for farmers and landowners to understand that whichever program in which they choose to enroll is permanent for the five year span of the bill, and cannot be changed. Therefore, it is critical that they make the best decision based on their specific farm situation.

Landowners also need to be aware that if “push-comes-to-shove” it is really the operator of record for 2014 that will make the decision.  With that in mind, landowners should work with their land tenants to arrive at a decision that both parties are comfortable with.  A professional land manager can provide valuable assistance to landowners when it comes to negotiating the correct programs for their land.If you are changing tenants for 2015, the former tenants have the authority to make the program decisions, when they really have no stake in the 2015 or beyond crops.  This could leave the landowner, or new buyer, of the farm with a program choice they didn’t have input on. The FSA is still determining if there’ll be exceptions made for those types of situations.

Some other specific considerations to be aware of are as follows:

  • Failure to enroll in 2014 places a farmer automatically in the PLC program beginning in 2015 with no payment eligibility for the 2014 crops
  • If choosing either PLC or ARC-C, a farmer may enroll in different programs commodity by commodity. As an example on the same FSA farm, the corn base acreage could be enrolled in PLC while soybeans are enrolled in ARC-C
  • If choosing the ARC-I program all base acres on that FSA farm must be enrolled in the ARC-I program
  • Base acreage can be reallocated to be in the same proportion as the actual planted crops during the 2009 to 2012 crops. This will be an elective as each farm can stay with the current base, or update.
  • Those electing PLC can update their FSA yield base to 90% of that farm’s yields from 2008 through 2012. It is likely that most electing PLC will also want to update their yields.

Undoubtedly, farmers and landowners have even more critical decisions to make with the expended program options available with the new Farm Bill. The pressure is on to have the latest information in order to make the right decision. This program details are still evolving and training for FSA staff is going on as this is written.  More information will come to light in the weeks ahead.

Do you have questions or concerns about the latest Farm Bill’s affect on your land and how the programs will be applied to your property? Contact a UFARM representative, and they’ll be happy to help make you make an informed decision.

Sources consulted:
Clayton, Chris. “Offering Advice on Farm Bill Choices.” The Progressive Farmer. 12 Oct. 2014. Web. 13 Oct. 2014.
Keeney, Roman. “A Perspective on the 2014 Farm Bill.” Purdue University Center for Commercial Agriculture. Purdue University Ag Econ Dept. 2014. Web. 13 Oct. 2014.

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What did the August 12th USDA WASDE report hold?

As usual, farmers and traders alike braced for the USDA’s latest World Agriculture Supply and Demand Estimate (WASDE) numbers. Market corrections based on the monthly report’s numbers vary in intensity based upon how well they match up with pre-report, private estimates. While many question the impact of the USDA’s numbers for the longer term, the reports undoubtedly affect the grain markets for the short term, and whether the outlook is bullish or bearish.

The August report was released at 11 am on Tuesday, and the numbers reflect record production for both corn and beans. Farmers across the nation are estimated to grow 14 billion bushels of corn and 3.8 billion bushels of beans.

For corn, the record national average estiUSDA Reportsmate of 167.4 bushels per acre is still below the pre-report estimates. This brought ending stocks for 2013-14 corn to 1.181 billion bushels, and ending stocks for 2014-15 at 1.808 billion bushels, both below the range of pre-report estimate. Despite the record numbers, they were still slightly below trade expectations, and analysts are calling it slightly bullish for corn.

As far as corn yields are concerned, 11 states are expected to post new yield marks. The USDA also reported that ten key corn producing states have the highest number of ears on record so far. The estimated average cash price expectation for corn was lowered to 3.90 from 4.00. For soybeans, the WASDE report spelled bearish futures for soybeans and record-breaking production. Farmers will harvest 3.816 billion bushels of soybeans with a national average yield of 45.4 bushels per acre, the USDA said. This is 16 percent higher than last year.

As such, shortly after the report numbers were released, soybean trade numbers dipped double digits on news of the potential record crop. The report also indicated that the U.S. season-average soybean price for 2014/15 is forecast at $9.35 to $11.35 per bushel, down 15 cents on both ends.

The ending stocks estimate for 2013-14 soybeans was unchanged overall at 140 million bushels, although some numbers were changed in regard to supply and demand. As a result of the increased production estimates, the USDA increased ending soybean stocks for 2014-15 by 15 million bushels.

