Published by Property The Farmland Professionals Vol. 38, No. 2
Services, Inc. www.capitalag.com Fall 2011
Summer Temperatures Reduce Harvest
ust when everyone thought there Julys ever, right at crop pollination time.”
might be a reprieve from the impacts The projected damage to the crops could
of extreme weather, the Hot Sum- mean reduced harvest. In fact, the USDA,
mer of 2011 hit, and with it came scorch- on August 11, lowered its inventory forecast
ing temperatures right at corn pollination for corn harvested this year, and the price on
time. The results have been deformed and corn futures jumped 3.7 percent that day.
incomplete ears of corn, and a lowering
in the estimates of what the final harvest The USDA August forecast for corn pro-
might be. duction was at 12.914 billion bushels, down
4.1 percent from its July estimate. Although
“As recently as June, the USDA was this is at near record level, the worldwide
looking at a leveling of food prices demand for corn is leaving reserves at his-
at the end of the year because farm- torically low levels.
ers were seeing less demand for
corn and were expecting a big crop. (continued inside)
This, despite the flooding that affected a
large section of the country’s heartland in CAPS’ Tim Harris to Co-Chair
May,” says Scott Johnson, AFM, CCA, Illinois Land Values Conference
Executive Manager and Real Estate Broker
with CAPS’ Champaign, IL, office. im Harris, AFM, CAPS Executive
Manager and Real Estate Broker
“Then came the blistering heat which based in Princeton, IL, has been se-
turned July into one of the top 10 hottest lected to co-chair the committee organizing
the 2012 Illinois Land Values Conference to
be held in March in Bloomington, IL.
“It is a real honor to be asked to take on
this responsibility,” Harris says. “The Land
Values Conference has achieved Midwest
regional status and attention, and we expect
people from across the area to be attend-
Harris and his co-chair will be responsible
for arranging for speakers and presentations
at the conference. “These are typically very
well known economists, tax specialists,
attorneys, and even government agency
(continued on page 4)
Reduced Harvest: Domino Effect
(continued from page 1)
“The August USDA report is very important,” areas, and we see tighter food supplies,” John-
Johnson says, “because it is based on 4,500 ac- son says.
tual field samples and 27,000 farm surveys, and
not just statistical trends.” He notes that rising food costs and corruption
sparked political problems across North Africa
Simply stated, lower supplies will lead to higher and the Middle East leading to the ousting of
prices, which will likely be reflected in the leaders in Tunisia and Egypt. The latter is the
prices consumers will pay at the grocery store. world’s largest buyer of wheat.
Walmart, which controls 20 percent of the U.S. According to the U.N. Food and Agriculture
retail food market, according to analyst esti- Organization, the output of food on a worldwide
mates, reports that second quarter grocery prices basis will need to climb by 70 percent between
rose 3.4 percent over the same period a year ago. 2010 and 2050 as the world population grows to
Groceries accounted for 54 9 billion.
percent of Walmart’s U.S. See related story
sales, or nearly $141 bil-
lion, according to a recent
“Supply Not Keeping Up Domino so important because
company filing. with Demand” it is used in everything from
Dan Basse to Address breakfast cereals to sweeten-
A Global Situation ers in soda and other foods, to
The International Monetary Midwest Seminar feed for livestock, including
Fund reports that record Page 4 cattle, hogs and chickens,”
worldwide food prices may says Johnson.
remain high because the output needed to ease
supply may take years. He notes that record-high prices paid for corn in
2010 led many Midwest farmers to plant more
Rising incomes in growing middle classes in corn in 2011. This meant fewer acres given over
developing nations mean changes in diets and to other crops, reducing the availability of soy-
demand for more meat and dairy products. More beans, wheat, sorghum, oats and barley.
meat and dairy products mean greater demand
for feedstuffs such as corn and wheat. “So we are starting out the season with fewer
acres of many other crops, and now we see a re-
“Add to all of this a rising demand for biofuels duced harvest of corn based upon weather con-
and the weather problems that have plagued a ditions, which no one could control. It ripples
great deal of the world’s through everything,” Johnson explains.
In Texas, which just saw its hottest and second-
driest July in history, dairy operations are having
to pay higher prices for Midwest corn because
they have no crops to harvest to feed their ani-
mals. Their crops have all been burned up by the
heat and drought.
