Monday, December 1, 2014

Strong crops, weak prices for Minnesota farmers

Here is a link to a very interesting article in the StarTribune by Tom Meersman, in which he discussed the 2014 crop year and conducted interviews with farmers in our region - including Renville County, Stearns County, and Yellow Medicine County:

Strong crops, weak prices for Minnesota farmers

  • Article by: TOM MEERSMAN , Star Tribune
  • Updated: November 30, 2014 - 2:00 PM
Bin-busting crops in corn and soybeans are causing furrowed brows rather than smiling faces for many Minnesota farmers this year.
Strong crop yields in the state — and record-breaking crops nationally — have produced plentiful grain in 2014. However, bountiful supplies mean lower prices per bushel, and some Minnesota growers will lose money or consider themselves lucky to break even.
“Given the challenges with late planting and some flooding and an early frost, guys have to be thankful for what we got,” said Minnesota Corn Growers Association President Bruce Peterson, who farms near Northfield. “It certainly isn’t anywhere near a disaster by any means, but it’s a little bit disappointing in the final numbers.”
With 95 percent of the state’s corn harvested, the latest USDA report estimates that Minnesota corn production will be 1.29 billion bushels, 1 percent below last year’s production, and yields are expected to average 165 bushels per acre, up 5 bushels from 2013.
Minnesota soybean production is forecast at 305 million bushels, a 10 percent increase from last year.
Robert Craven, a University of Minnesota Extension economist, estimated that corn growers pay a little more than $5 a bushel for seed, fertilizer, land rent and other costs, on average, and they are faced with prices well below $4 a bushel. Average costs to grow soybeans are also higher than current selling prices, he said.
Whether producers lose money depends on a host of factors, Craven said, including whether they presold some of their 2014 crop early in the year when prices were higher, how much land they rent and how much debt they hold in land and equipment loans.
The good news, he said, is that corn and soybean growers are coming off several years of healthy profits, and good managers who know the ups and downs of the market had a chance to build up their working capital: cash in the bank and other liquid assets.
“In some of the projections we’ve done a lot of producers are going to do just fine,” Craven said. “It really becomes a question of how long this slump in [crop] prices lasts, and how quick the costs will adjust.”
Those most vulnerable to losses, he said, are those who overextended themselves with land and equipment purchases, or beginning farmers who are carrying more debt than established producers.
Mickey Peterson, who farms about 3,200 acres with four brothers near Sacred Heart in western Renville County, said 2014 was more challenging than usual. The late spring and its frozen ground delayed planting by about two weeks, he said, and was followed in June by heavy rains that drowned crops in some fields and required replanting.
“Overall, the crop came in considerably better than we anticipated,” Peterson said, and the fall weather was ideal to get the corn and soybeans harvested quickly with little down time. But he noted that recent local prices for corn are about $3.35 per bushel, compared with $4.50 to $5.00 per bushel a year ago.
“Being a farmer for 40 years, I know it’s like a roller coaster with prices up and down, and you’ve got to go with the flow,” he said. Peterson and his brothers are watching market prices closely, he said, and won’t be buying any expensive land or major new equipment.
Effects on economy
Major farm equipment manufacturers foresaw the eroding crop prices and laid off workers earlier this year, and implement dealers have been downsizing their inventories.
“We’re already hearing about equipment sitting on the dealers’ lots,” said Dale Nordquist, associate director of the Center for Farm Financial Management at the University of Minnesota. “That’s the first ripple” of how the decline may affect some parts of the rural economy, he said.
But on the other side, Nordquist said, low prices for corn and soybeans mean lower feed costs for hog and dairy producers, which are flourishing after several years of struggling.
“They’re flush with money and they’ll hold up their part of the bargain in terms of helping out the local economies because they’re in position to do some things that they haven’t been able to do in the last few years,” Nordquist said. “In certain parts of the state that will have a bigger impact maybe than the downside on the crops.”
Nordquist said it’s more important than ever for farmers to get ahead of the game in projecting their cash flows for next year, which could be tougher than 2015 in terms of profits. “Projections we’ve done have been very tight,” he said.
Peter Scheffert, vice president and agricultural loan officer for Farmers State Bank of Hartland, also expects that 2015 will be a challenge for crop farmers. Growers are beginning to project costs and cash flows for next year, he said, adding up estimates for seed, fertilizer and land rent, and comparing them to average crop production and expected sale prices.
“Like any business it’s an individual business and you’ve got to work as hard with your head as you do with your hands,” he said.
Some producers are discovering that income won’t cover expenses unless costs can be shaved or prices improve, Scheffert said.
“They haven’t seen that for a while,” he said. “That’s part of the struggle as we think about the harvest this year, and it’s part of the change and the flip from where we’ve been the past few years.”
Scrutinizing costs
John Mages, who farms about 800 acres of corn and soybeans near Belgrade in Stearns County, has been looking toward 2015 with calculator in hand.
Costs for seed and fertilizer have not come down much, he said. Rental rates for cropland that rose dramatically during the past several years will likely remain high, he said, and take at least a couple of years to readjust slightly downward.
“Next year we’re looking at not a very good year even with good yields,” Mages said.
Mages said he may plant a little less corn next year and slightly more soybeans, which don’t need as much fertilizer and are less expensive to get in the ground.
Doug Albin, who farms about 1,200 acres near Clarkfield in western Minnesota’s Yellow Medicine County, said he had an especially tough year, with more than a foot of rain in June that drowned or stunted crops, and no rain in July and August when he needed it. “We ended up with the worst of both worlds,” he said. “I’m not going to make a profit.”
Albin said he has saved during the past three or four years of good crops and profits, but he still faces some tough decisions about what’s ahead.
“We’ll be all right between the crop we did harvest and federal crop insurance that we bought,” he said. “That gives us enough to not necessarily make money, but it’ll keep us farming for another year.”