The report also indicated that Arkansas, Illinois, Louisiana, Mississippi, New York, Ohio and Pennsylvania could see record state soybean yields, and as of the end of last week, 71 percent of soybeans were rated in good to excellent condition, with development moving forward at a normal pace.

While these numbers are not good for beans, Al Kluis of Kluis Commodities cautions against making any rash decisions based upon quick market reactions after the report numbers are released. He reasons that the report’s estimates are not that far off of last month’s estimates, and the lower price trend has been underway for some time. Kluis notes, “If you’ve got hedges or crop insurance in place, there’s no reason to be panicking here. If we don’ t have an early frost, prices could bounce back in October.”

Do you have concerns regarding your land and the effects of the current report on the land rental rates? Let the experts at UFARM help.

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. “Soybean Crop Size Flirting with a Record—USDA.” Agriculture.com. 12 Aug. 2014. Web. 12 Aug. 2014. Micik, Katie. “USDA Sees Record Corn, Soybean Crop.” DTN/The Progressive Farmer. DTN/Progressivefarmer.com. 12 Aug. 2014. Web. 12 Aug. 2014. “USDA reports record US corn, soybean production.” Reuters. CNBC.com. 12 Aug. 2014. Web. 12 Aug. 2014.

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What Does The Latest USDA Report Mean For Landowners and Farmers?

USDA ReportsFour major crop reports were released on January 10th by the USDA. More bullish-than-expected data in the corn market came as a surprise to many market analysts after largely bearish predictions prior to the release of the reports. On the whole, the USDA reflected higher than anticipated estimated corn stocks, neutral bean stocks, and bearish wheat stocks.

The four reports—the Annual Crop Production, Grain Stocks, Winter Wheat Seedings, and World Agricultural Supply and Demand Estimates (WASDE)—are highly anticipated, as these reports set the basis for harvested acres from the previous growing season and set the tone for the grain and crop market outlook for the next growing season. The USDA’s monthly and annual reports are considered the most significant factors affecting the grain markets, and even slight changes in the reports’ numbers can have drastic implications on commodity prices and market reactions.

After higher than expected yields for corn and soybeans across most of the Midwest this fall, most analysts were anticipating the USDA to revise its numbers upward in its January report, and were expecting the corn outlook to remain bearish. The USDA’s downward revision of estimated corn bushels per acre combined with a higher demand number resulted in the lower corn stock estimates.

Looking at the numbers, for corn, the USDA estimates the 2013 U.S. average yield at 158.8 bushels per acre, which is down 1.6 bushels from the November forecast, but 35.4 bushels above the 2012 average yield of 123.4. The USDA said 6.38 billion bushels are stored on farm, while 4.05 billion bushels are stored in off-farm locations like grain elevators.

Area harvested for grain is estimated at 87.7 million acres, up slightly from both the November forecast and 2012.

In soybeans, the USDA increased its production estimate, boosting production to 3.289 billion bushels from its previous projection of 3.258 billion bushels. To get there, USDA upped harvested acres to 75.87 million acres from its previous 75.7 million acres estimate and adjusted the national average yield to 43.3 bushels per acre from 43.0 bushels per acre. The USDA set soybean stocks as of December 1 at 2.148 billion bushels, which is slightly smaller than the average pre-report estimate. Additionally, it’s the second-smallest soybean stocks figure since the 2003-04 marketing year. The USDA said 955 million bushels are stored on-farm, while 1.192 billion bushels are in off-farm storage.

In wheat, farmers planted 41.89 million acres of winter wheat this fall, down 3% from 2013, the USDA reported. Winter wheat seedings came in below the range of pre-report expectations. The USDA also reported that hard red winter wheat was planted on 30.1 million acres, which is up 2% from 2013. Soft red winter wheat was planted on 8.44 million acres, down 16% from 2013. White winter wheat was planted on 3.39 million acres, down 3% from last year. The quarterly Grain Stocks report said the U.S. has 1.463 billion bushels of wheat stocks, 399 million bushels stored on farm and 1.064 billion bushels stored off farm. (Micik, Katie. “USDA Reports Summary: USDA Trims Corn Crop.” DTN/The Progressive Farmer, 06 Jan. 2014. Web. 07 Jan. 2014.)

The January USDA numbers often yield unexpected data, and this year’s reports didn’t disappoint. If you’re a landowner looking for assistance managing the complexities of land ownership, please contact UFARM for a free consultation with one of our experienced land managers.