Texas Department of Agriculture officials say
that more than 90 percent of Texas is listed by
the U.S. Drought Monitor as being in either
“extreme” or “exceptional” drought, the two
worst categories. Agricultural losses in the state
are expected to exceed $5.2 billion. This year’s
drought has been declared the second most
severe in state history and the worst in a single
(continued on page 5)
Real Estate Listings
Midwest 630-434-9150 Mid-South 901-756-5367
Contact: Chip Johnston 815-875-2950 Contact: E. Russell Black, Jr. 662-334-4627
Bureau Co., IL 70 ac., combo CRP/timber. Bolivar Co., MS 930 ac.Cotton & grain farm near Mississippi
Bureau Co., IL 64 ac., nice mix of tillable/timber. Reduced River levee. Partially irrigated.
Bureau Co., IL 101 ac., 98 ac. till., grain storage. Reduced Terrebonne Par.,LA 1,022 ac. Potential coastal mitigation, water-
front development, recreation. S of Houma.
Marshall Co., IL Sold
74 ac., 21 ac. CRP; log home, nice get-away.
Washington Co., MS 91 ac. Near Greenville, currently farmland,
Marshall Co., IL Sold
118 ac., over 75% Muscatine soils. Sold
potential development land.
Marshall Co., IL Sold
19 ac., Graymont/Birkbeck soils. Washington Co., MS 192 ac. Excellent recreation & hunting tract.
Bureau Co., IL 80’ x 130’ buildable lakefront lot. 33 ac. classified as cropland.
Bureau Co., IL 43 acres, 34 ac. tillable, timber.
Contact: Murry McClintock 662-363-1801
Bureau Co., IL ,
137 ac., some CRP balance in timber. email@example.com
Bureau Co., IL 26 ac., beautiful home, bldgs., pasture. Chicot Co., AR 1,457 ac. Hunting land; 759 ac. woods/
Bureau Co., IL 373 ac., excellent deer/turkey/waterfowl sloughs; 387 ac. cropland; 369 ac. CRP .
hunting property; 104 ac. CRP Reduced Ashley Co., AR 130 ac.; 68 ac. cotton/grain production; 50%
Bureau Co., IL 30 ac., excellent hunting property 2 mi. S of irrigated; woods; deer hunting.
Lake DePue Conservation area. Quitman Co., MS 232 ac. Deer and duck hunting potential. Ac-
LaSalle Co., IL Sale Pending
40 ac., , Catlin/Drummer/Muscatune soils. cessible in all weather by county roads.
Marshall Co., IL 100 ac., 75% till., barn. Would lease back. Chicot Co., AR ,
1,375 ac., 1,321 ac. WRP 3-acre cabin site.
Marshall Co., IL Sale Pending
107 ac., Mallard Lake Duck Club
Chicot Co., AR
Prime deer and duck hunting.
338 ac. Ponds converted back to cropland.
Marshall Co., IL 120 ac., 75 ac. cropland, timber, no bldgs.
Soybeans and rice harvested last 3 years.
Marshall Co., IL 114 ac., tillable / timber combination.
Issaquena Co., MS 430 ac. Converted fish ponds; 160 ac.
Contact: Scott Johnson 217-359-3336 cropland; deer/duck hunting.
firstname.lastname@example.org Quitman Co., MS 67.5 ac. 64 ac. FSA cropland. Excell. grain
Kendall Co., IL 3 ac., Rte. 126 & 71 intersection location. production potential, also suitable for cotton.
Mason Co., IL 224 ac., 97% till.,Canisteo, Marshan soils. Ashley & Chicot 4,397 ac. Excell. rice farm; deer/duck hunting/
Contact: Bill Green 630-761-8143 Cos., AR ,
habitat. 2,304 ac. WRP woods, sloughs.
Kendall Co., IL 10 ac., Rte 34 frontage 1/4 mi. E of Rte 47. Contact: Scott Mason 870-972-4766
Contact: Tim Harris 815-875-7418
Lawrence Co., AR 402 ac. Suited for grain prod. 80 ac. precision
Whiteside Co., IL 40 ac., tillable, CRP charming home.
leveled land w well. Adjoins Walnut Ridge.
