National Land Conference Summary – Part 2
March 12-14, 2018
Chris Peacock attended and participated in the National Land Conference on March 12-14, 2018 in Nashville, Tennessee. Attendees represented nearly every state in the continental US. Chris is an Accredited Land Consultant and was asked to lead three discussions on crop leases and farm management during this conference, which he found very insightful. Discussions provided input and approaches from professionals from various parts of the country. Following is second of two summaries of the 2018 National Land Conference:
Farm Financials: Agriculture is in a recession. Since 2014 according to the American Farm Bureau Federation, field crop cash receipts have declined 19% and dairy and other livestock receipts have declined 21%. Farm input costs have seen minimal reduction through this time. Essentially, farm income has decreased from nearly $444 billion in 2014 to $355 billion in 2017 for an $89 billion decline. Farmers have been burning equity and borrowing funds to survive. However, the cash rent market remains very aggressive in Indiana and throughout the U.S. as farmers strive to lock in additional acres without purchasing land at today’s farmland prices. After a 15% to 20% farmland price reduction from 2014 through 2016, farmland values stabilized in many areas in 2017 and early 2018. None of us have a crystal ball, but the stronger fall 2018 delivery grain prices have created a stronger undertone in the agriculture community. In Indiana, dairy farmers have endured the greatest financial challenges. Grain producers and independent livestock producers are also facing significant financial challenges. It’s interesting to note that nearly all farm equipment dealers have significant small utility tractor and ATV inventory at the front of their lots, with a relatively small amount of large farm equipment toward the back of their lots. They are well aware of the struggling agriculture economy and strong US economy.
Tax Bill Update: Russell Riggs of the National Association of Realtors (NAR) credited the NAR for two major modifications to the current tax bill. The initial tax bill would have removed the home mortgage expense as well as the IRS Code 1031 tax deferred exchange opportunity. The NAR lobbied diligently to inform our elected officials of the consumer financial importance of these two income tax tools and was able to have these included in the final tax bill. Dr. Mark Dotzour further emphasized the positive corporate reactions to the new tax bill that immediately benefitted the U.S. economy through year-end employee bonuses and the positive effect of significant income tax reductions beginning in 2018.
U.S. Economy: The U.S. economy is strong with continued growth anticipated. Edsel Charles of Market Graphics Research Group, Inc. reports that the residential economy is so strong that it is challenged to hold pace with the residential construction needs in virtually all U.S. markets. Residential building site values continue to increase slowly. Mr. Charles anticipates that the US economy will continue to grow into 2019, then he projects a short-term economic pull-back in 2019 that will lead to another significant period of economic growth beginning in 2020. Factors that can impact this are interest rates, controlling inflation, the value of the dollar, etc.
As confirmation of Mr. Charles’s data and projections, Dr. Mark Dotzour projects “smooth sailing ahead” for the U.S. economy. Dr. Dotzour believes that the strength of the U.S. economy will pull the agriculture economy out of its current recession soon. Dr. Dotzour encouraged us to be very mindful of the news source that we follow as he is concerned with the depth of politicizing in today’s news and the degree of news manipulation occurring today. In addition to the key economic factors Mr. Charles encouraged us to follow, Dr. Dotzour is monitoring the current international trade agreements and their potential modifications and how the upcoming U.S. infrastructure improvement initiative will be funded. Economists are hopeful that this will be funded through bridge, tunnel, or road tolls rather than further increasing the U.S. debt.
The National Land Conference is one of the top annual land conferences providing the industry’s premier speakers, excellent corporate partners sharing their latest technological advances, and opportunities to network and share information with other top land professionals and corporations from across the U.S. The 2018 National Land Conference provided current updates and current economic projections for our monitoring and preparedness. Our economy constantly cycles. Strong economic times offer opportunity to improve one’s financial strength while challenging economic times offer growth opportunities. As the late President Andrew Jackson once said, “I was born for a storm and a calm does not suit me”. So it is with agriculture. Let me be the calming force with your farm investments. Please contact me at firstname.lastname@example.org or (765) 546-0592 to schedule a confidential meeting.