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A Shift In Prominent Crops in Kansas

Posted on March 26th, 2024

The United States Department of Agriculture’s Economic Research Service reported earlier this week that “the number of wheat farms in the United States has declined substantially over time. Since 2002, the total number of wheat farms fell by more than 40%, from 169,528 in 2002 to 97,014 in 2022, and also more than 7% lower from 104,792 farms in 2017.”

In addition to the decline in wheat farms, “wheat production is down slightly, but has been variable year to year,” the USDA ERS reported. “Annual wheat production ranged from about 1.6 billion bushels in marketing year 2002/2003 to as much as 2.5 billion bushels in 2008/2009. Notably wheat production has not topped 2.0 billion bushels from 2017/2018 to 2023/2024.”

Another “major reason for the decline in wheat production and area over time is that wheat has become a rotational crop that is mixed into rotations with more profitable corn or soybean crops,”the ERS said. 

According to USDA ERS commodity cost and returns estimates, “production less operating cost, which is a measure of profitability,” has grown a little more than $83 to $185.26 per acre for wheat from 2017 to 2022. For corn, that same measure has more than doubled to $654.46 per acre, while for soybeans it has grown to $441.53 per acre in 2022.

“Additional factors include changing farming practices, the development of seed varieties for corn and soybeans that are more conducive to growing conditions in areas traditionally planted to wheat, and other technological developments,” the ERS reported.

As of 2022, Kansas now accounts for 15% of all wheat farms in the United States, followed by North Dakota and Ohio. Only a handful of states had increases in the total number of wheat farms from 2017 to 2022, including Pennsylvania, Wisconsin, Georgia, Mississippi, and Kentucky, the ERS said.

The ERS also reported that “the number of smaller farms is shrinking at a faster rate than larger farms. Between 2017 and 2022, all but the largest wheat farms (specifically, those from 1 to 2,999 acres) saw reductions anywhere from 4% for farms between 100 and 249 acres to 11% lower for farms in the 250-to-499-acres category.”

“Overall, the 2022 Census of Agriculture shows a continuation of a much longer-term trend,” the ERS wrote. “The number of wheat farms continues to shrink across all but the largest farm sizes. The average farm size continues to grow as the number of smaller farms declines and larger farms increase in number.”

Contact GF&A today to assist with all your real estate needs.

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From Touchdowns to Turf: How Agriculture Shapes Every Aspect of the Super Bowl Experience

Posted on February 28th, 2024

A little football game called the Super Bowl was played for the 58th time this month. If it weren’t for farmers and ranchers, millions of people would have to find another way to spend their Sunday evening. How does agriculture impact the Super Bowl?

Money changes hands, whether in the purchase of game tickets (average price $9,720), food, or the loss of a bet. Did you know 75% of that dollar bill you just used to tip the pizza delivery guy is made of cotton?

According to the National Retail Federation, 192.9 million adults plan to watch the big game, spending a total of $16.5 billion, or an average of $85.36 per person. While some of those expenditures will go to things like team apparel, decorations, new TVs, and furniture, a whopping 79% will be spent on food and beverages, all of which come from farms. In fact, Americans eat more food on Super Bowl Sunday than any other day of the year except for Thanksgiving.

Super Bowl Sunday is one of the biggest days for pizza sales in America. According to The American Pizza Community, a coalition of the nation’s largest pizza companies, 12.5 million pizzas were sold on the day of the big game last year. What would pizza be without wheat, dairy, meat, fruit, and vegetables, all grown or raised by farmers?

The National Chicken Council estimates 1.45 billion chicken wings will be eaten Sunday. That’s enough wings to go around the Earth three times.

More people will grill on Super Bowl Sunday than any other day besides the Fourth of July. There will be an estimated 14 billion hamburgers served on game day, possibly topped with some of the 12 million pounds of bacon that will be eaten.

