Wheat Certification Deadline is Dec. 15, 2014

Just a reminder to farmers and producers in our West Central Indiana farm land region, the deadline for certification of wheat is December 15, 2014.

If you miss this certification date for wheat it will be considered late filed and incur late fees.

Call your local FSA / USDA office and get it scheduled!

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Have you certified your wheat farm acres in Indiana?

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Deadline for Certification is 12/15/14!

How much is Indiana Farmland Worth?

Apples to Apples or Apples to Oranges

Not all land is created equal and it’s important to take a wide range of factors into consideration when placing value on land in Indiana. Just because the coffee shop is buzzing that a farm sold for $15,000 per acre, this does not mean every parcel or tract in the county is worth the same amount. As markets fluctuate and land values cycle, we continue to track local and regional land sales, keeping a close feel on the pulse of the market. In this article we look at factors that influence today’s land values.

In this article we look at factors that influence today’s land values.

  • Returns

    Land is an investment asset and buyers assign value based on the equitable returns that can be gained from the land. Whether you’re financing or paying cash, the math has to work.


  • Location

    The old cliché remains true. Location of land always plays a role in the market value. Farmland close to the core operation of a farmer may be worth more to them as a buyer. Likewise, a convenient location for a wooded or recreational property can increase the value to then interested party.

  • Markets & Futures

    At a recent presentation by Purdue Extension in Benton County, Ag Economist Chris Hurt spoke at length, lending his insights on a variety of Indiana land value and market concerns. “For the time being, cash positions of farmers are headed south fast,” said Hurt, a renowned Professor of ag economics at Purdue University, he added “Demand and supply determine the price & farm income, which in turn affects farmland values.”

  • Size & Shape

    From a farmer or producer perspective, the size and shape of farmland is important. Larger, contiguous pieces of ground may be more attractive as equipment gets larger. Smaller parcels may be more attractive to those in a great cash position and to younger operators trying to grow land holdings.

  • Soil Quality & Health

    Not all soils are created alike. This is an important factor that helps determine farmland value, as well as Conservation value. Higher quality soils mean higher returns for farmers and landowners. Likewise, NRCS and CRP payments are based on soil type – if you are conservation minded, this can affect the rate of return.

  • Drainage & Tile Systems

    Farmland with great tile and drainage commands a higher price and has higher value placed upon it. If soils are poorly drained, a farmland investor will need to spend money on tile systems to achieve higher yields and the returns needed to justify the price per acre. Poorly drained soils are at the bottom of the scale in terms of land values.

  • Irrigation

    Water issues and water rights have long been a top of interest and concern. Irrigated land produces higher yields and returns, thus having a higher market value in Indiana.

  • Ease to Farm

    Farmland that can be easily accessed with large equipment plays a vital role in perceived value on the land. Smaller tracts or odd shaped land takes more time to plant and harvest, thus it may not be as attractive to a farmer. Given a good location, this can change the value for a nearby farmer.

While the land markets are ever-changing, farmland values and the real estate market are local in nature. West Central Indiana land is considered the highest valued in the State of Indiana for both price per acre, cash rent and return on investment. As we enter a cycle of lower corn prices and futures estimates, land remains a strong investment. According to Purdue University, the 25-year average return to land is nearly 12.5%, with an appreciation of 8.21%

 

When considering an investment in land, keep in mind the variety of factors that influence value and remember that “Price is what you pay. Value is what you get.” – Warren Buffett

 

¹Annual % increase in Indiana Ag land values from Purdue Survey in June every year.

About the Author

Johnny Klemme is a published author, graduate of Purdue University and Land Broker specializing in farms, recreational property and development land in West Central Indiana. Born and raised on a local farm, his commentary on issues that are important to the farming and real estate community can be found at www.PrairieFarmland.com

cash lease, flex lease, 50-50 leases

5 Tips to Rent or Lease More Farm Ground

Negotiating a farm lease can be easier than you might think. Whether you are looking to expand with a cash lease, 50-50, 2/3 – 1/3 or prefer a flex lease, there are several important factors that will help you grow your farm operation. Ultimately, you want to build a great landlord / tenant relationship that is fair, equitable and results in long term success for you both.

  • Communication = Trust

    No matter if you are a landlord or tenant of a farm in Indiana, one of the best ways to negotiate a mutually beneficial lease and long term success in farming is regular communication. Address concerns when they happen, learn what the landowner values in a tenant and in the health or productivity of their soils and you’re putting together a recipe for great returns to both parties.


  • Values & Goals

    If a landowner values good agronomics, no-till or cover crops, it’s best to address these needs up front. If you can help improve soil quality during the term of a lease or cash rent agreement, this is a great way to negotiate longer terms that are mutually beneficial. Think Win-Win, no matter who your landlord is or what they believe is most important to their land assets.


  • References & Resumes

    With more and more absentee landowners in Indiana, having a great resume and set of references can mean the difference in your bottom line. Take the time to prepare a resume that includes your experience, education/degrees, how you approach soil health & fertility and what makes you a sound choice as a tenant and producer. It’s been said that the devil is in the details.


  • Land is Your Greatest Asset

    For both the landowner and the tenant, it’s vital to think long-term about productivity, soil health and nutrients. Best practices = great profits for both parties. Take a look at the most successful farmers & producers in your area and think about why they are leasing more ground. Are they using variable rate technology? Do they practices good crop rotation? How have they improve the soil? Your answers to these questions can help you build a great landlord/tenant relationship that results in higher profits for both parties.


  • What’s the Going Rent Rate?

