THE PEOPLES PERSPECTIVE
The Land Investment Monthly is a round-up of articles and headlines published by the farm press, business media and financial publications with insights into buying, selling or investing in farmland, recreational ground or development ground. Follow Steve Bruere @SBruere on Twitter and find Peoples Company on Facebook for the latest land listings, auction results, upcoming events and real estate news. To subscribe to my monthly updates via email, send a message to Steve@PeoplesCompany.com with “Land Investment Monthly” in the subject line.
The Land Investment Expo is two weeks away with Donald Trump scheduled to headline the annual conference presented by Peoples Company and featuring presentations by some of the most recognizable names in land ownership.
The first Land Investment Monthly of 2015 is dedicated to highlighting the buzz around The Donald, and those such as Jim Rogers, T. Boone Pickens or Dennis Gartman, who’ve either spoken at the Land Expo in years past, or are in line to present at the Sheraton West Des Moines Hotel on January 23.
The Land Expo is the Midwest’s premier agricultural real estate conference with in-depth programming that covers topics ranging from commodities prices and farmland values to socially responsible land investing and future of agricultural real estate.
Join us in Iowa this January along with Donald Trump, Dennis Gartman and Eric O’Keefe, along with Land Expo moderator Ken Root and more than 600 attendees to consume a day full of educational breakout sessions and expert commentaries covering the land investing trends and topics that are of greatest interest to you.
A limited number of tickets are still available and can be purchased via online registration at www.LandInvestmentExpo.com.
The Drudge Report was among the media to pick up the Des Moines Register’s story on Donald Trump’s visit to Iowa to speak at the Land Expo. The article covers the potential presidential candidate’s plans to follow the Land Expo by attending an invitation-only dinner event at the Stine Barn with Gov. Terry Branstad, Lt. Gov. Kim Reynolds, and other prominent leaders, celebrities and businesspeople.
Land Expo speaker Dennis Gartman, making his inaugural appearance at the conference in 2015, has been directly involved in the capital markets since August of 1974. The editor and publisher of The Gartman Letter, who is sourced and quoted regularly in business or financial publications, has been making a lot of noise as of late about declining oil prices and the brokenness of OPEC. He also expects the U.S. dollar to power up in 2015. Gartmantold CNBC that, “I think the bull market in the dollar has really only just begun. Of course there’ll be corrections along the way.”
Author, editor and journalist Eric O’Keefe has covered everything from the NFL to Willie Nelson, as well as numerous celebrities and politicians during a 20-year career. Since 2006, that career has included the publication of The Land Report – or The Magazine of the American Landowner – a quarterly publication centers covering topics of interest for landowners and those interested in investing in land. O’Keefe’s insights and opinions, which he will share live from the main stage of the 20015 Land Expo, have been been featured in The New York Times, The Wall Street Journal, and Investor’s Business Daily.
Business Insider published an excerpt from Jim Rogers’ “Street Smarts” last month and included a synopsis of the Wall Street legend’s view on how to become a successful investor. Rogers, the author and billionaire adventurer who headlined the Land Expo in 2013, writes that sometimes doing nothing is the most prudent course of action. “That is how you make money,” he says.
T. Boone Oil
Oil-and-energy entrepreneur T. Boone Pickens said on January 5, that he expects that oil prices won’t reach $100 a barrel for 12 to 18 months. Fox Business News conducts an on-camera interview with the 2013 Land Expo speaker regarding the future of oil and cost of energy.
More food in the next 40 years will need to be produced by people than the previous 10,000 years combined, causing institutional types such as pension funds to consider global prospects in farmland investing. The Economist, reporting that the most patient and diligent investors are poised to reap the largest rewards, shines a light on “Barbarians at the Farm Gate.” The article includes thoughts on helping farm producers to attract more capital and grow their operations while investors deal with the sector’s “peculiar risks and complexities,” such as commodities prices or soil health.
The world can’t “grow” new farmland, but that doesn’t mean more of it can’t be produced to meet worldwide demands for commodities such as ethanol and soybeans. DTN Executive Editor Marcia Zarley Taylor plays myth buster in a look at Purdue University’s analysis by economist Chris Hurt. The U.S. shuffled plantings to add 21.3 million acres of corn and soybeans between 2005 and 2014. DTN reports, by reducing acreage in crops such as hay, cotton and oats while adding former CRP land or working with double-crop soybeans. Though the supply of global farmland is limited, “acreage surges show new cropland gets planted until demand catches up to supplies.”
Read more about the 2015 Land Investment Expo and speakers, including climate economist and commodity yield expert Dr. Simon Atkins, executive consultant Dr. Edmond J. Seifried and others at www.LandInvestmentExpo.com.
Olympic Gold Medalist Shawn Johnson on Land Investment Expo Speaker Donald Trump’s Political Aspirations, “Celebrity Apprentice”
Olympic gold medalist Shawn Johnson will appear Sunday on NBC’s “The Celebrity Apprentice” as the real estate magnate and 2015 Land Investment Expo keynote Donald Trump launches his seventh season of the merciless reality television show.
Johnson, 22, just wrapped up her second season on “Dancing with the Stars” and is now competing on ”The Celebrity Apprentice” to raise money for the not-for-profit Character Counts in Iowa.
But she’s not the first Iowan to go toe-to-toe with Trump in front of a national audience.
Johnson follows Tana Goertz, the radio host and motivational speaker who appeared as an “Apprentice” finalist in 2007. Both reality stars were quoted in a Des Moines Register article with talk of Trump’s potential presidential bid.