Agriculture also affects the game itself. The turf in Allegiant Stadium in Las Vegas is a hybrid drought-tolerant Bermuda grass. The grass is rolled outside when the grass needs sunlight or the stadium is being used for other events. 

The earliest football uniforms were made of sheep’s wool. The wool was durable and held up to the physical play. Helmets today are made with polycarbonate, but the first helmets worn by players were made of soft leather.

Leather is also used to make the ball. Even though it’s often called a pigskin, footballs are actually made of cowhide. Wilson is the official supplier of footballs for the NFL: 120 of its footballs will be used in Sunday’s game. One cowhide will make 10 footballs. Not just any cowhide is used; it comes from cattle raised in Iowa, Kansas, and Nebraska.

Whether it’s the stadium, the field, the ball, or the food, one thing is clear: no farms, no Super Bowl. If you’re in the market to buy, sell, or invest in real estate, our dedicated team is here to assist you every step of the way. 

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GF&A Celebrates 40 Years

Posted on February 15th, 2024

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Navigating the Farmland Market: Opportunities and Challenges Ahead

Posted on January 29th, 2024

For the first time since 2001, interest rates are rising faster than farmland values, creating a potential obstacle to land purchasers, said the Kansas City Federal Reserve Bank. With interest costs now above average land value appreciation, farm operating profits will determine the magnitude of returns for financed land.

Although growth in farmland values held firm in 2023, higher interest rates and a moderation in agricultural commodity prices have cut potential returns and could dampen demand for farmland — and thus farmland values — going forward.

Meanwhile, ag bankers said in a Federal Reserve survey that the volume of new non-real estate loans was 15% lower during the final quarter of 2023 than during the same period in 2022. While the number of new loans was slightly higher than in fall 2022, the amount borrowed, when adjusted for inflation, was the lowest since 2017.

Elevated production costs, higher interest expenses, and lower commodity prices have increased financing needs of many producers; however, strong liquidity built up in recent years likely supplemented borrowing needs of some operations throughout the year.

As Mark Twain coined, “Buy land, they’re not making it anymore”.  Contact us today to assist with your land purchases and sales.

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GF&A Provides Land Value Assessments

Posted on December 29th, 2023

While price increases for US farmland were still observed in 2023, signs indicate the market is starting to cool. Statewide farmland prices in Kansas continued to escalate in the first half of 2023.  The continued growth in prices was supported by a number of factors, such as farm incomes and liquidity. 

The experience, however, was not shared across all regions or quality grades. Depending on the area of the state, some found modest increases while others found declines due to climate and soil morphology and topography. Commodities are likely to be impacted by ongoing conflicts in the Middle East and Ukraine. More than likely there will be a boost to the economy leading up to the election. Yet, it is encouraged for producers to take a seasonal approach to selling. Future prices and values are very uncertain right now. 

The U.S. Federal Reserve continued efforts it began in 2022 to slow the rate of inflation. Since interest rate increases began in March 2022, the federal funds rate has been increased 11 times, upping the rate 5.25 percentage points.

Dr. Stanley Longhofer, Director of the Center for Real Estate at Wichita State, recently shared the forecast for 2024. He believes that there should be a tightening of the spread between mortgage rates and the 10 year treasuries. Then once the housing component of the CPI slows that will help reduce rates. We should see a settling of loan rates and to drop 2% by the end of 2024. 

As Mark Twain said, “Buy land, they’re not making it anymore”. Contact us to seek professional advice and assistance when buying or selling land. Gene Francis and Associates is here for you!

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Farm & Home Realty LLC of Cheney Merges with GF&A

Posted on December 19th, 2023

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The Other A.I. in Farming

Posted on November 27th, 2023

Mention AI to any seasoned cattle breeder or livestock farmer, and they will likely reminisce about the remarkable benefits of artificial insemination. Bloodlines, donor sperm quality, and the importance of genetic diversity are topics they can discuss until the cows come home—literally. However, in recent years, conversations within the farming community have shifted towards a different type of AI: artificial intelligence and the profound technological advancements that are revolutionizing agriculture. The future of farming is undergoing a dramatic transformation, thanks to AI.