Poinsett & Jackson 1,780 ac. Along Bayou De View; historically
Bureau Co., IL 34 ac., house, till. ac., comm. tower income. Cos., AR good duck & deer hunting. Farm developed
Bureau Co., IL 3 lots appx. 2.5 mi. SE of Princeton for rice & soybean production.
Bureau Co., IL 87 ac., all timber, potential for homesite. Contact: Royce Bryant 901-758-3351
Contact: Doug Deininger 815-439-9245 email@example.com
firstname.lastname@example.org Coffee Co., TN 1,108 ac. E of I-24 between Nashville &
Kendall Co., IL Sale Pending
377 ac., Plano/Kaneville soils, near Plano. Chattanooga. 500 ac. of nursery for various
types of ornamental & shade trees. 550 ac.
Kankakee Co., IL 153 ac., good soils, metal machine shed. of improved pasture which can be used for
Kendall Co., IL 64 ac., 58 till., Saybrook/Lisbon/LaRose soils. nursery expansion or converted to row crops.
Macoupin Co., IL 98 ac., tillable with some timber. New listing
Contact: John Nitz 630-829-4679 Equal Housing Opportunity
email@example.com All acres/dimensions/measurements for real estate listings are +/-
Greene Co., IA Sold
236 ac. in 2 tracts, CRP & timber. Information on the real estate listings is from sources CAPS considers reliable.
However CAPS has not independently verified & does not guarantee accuracy,
Contact: Sid E. Holderly 219-984-5665 in Indiana completeness or sufficiency of information. Buyer is advised to independently
firstname.lastname@example.org confirm information, & relies upon it at own risk. Past history is no guaranty of
future performance. CAPS expressly disclaims responsibility for future operating
White Co., IN 74 ac., 29.6 ac. tillable, balance in timber. & investment results.
CAPS represents the SELLERS. Offerings are subject to prior sale, title mat-
Contact: Robert A. Pearson 217-359-3300 ters, price change, rental or other conditions, & to special listing conditions or
email@example.com requirements Sellers may impose, & may be withdrawn from market without
Contact: Lowell Akers 815-895-2016 for appraisals
firstname.lastname@example.org Detailed information on all listings: www.capitalag.com
Supply Not Keeping Up with Demand
Dan Basse to Address Midwest Outlook Program
gricultural economist Dan Basse, presi-
dent of AgResource Company based in
Chicago, will deliver the keynote presen-
tation at CAPS’ Midwest Outlook program. The
event will be held Sept. 16 at Jennifer’s Garden
Banquets in Morris, IL.
The title of Basse’s presentation is “Supply Not
Keeping up with Demand -- The Risks for U.S.
The presentation will review world grain market
prices since January of 2009, and he will discuss
the effects of the summer weather on Midwest
corn and soybean crops.
Key points will be on world demand for grains
and meat, and the role weather has had in keep- given by members of CAPS’ professional real
ing producers worldwide from being able to estate staff.
harvest enough to meet demand.
Advance registration is required and can be
The second presentation at the Outlook Program made by calling CAPS at 800-243-2060 or e-
will be a review of land values, which will be mailing to email@example.com.
CAPS’ Tim Harris to Co-Chair
(continued from page 1)
heads,” he says. “We try to cover a broad sweep coincides with the release of the annual Illinois
of topics that will attract a wide range of attend- Land Values and Lease Trends Report, and com-
ees.” plimentary copies are given to all attending the
The Conference is an annual event put on by the
Illinois Society of Professional Farm Managers The dates for 2012
and Rural Appraisers. “It was begun a number are March 22 and
of years back as an outlook conference and was 23. “The confer-
held in the Chicago area. That was when there ence is open to
were a lot of 1031 tax deferred exchanges taking anyone who has an
place and there was great interest in farmland interest in Illinois
from the metropolitan area. farmland,” Harris
“It was renamed the Illinois Land Values Con-
ference in 2005, and the venue changed to Mor- Persons interested
ris, IL, to accommodate more downstate attend- in the program and
ees. It has subsequently found a new home in registration should
Bloomington. Being more centralized has made monitor the web-
it more convenient for people to come from site of the Illinois
Indiana as well as Missouri,” he explains. Society at www.
“The conference has been steadily growing
and we anticipate upwards from 150 to 175 in
attendance at the 2012 conference.” The event
Reduced Harvest: Vicious Cycle
(continued from page 2)
In addition, the drought saw farmers across the RICS says thousands of acres of land across all
Southwest abandon 30 percent of their cotton of Ireland, Britain and parts of Europe that had
acreage. been zoned for development are being put back
to use in animal and crop production.