Tom Meersman • 612-673-7388

Tuesday, August 12, 2014

Crop prices are down, but land values are still up

I read a good article in the West Central Tribune today by Jonathan Knutson about the strange paradox of crop prices falling but rental rates and farmland values still rising.

You can follow this link to read the article online, or read some excerpts below:

Please let me know if you'd like any information about farmland values in our area. I'd love to help you buy or sell some farmland.

Noah Hultgren

Saturday, May 31, 2014

Don't bet the farm - FedGazette Roundup

Here is a link to an interesting article about farmland values from the Federal Reserve Bank of Minneapolis:

It's interesting to see that farmland values in Minnesota have begun coming down, while farmland prices have been going up in all of the surrounding states. It's also a little surprising to see that cash rental prices are down in the region and 3 of the 5 states.

Have a great week,

Don’t bet the farm

As fedgazette Roundup has documented before, farm values have been on an upsurge in recent years. The growth has been so steep that it has prompted discussions about whether farmland is overvalued. On the one hand, booming crop prices have increased the return on the land, reflected in higher rents. But memories of the 2007-09 financial crisis, with its origins in real estate, as well as the 1980s farm crisis, have stoked concerns of a farmland bubble.
But new data suggest a pivot, or at least a cooling period, in farmland prices, according to the Minneapolis Fed’s April survey of agricultural credit conditions for the first quarter of 2014. The survey found that prices for non-irrigated farmland fell an average of almost 2 percent across the Ninth District compared with a year earlier. While that would still leave prices well above the levels of just a few years ago, a broad-based fall in values is noteworthy.
Comparisons across the district reveal that the fall in values took place mostly in Minnesota (see map). In other district states, the price continued to increase, albeit at a slower pace than the double-digit growth typical of previous years. The survey indicated further that land rents (also shown on the map), which are more directly tied to the productive value of land, dropped by even more around the district and across a broader swath of territory.
Not every type of agricultural land has turned down either. The survey found that ranchland prices continued to climb and at a faster pace than cropland. This is especially noteworthy because the price of ranchland has typically grown more slowly than cropland during the run-up period. Livestock prices have climbed to historic highs, and a reduction in crop prices means dairy, cattle and hog producers are reaping fatter profit margins, so robust pastureland values might be expected.
- See more at:

Don’t bet the farm

- See more at:

Don’t bet the farm

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Don’t bet the farm

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Thursday, April 24, 2014

Domestic oil drilling isn’t stopping the annual summer gas price hike

Here's an interesting article from Minnesota Cornerstone about rising gas prices despite record levels of domestic oil drilling:

As we drill for more oil than ever before in the United States, gas prices are going up.
Yes, it’s that time of year again. The snow is melting, temperatures are rising, families are making summer vacation plans, people are driving more, and (conveniently) gas prices are spiking.
“Hold on a minute,” you might be saying. “We’re in the midst of a domestic oil boom. I thought that was supposed to lower gas prices?”
Despite messages you might hear from Big Oil companies (often delivered through their friends in Washington D.C. and the media), increased domestic drilling will not save you money at the pump.
According to this story from the Wall St. Journal, U.S. gasoline stockpiles are at their lowest for this time of year since 2011, which is driving up prices. Why are gas stockpiles low and prices up if we’re drilling for more oil here at home?
Because oil companies are exporting gas to other countries, creating a shortage in the U.S. and driving up prices again. From the Wall St. Journal story:
 …the retail price for a gallon of regular gasoline averaged $3.68 on Monday, up 4.2% from a year ago, according to the EIA. That is the highest price since March 2013. AAA had the average price on Monday at $3.67…Total petroleum exports, mostly gasoline and diesel, averaged about 3.6 million barrels a day last week, according to the EIA, up 25% from the same period last year.
So instead of delivering on the promise of lower gas prices with increased domestic drilling, Big Oil is just exporting more gas and once again inflating gas prices as families prepare to hit the road for a summer getaway.
It would have been nice if the Wall St. Journal provided some information and context in the story about the role homegrown ethanol and biofuels play in cutting prices at the pump. Or how now is not the time to slash the Renewable Fuel Standard and reduce the amount of ethanol blended in American gasoline.
Unfortunately, the Wall St. Journal is notorious for it’s blind hatred of ethanol, and is one of the main publications Big Oil counts on to spread misinformation and parrot talking points about American farmers and biofuels.
If you’re looking to save a few bucks at the pump on your family vacation this summer, fill up with higher blends of ethanol. There is a promotion in West Central Minnesota that prices E85 (a blend of 85 percent ethanol and 15 percent gasoline) at least $1 less than gasoline. Higher blends like E15 and E30 are now available in the Twin Cities.
You can get more details on where to buy higher ethanol blends in Minnesota at the American Lung Association of Minnesota’s Clean Air Choice page.

Thursday, April 10, 2014

Farmland values in Renville and Kandiyohi County are March-ing upward!

I know we're into April now, but I read an article last month about how farmland values are still March-ing upward, though the market seems to be slowing down.

In an excellent article in the West Central Tribune by Tom Cherveny, he details the significant rise in farmland values over time in our region, including Kandiyohi, Renville, Yellow Medicine, Chippewa, Swift, and Lac qui Parle counties.

The full article is here:

Farmland values continue upward but some signs of cooling market
"The value of tillable farmland continues to rise in the region, although some county assessors are seeing signs suggesting that the market may be ready to cool down.
Recently distributed property tax notices have already informed most landowners that values are up once again, continuing a trend that took off in earnest in 2008. The assessed value for 2014 on tillable land rose by approximately 10 percent or more in most area counties, including Renville County, which typically sets the pace.
Renville County saw its largest increase in 2013, when the per-acre value of tillable land ranged from $4,822 to $10,014, according to information from County Assessor Barb Trochlil. The 2014 assessment range is $5,140 to $14,190 per acre. There were 67 sales evaluated, indicative of a strong market. The assessments are based on sales from October 2012 to Sept. 30, 2013.
Other counties in the area have yet to crack the $10,000-per-acre mark, but they are coming close. Assessor Val Skor, Kandiyohi County, reported that the county’s 2014 tillable land values range from $3,354 to just over $9,000 an acre.
Land values to the west are not as high. It is also where some of the first indications of a possible change in the ag market are coming, according to Connie Erickson, Yellow Medicine County assessor. She spoke recently about the changes at a program with former state demographer Tom Gillaspy.
Erickson pointed out that since October, her office has seen several land auctions where no sales occurred because the sellers were not offered the prices they anticipated. She also noted that agricultural land values rose by 255 percent in the last six years, including a 36 percent jump in 2013. This last year’s increase was only 10 percent.
Assessor Bonnie Crosby, of Chippewa County, said sales records also seem to suggest that values are not rising as rapidly as in prior years. Nonetheless, other counties continue to see steady and relatively large increases. In Lac qui Parle County, land values rose 20 percent in the latest assessment, with a range for 2014 of $4,131 to $7,489, according to Assessor Lori Schwendemann.
Swift County is seeing steady jumps as well. From 2013 to 2014, the average for tillable acres rose from $4,420 to $5,730 per acre, reported Wayne Knutson, county assessor. Swift County saw 39 sales for 5,378 acres in the time period evaluated for 2013 assessments. In the period for the current 2014 assessments, it saw 29 sales for 2,540 acres.
Swift County has seen more activity than would be expected due to the Minnesota Farm Company. It owns several thousand acres in the western part of the county, and has been marketing the properties. The company’s land sales have greatly complicated the task of assessing values in the county. Knutson said there have been surprising variations in the prices at which land sold in recent sales.
No matter the variations in values per acre, all of the counties in the area have seen major increases in farmland values since 2008, while residential and commercial/industrial property values have remained largely unchanged.
The result is a major increase in the tax capacity of the counties, along with a shift of the overall burden to agriculture. Erickson reported that in Yellow Medicine County, the tax base has risen from $1.4 billion to $3.2 billion, with agriculture representing $2.8 billion of the total. Swift County added nearly $500 million in value last year alone due to the rising value of farmland, noted Knutson."
If you have any questions about selling your farmland, please contact me at 320-894-7528 or I would be happy to help you out!
Noah Hultgren