AI has also introduced novel methods for monitoring and managing cattle health and behavior. By utilizing AI-driven cameras and sensors, breeders can track individual cows’ behavior, eating habits, and milking efficiency. This data enables them to promptly detect signs of distress or illness, leading to improved animal welfare and overall productivity. 

Consider drones, for instance. The first agricultural drone took to the skies 23 years ago, and since then, they have become invaluable tools for monitoring and mapping fields from above. These drones can spot damaged crops and identify areas of weed or pest infestation with precision. However, the future promises even greater advancements. Soon, there may be no need for a human operator as drones become capable of automatically precision-spraying crops. These advanced drones will also be able to land unaided, allowing an onboard robot to take soil samples. This level of automation is reshaping the way farming is conducted, making it more efficient and productive.

Once the data from cameras, sensors, and monitors is processed, analyzed, and synchronized with existing machinery, such as robotic fruit-pickers or weed-control lasers, the possibilities are endless. It won’t be long before running an entire farm from a phone becomes the norm. Already, farmers receive updates on their mobile phones during key planting and harvesting seasons, showing that the transition to mobile-based farm management is already underway.

As we adapt to this new era of farming, one thing is clear: the future of agriculture is smart, efficient, and powered by artificial intelligence.  Contact us for opportunities to buy or sell land and experience the innovations in agriculture.

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Inflation’s Unpredictable Rebound: The Mortgage Market at 20-Year Highs

Posted on October 27th, 2023

“Just when I thought I was out, they pull me back in!” That famous line from Al Pacino in Godfather III, tells a similar story of what’s going on with inflation. After surging to 40+ year highs in June of 2022, the closely watched inflation reading Consumer Price Index seemed to have bottomed out this past June at just below 3% but the latest reading shows near 3.70%. Traditionally, higher inflation usually pushes borrowing costs, like mortgage rates, higher. That is what we are currently seeing, with the 30-year fixed rate mortgage now at highs last seen in 2001. But inflation is just one piece of the puzzle. 

Another important piece is the uptick in government spending. There must be a tool to fund the increased spending. That tool is issuing more debt or more Treasury securities in the form of notes and bonds. Simple economics tells us that if there is more supply then there is demand, and in this case in the form of added bond supply, prices tend to decline which has pushed yields and borrowing costs higher. The 30-year fixed rate mortgage is now just above 7%.

A spokesperson from Freddie Mac says, “Mortgage rates continue to linger above 7% as the Federal Reserve paused their interest rate hikes. Given these high rates, housing demand is cooling off and now home builders are feeling the effect. Builder sentiment declined for the first time in several months and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply.” Land rates are even higher; however, there is still a large amount of cash flowing.

With so much negativity, could bond yields finally be attractive for investors? Could the market be at a point where it pivots and rates head lower? Or is the enormous amount of supply too much to get sopped up and rates must remain higher for longer? Time will tell.

Bottom line: Although rates are high, and inventories are low, people still need a place to live, no matter what the cost. You may not be able to afford a big mansion, but there are opportunities out there if you look hard enough.  They also aren’t making any more land! Like Louis Sachar once said, “Nothing in life is easy. But that’s no reason to give up. You’ll be surprised what you can accomplish if you set your mind to it.”

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WOTUS Rule – Recently Updated

Posted on September 26th, 2023

The WOTUS Rule, which stands for “Waters of the United States,” is an important environmental regulation that defines which water bodies are protected under the Clean Water Act. In essence, it determines the extent of federal jurisdiction over bodies of water, including streams, wetlands, and other water sources. The rule’s intent is to help maintain water quality and seeks to ensure that activities impacting these waters are properly regulated. As a landowner, it is important to stay up-to-date on the latest changes to the WOTUS Rule. 

