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Published by                 Property                       The Farmland Professionals            Vol. 38, No. 2
                             Services, Inc.                     www.capitalag.com                     Fall 2011



               Summer Temperatures Reduce Harvest

               J
                     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


                                                                 T
               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-
                                                                 ing.”

                                                                 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
                                                                                   “Corn is
                                                                                              Effect

         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.
                                         food-producing
                                                                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
                                                                      year.
                                                                                               (continued on page 5)

Page 2
                                              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
                   farms1@comcast.net                                                 russellblack@bellsouth.net
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.                              murrymc@bellsouth.net
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.
                   christopher.johnson@prudential.com              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
                                                                                      scott.mason@prudential.com
Contact:          Tim Harris 815-875-7418
                                                                   Lawrence Co., AR 402 ac. Suited for grain prod. 80 ac. precision
                  timothy.a.harris@prudential.com
                                        ,
Whiteside Co., IL 40 ac., tillable, CRP charming home.
                                                                                                             Sold
                                                                                      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                                               royce.bryant@prudential.com
                 doug@deininger-land.com                           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.
                           Sale Pending
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.
                                   Sold
Macoupin Co., IL 98 ac., tillable with some timber.                    New listing
Contact:           John Nitz 630-829-4679                                             Equal Housing Opportunity
                   john.nitz@prudential.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
                   sehappraiser@comcast.net                        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
                   robertp_1@yahoo.com                             requirements Sellers may impose, & may be withdrawn from market without
                                                                   advance notice.
Contact:           Lowell Akers 815-895-2016 for appraisals
                   1lakers@comcast.net                             Detailed information on all listings: www.capitalag.com
                                                                                                                                               Page 3
Supply Not Keeping Up with Demand
       Dan Basse to Address Midwest Outlook Program

A
        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.
Agriculture.”

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 frances.secrist@prudential.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
                                                      conference.
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
                                                      adds.
“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.
                                                      ispfmra.org.
“The conference has been steadily growing
and we anticipate upwards from 150 to 175 in
attendance at the 2012 conference.” The event

                                                                                                          Page 4
         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
                                   commodities.”              However....
                                                              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?


Page 5
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             Services, Inc.
             801 Warrenville Road
             Suite 150
             Lisle, IL 60532-1357

             630-434-9150
             www.capitalag.com




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           recycled paper
             with soy ink




Farm Cut of Dollar: 11.6 C                              Industry Group Value-Added Shares of the Food Dollar


A
        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
energy-intensive.
In an article published by the Cornucopia Insti-
                                                                                                         Source: USDA
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)

                                                                                                                 Page 6

				
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