    Avoid the coffee shop talk. The ground you own or lease has its own unique characteristics in both soil type, history and current or planned investments. Just because a farm in the same county gets $500 / acre does not mean your farmland is worth the same. Factor in the size, shape, ease of use & ability to get large equipment there, travel time, location, point rows, drainage, commodity prices, input costs….just to name a few!


No matter what type of lease you prefer, from cash rent leases to more complex flexible leases, sharecropping or 50/50, it’s really about understanding landowner and tenant needs and goals. If you aren’t able to meet each other’s expectations, then chances are the relationship may suffer and the lease will expire. On the other hand, if you have share common values , you’re most likely on the right track to helping each other be successful and profitable this year and many more. 

In today’s farm and land leases it is becoming more common to include provisions for the ownership of farm data. Landlords should take this into consideration to get a better handle on the productivity and fertility of their land. Long term, it is always best to improve soil health as many leases include provisions for “flex bonus payments” when bumper crops or prices are favorable.

About the Author

Johnny Klemme is a published author, graduate of Purdue University and Land Broker specializing in farms, recreational property and development land in West Central Indiana. Born and raised on a local farm, his commentary on issues that are important to the farming and real estate community can be found at www.PrairieFarmland.com/blog

Indiana Land Auctions Getting Mixed Results?!

Recent farmland real estate auctions in Indiana have brought mixed results for buyers and sellers. Reports of no sales at auctions in the midwest and sealed bid / minimum bid auctions having no sales or non competitive buying indicate that a shift to listings or ‘listing combinations’ will become more frequent in 2015. Full reports of land values can be found in the the PAER 2014 report released back in August of 2014.

While there are many factors that determine the value of farmland (E.g. your cash position, soil quality, location grain storage, drainage, point rows, etc), we will be keeping a close eye on land sales and auctions over the next few months to help paint a more accurate picture of what is going on the market today.

  • County
  • Benton
  • Howard
  • Howard
  • Carroll
  • Carroll
  • Benton
  • Tippecanoe
  • Benton
  • Benton
  • Auction Type
  • Sealed Bid
  • Public
  • Public
  • Public
  • Public
  • Public
  • Public
  • Sealed + Oral
  • Sealed + Oral
  • Tracts / Acres
  • 1 / 93
  • 1 / 60
  • 1 / 118
  • 1 / 100
  • 1 / 116
  • 3 / 350
  • 7 / 636
  • 1 / 98
  • 1 / 75.64
  • Soil Quality
  • 158 avg.
  • 168 avg.
  • 162 avg.
  • 176 avg.
  • 181 avg.
  • 171 avg.
  • 121 avg.
  • 158.4 avg.
  • 164.7 avg.
  • Price Per Acre
  • $10,000
  • $10,945
  • $9,742
  • $7,000
  • $5,347
  • $8,057
  • $9,377
  • $9,857
  • $10,258

 

 

When done right, under the correct market conditions, land auctions can do a great job for both the seller. When considering an auction, ask questions and rely on those that have experience with both private, public auctions and listing combinations.

Signs seem to point toward high quality land still commanding top dollar. Whether it’s soil quality, location or drainage – all of these factors combined with a high level of wealth from record farm incomes have left plenty of ready buyers in the marketplace.

High cash rents / leases have left a bit of uncertainty in the market, but as these factors stabilize to accommodate lower expected returns, we should see more stabilization in farmland values.

Stay tuned as we keep you updated on the latest farm auctions in West Central Indiana!!

 

 

information obtained from reliable sources, deemed accurate, but not guaranteed.

 

 

 

3 Important Issues When Dealing with the Family Farm

We’ve all heard the stories about the heirs to a family farm struggling with what to do next. Farmer McDonald (Dad) passed away several years ago, and just recently his widow Mrs. McDonald (Mom) died; now their seven children are faced with the challenge of “dealing with the family farm.”  In one fell swoop, siblings that might only see one another on holidays are now having the conversations; “Do we really have to do this?  “Can we just get it over with?”

Families faced with this once-in-a-lifetime challenge are not alone.  Many families work through it and come out of the situation in a better place, while others end up on the other side of the scale, with permanent damage to sibling relationships. There is a time and place for the Bank Trust Department, attorneys, and appraisers to be involved, but taking into consideration everyone’s view on how to divide the family farm is crucial.

Dealing with Disagreements

Farm families should know that disagreements are common when dealing with estates. The more siblings there are, the greater the chances of this occurring.  Emotions can run high when we dealing with our home, where we grew up, and family history. Taking into account the family members who live close to home, those that moved away and those that may have continued to farm the land is vital to overcoming any disagreement that may take place.

Identify What’s Important

There is often a laundry list of important factors that must be addressed, usually unique to each family member. Personalities, lifestyle, financial needs and sentimental values all relate to the stress of owning the farm. Consulting with a third party to identify the goals and objectives for everyone involved is a necessary step in the right direction.

Improving the Outcome

There are ways to improve the outcome, if the family is willing to try.  Each family member has a perspective must be heard and this is important in finding the path that makes everyone happy. Consider a third party that has dealt with these situations before, factors in the interests of each person involved and is a great listener.

What’s best for everyone to move forward?

This question is tough to answer as sibling rivalry and family division can unfortunately be permanent. There many ways to move forward, each with its pros and cons. What’s important to remember is that it starts with a conversation, determining the farmland value, and knowing it will take time and those with experience in this sensitive area are willing to help.

About the Author

Ed Geswein began his career on the Purdue University staff as a County Agent for ten years. Since 1977 he has been consulting with families in the land and commercial property business. With a BA and MS degree from Purdue, he remains a farm boy at heart. Commentary and Articles written by Ed can be found at www.PrairieFarmland.com/blog