The original WOTUS Rule was established in 2015, but it has faced ongoing legal challenges and controversy. To clarify the definition and provide more certainty to landowners and other stakeholders, the rule has recently been revised. Understanding the basics of the WOTUS Rule  helps landowners and land buyers navigate their responsibilities and obligations. By staying informed about the updated rule, landowners can ensure compliance and contribute to the preservation of clean and healthy water for future generations.

The original rule, implemented in 2015, faced controversy and confusion due to its broad definition of protected water bodies. The revised rule aims to provide a more precise and understandable definition, giving landowners a better understanding of their responsibilities and obligations. By revising the rule, the government aims to strike a balance between protecting the nation’s water resources and allowing for responsible land use and development. 

One of the main changes is the narrowing of the definition of protected water bodies. Under the revised rule, only four categories of water sources are considered “waters of the United States”: traditional navigable waters, tributaries, certain ditches, and certain lakes and ponds. This change provides more clarity and specificity. Another important change is the elimination of certain exemptions and exclusions, which means that more water sources may now be subject to regulation. Landowners must also take note of the revised definition of “adjacent wetlands,” as it impacts the extent of federal jurisdiction. 

With the new rule, landowners need to be aware of the four categories of water sources that are considered “waters of the United States,” which include traditional navigable waters, tributaries, certain ditches, and certain lakes and ponds. This means that landowners may have to obtain permits for activities that could impact these water bodies, such as construction, drainage, or discharges. Additionally, the elimination of certain exemptions and the revised definition of “adjacent wetlands” mean that more water sources may now be subject to regulation. 

To comply with the revised WOTUS Rule, landowners can take several steps. First and foremost, they should familiarize themselves with the specific water bodies that are now considered “waters of the United States”. This will help them understand the extent of federal jurisdiction and whether their land or water resources are impacted. Next, landowners should assess any potential activities on their property that may impact these water bodies, such as construction, drainage, or discharges. If these activities are likely to have an impact, landowners may need to obtain permits or follow certain regulations.

By staying educated and proactive, landowners can navigate the revised WOTUS Rule and ensure they are fulfilling their responsibilities while preserving the health of our water resources. Contact us to assist in buying and selling land to ensure your goals and legalities are met.

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Incremental Sales to Win at Commodities

Posted on September 1st, 2023

When it comes to marketing commodities, the greatest temptation on earth is to swing for the fence. The financial windfall and pride that comes with selling all of your product at the top of a market move is so alluring that few can turn away from the temptation of trying. The inherent problem is very few, if any, can accomplish this task on a regular basis. So what is the better option?

To use a baseball analogy, many believe the more sound principle is to consistently hit singles and doubles while avoiding strike outs. Tony Gwynn had 9,288 major league baseball plate appearances while striking out only 434 times which is an astonishing 4.7% of the time. While not generally regarded as such, he should be considered to firmly be in the discussion for greatest hitter of all time. By not striking out 95% of the time, he was an incredibly valuable asset to his team. Similarly, if you can avoid making the big mistakes when marketing your ag products, your results should be fine over time.

So how do you go about hitting singles and doubles when selling your grain, cattle, milk or other commodity? Simply put: incremental sales. When a market moves in your favor at a price that is profitable for your operation, sell some and if the market continues to move in your favor, make more incremental sales as it goes up. If the market keeps on rallying and your first sale is your worst sale, most people would be perfectly happy with this result. If the market rally turns out to be short lived and heads lower, at least you are somewhat comforted knowing that you sold some. Generally, for best results, don’t put all your eggs in one basket.

Contact our team for results to buy or sell your property!

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Taxing Ag Land in Kansas

Posted on August 28th, 2023

Whether the result of urban sprawl, energy production siting, or some other non-ag use, the amount of land available for farming is decreasing each year. Land no longer used for agricultural purposes yet still taxed on its potential agricultural income/productivity is an issue. According to the USDA, the total land used for farming in the U.S. decreased from 896.6 million acres in 2020 to 895.3 million in 2021.