Saturday, March 29, 2014

Minnesota farmers' income plunged 78% in 2013

Not a huge surprise, but data from the University of Minnesota's Center for Farm Financial Management shows that farm income was down significantly in 2013. An article from Mike Hughlett of the StarTribune provides more detail:
Minnesota farmers' income plunged 78% in 2013
Article by: MIKE HUGHLETT , Star Tribune
Minnesota farmers’ income dropped 78 percent in 2013, as falling commodity prices took their toll.
Net income for the median Minnesota farm was $41,899, down from $189,679 in 2012, according to an annual report released Thursday by Minnesota State Colleges and Universities (MnSCU) and University of Minnesota Extension.
A primary culprit was a drop in corn prices from a lofty $7 to $8 per bushel in 2012 to a more pedestrian $4 to $5 per bushel last year. Also, corn and soybean yields were down as weather conditions were worse in 2013 than the previous year.
“A decline from 2012 levels should not come as a big surprise,” Dale Nordquist, an economist for the U’s Center for Farm Financial Management, said in a news release. “We have to remember where we came from. 2012 was a very profitable year for Minnesota farms.”
Livestock farmers did not fare much better than crop farmers, according to the report. While the price of milk, pork and beef were all up, higher feed costs and other factors pushed down livestock farm profits.
Prospects for livestock producers are better for the coming year, with strong prices projected. But crop farmers will see much tighter margins in 2014, the report said, as commodity prices remain low relative to 2012.
“Most crop producers were in pretty good shape to handle a down year (in 2013),” Nordquist said. “The question is, `How long will these reduced profits last?’”
It will be interesting to see how this year shakes out, once we can get in the fields again.
Noah Hultgren

Thursday, February 13, 2014

Local housing market is building up

The West Central Tribune published an article by Anne Polta this week about how the local real estate market is improving. You can read the full article here:

Here are a couple highlights that I pulled out:

"New figures from the Minnesota Association of Realtors show steady improvement over the past year in virtually every indicator. Statewide, new listings were up 4.1 percent last year compared to the year before, while closed sales were up 4.6 percent."

"Prices also are gaining strength. On average, homes across Minnesota sold for 11.2 percent more in 2013 than they did in 2012. Meanwhile, the number of sellers who received their original asking price inched upward as well, from 92.5 percent to 94.6 percent."

"The median sales price for homes in the region rose 17.3 percent last year, from $102,300 to $120,000. Although homes in the four-county region still take longer to sell than in the metro area, there was an 11.5 percent drop last year in the number of days the average house spent on the market, from 131 days to 116 days. The region also saw a 5.6 percent increase last year in new listings and a 9 percent increase in closed sales."

"The local market still contains several foreclosed and short-sale properties, but observers say the numbers of these are on the decline."

If you're ready to test the market and sell your home, please call me at 320-894-7528. I'd love the chance to work with you and find you a great value!

Noah Hultgren

Monday, February 10, 2014

Nanograms and M&Ms

I read an interesting blog post from the "Farm Meets Fork" blog the other day about the amount of hormones found in different types of food. The way she shares this information is extremely useful. If everything was counted with M&Ms I could understand a lot more... 

Not everyone knows hormones exist in every living thing. Synthetic doesn't mean bad. A fair amount of beef and dairy receive some form of hormones. FDA, just as in human drugs, go through thorough testing and review before they are approved for use.

Just an interesting story to think about...

Have a great day,
Noah Hultgren
The Farmlandman

Friday, January 31, 2014

A Glimpse of the Future?

This is going to sound strange, but I read an interesting article the other day about how farmers in Minnesota and North Dakota are learning about how to use unmanned aircraft systems (drones) in precision farming.

It's a fascinating idea, and the article - written by Mikkel Pates of the Forum News Service - interviews several local farmers to get their feelings about the new technology.

You can read the article here:

Are we getting a glimpse of the future of farming?

Take care,
Noah Hultgren
The Farmlandman