The USDA also estimates that U.S. wheat pro-
duction will drop 5.9 percent. Wheat is com- Agricultural land in the Ukraine is considered
monly used as a replacement feed when corn is underutilized by many and holds tremendous
not available or unaffordable. Estimated soybean potential for further development. While for-
yields are now also projected to be 8.2 percent eign interests cannot purchase land there, it can
lower than in 2010. be rented using local labor and equipment for
developing agricultural crops.
The rice crop in Arkansas is expected to be the
lowest in more than a decade, down 31 percent A Bright Side
from last year. USDA forecasts peg the harvest “Reduced supplies and higher crop prices could
at 79.5 million hundredweight of rice. That’s mean dramatic increases in profitability for
the lowest production since 1997’s 79.2 million those farmers who did not get caught up in the
hundredweight. summer heat,” Bryant says. “Current forecasts
add $5 billion to U.S. farm cash receipts for the
“It becomes a vicious cycle,” says Royce Bry- year, lifting the total to well above the $94.7
ant, AFM, Regional Vice President and Real billion forecast earlier this year. And that was up
Estate Broker at CAPS’ Mid-South office based $15.7 billion from the 2010 forecast.
in Memphis. “And we likely will not see any
real relief, particularly regarding food prices, “According to the USDA, the earlier 2011
until we get some indications of what the overall forecast is the second highest inflation-adjusted
2012 harvests will bring. It’s go- value for net farm income recorded in the past
ing to take that long because of 35 years.”
the very low reserves of these
Rising input costs will likely put a damper on
Land Values Here margins. “Nationwide we are about maxed
and Abroad out on the land available for planting, so the
While U.S. Heart- only way we are going to see increases in total
land farmland production is through increased use of fertilizer,
values are continu- particularly on corn,” notes Tim Harris, AFM,
ing a steady, upward CAPS Executive Manager and Real Estate
trend, prices being paid in Broker based in Princeton, IL. “That, of course,
Europe are also reaching raises demand which is forcing higher prices for
record levels. the fertilizer that is available.”
Even with its general economy in the tank, He cites a USDA forecast of total operating
prices being paid for farmland in Ireland are costs rising 18 percent for corn, 13 percent for
skyrocketing upward. Two relatively small farm soybeans, 18 percent for wheat, 15 percent for
parcels in Northern Ireland were recently sold at rice, and 9 percent for cotton, compared to 2010.
auction for the equivalent of $31,350 per acre.
“While the price of fuel has not changed sig-
At the same time, the average cost of bare land nificantly from last year to now, it is still a
in Great Britain is up to $10,000 per acre com- major factor in harvest costs,” Harris continues.
pared to $9,600 at the end of 2010. The Royal “Simply stated, with more acres planted it will
Institution of Chartered Surveyors (RICS) says take more fuel to get the crops harvested, and
the demand for agricultural land is being driven the cost all comes off the bottom line for the
by investors seeking a refuge from turbulence in producer.”
global financial markets. Sound familiar?
801 Warrenville Road
Lisle, IL 60532-1357
is printed on
with soy ink
Farm Cut of Dollar: 11.6 C Industry Group Value-Added Shares of the Food Dollar
merican farmers and agribusinesses are
receiving only 11.6 cents of every dollar
being spent on food according to a recent
analysis by the USDA. That is down from nearly
20 cents on the dollar that USDA calculated in the
past, using a different method, and tends to under-
cut arguments that farm prices for commodities
and feedstuffs are driving higher retail food prices,
resulting in grocery store “sticker shock.”
According to the USDA, the second-largest con-
tributing factor to food prices, only trailing labor
costs, is the combination of food processing, pack-
aging and transportation, all of which are highly
In an article published by the Cornucopia Insti-
tute, Dick Gallagher, chairman of the Iowa Corn Economic
Promotion board, says “Only a small percentage AgriForum is published by Research
of our food dollar actually pays for the production Capital Agricultural Property Services, Inc. Service
of the raw commodity itself. I think it’s easy to see For a free subscription, call 800-243-2060
that what you pay at the store has even less to do or complete the form at
with the price of corn.” www.capitalag com (Contact Us)