The Kansas constitution recognizes the scarcity of land by setting apart Ag Land as the only subclass of real property that is taxed “upon the basis of its agricultural income or agricultural productivity,” often referred to as use value appraisal. All other subclasses of real property are taxed at their market value. The goal of this is to better insulate agricultural landowners from market influences outside of agriculture, which could push property taxes on agricultural land to levels unaffordable for those who wish to farm the land.

In Kansas Statutes, Chapter 79–Taxation, Article 14–Property Valuation, Equalizing Assessment, Appraisers and Assessment of Property, K.S.A. 79-1476, Kansas law provides a relatively broad definition. In general, The challenge for appraisers is that even if some tiny fraction (i.e., one acre) of a land unit is used for agricultural uses (grazing, haying, farming, timber), the entire unit can continue to be classified as agricultural land. Appraisers, though, do have the authority to split the original unit into separate “hunting/non ag,” and “ag” units. But this too could potentially be thwarted if the landowner simply cut a few trees and sold the wood, or swathed and baled a few acres on the “hunting side.” It doesn’t have to be a lot of agricultural activity, just enough.

To explore further, contact our team for more information in Kansas ag land.

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Easements: A Right To Cross

Posted on July 13th, 2023

Easements are an important tool in land ownership, as they allow an individual or entity to legally use the property of another. They’re a form of contractual agreement that allows for the legal use of land, without the individual or entity actually owning the property. The easement will typically define the types of activities that are allowed to take place on the property.

There are three types of easements: public, private, and prescriptive. A public easement is granted by the government and provides an individual or organization the right to use public land, such as parks, trails, or waterways. A private easement is one in which two parties privately agree on the right to use someone else’s property for their own private benefit. A prescriptive easement is established by continuous use and is the most difficult to enforce, as the individual or organization using the land must show that they have been using the property for an extended period of time and have established some sort of “right” to its use.

Once established, an easement is usually held by the same party indefinitely, unless it is sold or gifted. Additionally, easements may also expire or be terminated for certain reasons, such as when the purpose for which it was created is no longer needed. It is important to note that although an easement grants access to another party, the owner of the servient estate still maintains ownership of the land.

It’s important to understand the details of an easement agreement, including who owns the land, the scope of activities allowed, and the financial arrangements. An easement will always come with some sort of restrictions and limitations. It’s important to have an experienced and knowledgeable professional involved in the process to make sure all of the details are handled correctly. Contact us today to be of assistance in your real estate handlings.

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2022 Farm Market Forecasts

Posted on December 29th, 2021

Farmers walked away with higher than average profits for 2021. However, forecasts for 2022 are bleaker.

K-State just released its “Preliminary Estimate of 2021 Kansas Net Farm Income and a Projection for 2022” report. What they found was farmers will need to be prepared for what lies ahead.

“For 2021, we expect the net farm income for Kansas grain farms to be around $261,000, which is a 39% increase from 2020,” Gregg Ibendahl reported in a release with regards to the report. Idendahl and Dan O’Brien, both agricultural economists for K-State, found not all farms will experience a profit in 2021 and Ibendahl expects that 10% of farms will see negative net income. But overall, the study concludes 2021 will bring strong returns for most farmers. This will be helped by government support.

The estimates examined in the report for last year and this year examine seven areas: yields, prices, crop acres, expenses, crop insurance, government payments from the farm bill and ad hoc government payments. Projections came from an examination of 588 grain farms in the Kansas Farm Management Association database. Although expenses went up this year, many farmers had already purchased inputs like fertilizer, but as inflation continues to increase the supply chain teeters, farmers are expected to experience a decrease in profit margins.

Right now, the higher prices for grains are mitigating the increased prices for inputs, but this can change at any point. Livestock prices are expected to remain steady in 2022. Because of this economic outlook, O’Brien is suggesting more of an emphasis this year on price protection.

Our team is here to assist you with your land sales to continue to hedge your portfolio.

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