Goertz commented on the presidential nature of Trump’s straight-forward attitude and decision-decision-making skills. “He’d be an amazing president because he is a leader,” she said. He’s very decisive, and he doesn’t put up with nonsense.”
Johnson, working to wrap her head around the concept of The Donald as president, said she “actually loved him,” found him to be a “very respectable guy,” and wished “all the power to him.”
“I mean, he puts on a crazy show, but he’s really nice,” Johnson told the Register. “I got to talk with him and his daughter (Ivanka Trump) off camera a lot. He was intimidating the first few times I saw him, but he’s a good guy.”
Catch Iowa-native Shawn Johnson at 8 p.m. CST on Sunday, along with celebrities Gilbert Gottfried, Geraldo Rivera and Kate Gosselin, who are each taking a celebrity dive into the 2015 competition.
Peoples Company in early September set the stage for Iowa Secretary of Agriculture Bill Northey to fuel some boots-on-the-ground dialogue surrounding the use of targeted land conservation practices on Iowa farmland.
The field day began with Northey stepping onto the tarmac at Osceola Municipal Airport to visit with Peoples Company President Steve Bruere and Land Manager Mollie Aronowitz as employees of Indianola-based Agri-Tech Aviation Inc. loaded winter rye seed into an Air Tractor 402 idling on a runway. The seed would later be aerially applied on a 150-acre demonstration farm managed by Peoples Company just south of the airport.
Northey, an Iowa native and fourth-generation farmer who in January 2015 will begin serving his third consecutive term as the state’s agriculture chief, said the practice of sowing cover crops is taking hold with greater numbers of landowners and producers looking into the positive and lasting effects of limiting nutrient runoff, stifling erosion and increasing organic matter. He visits annually with farmers and industry leaders in each of Iowa’s 99 counties to better understand how they are maximizing breakthroughs in science and exploring the potential for innovative technologies intended to protect air, water and land.
“There have always been some folks who’ve done a little bit with cover crops, but we see the interest really growing,” Northey said. “We think we’ve doubled the number of cover crops each of the last few years. It’s still a small number in Iowa. It’s a great practice for the field and controlling erosion. Certainly has the possibility of creating some organic matter, as well. But it’s a great water quality practice. Iowa State’s research will show about a 30 percent reduction in the amount of phosphorus leaving the farm, and another 30 percent in the average amount of nitrogen leaving a farm on an average year with a cover crop planted.”
The preservation of organic material and a reduction in nutrient leaching are among the primary benefits associated with laying down a winter cover crop such as cold-hearty rye, which can be aerially seeded or drilled into the dirt following harvest, and is typically killed off using a herbicide the following spring.
Northey spoke with Agri-Tech’s aviation crew – who shared their perspective on what works or what doesn’t in the air and on the field – before a pilot departed and engaged GPS-guidance technology to help ensure as complete coverage as possible as he lined up to spray the rye on a field of standing corn a few miles away.
Aronowitz, who has a diverse background in Midwest agriculture, horticulture and her own family’s Iowa farming operation, watched as the conversation went beyond the face value of cover crops – in terms of their ability to control erosion and build soil – and to the future importance of documenting both the methods and results of land conservation practices today.
“A standard measuring matrix can help,” she said. “But what’s good on one farm isn’t always the best for another. Whether we’re talking about cover crops, tilling practices or fertilizer application timing, it all depends on variables such as soil type, slope and location in the state. By collecting and comparing research, we will ultimately allow farmers and managers to make more informed decisions when it comes to crop intelligence. We can set benchmarks and begin to evaluate which collection of practices is expected to have the greatest net-positive impact on individual farms.”
Northey, discounting any notion of a one-size-fits-all approach to land management, acknowledged that there is plenty of room for creativity and innovation in the farmland marketplace. Some of technologies that are introduced will work. Others will not. “None of these tools are universal,” he said. “That’s why we need decision-makers. It’s not like the government can just say, ‘Hey everybody does this.’ It’s needs to be the right thing, in the right place, for the right operation. We are all going to learn from each other as we have field days. We’ll target these pieces based on the operator, based on the land.”
He compared caring for the land with the keeping maintenance records on a car or pickup truck. “Picture two vehicles sitting side-by-side,” Northey said. “They may have been taken care of. May look the same. But if one has maintenance records, and you are able to understand what happened to that vehicle over the past five years, you have more trust. First of all, you know what did happen. But second, you know that someone cared for it.”
Bruere sees collaboration as a critical piece, too, as well as a need to properly capture and share the results of land conservation practices; tasks that fall squarely into the wheelhouse of today’s farm producer or land manager. “The necessity of capturing and communicating fertility history is growing right along with investor interest in farmland,” he said. “Landowners have never been in a stronger position to leverage technology and information to gain valuable insights into the history and future predictability of their land. These types of applications go hand-in-hand with profitability, sustainability of and the appreciation of productive farmland in Iowa and other corn-and-soybean producing states.”
Northey, who said research and communication are key elements to the success of the Iowa Nutrient Reduction Strategy program, anticipates that in time cover crops will become even more of “an economic driver for farmers, in addition to the water quality benefits.”
He recalled how earlier this year a sense of pride and accomplishment swept recently over his friends in Washington County, following the addition of cover crops to their annual rotations of corn and soybeans. “They’d go out right after rain and watch water flow off the field,” Northey said. “In some cases it was too much water, to be able to all be soaked in. The water coming off those cover crop fields was clean; it had no soil in it or almost no soil in it. It gave them a lot of pride. They were holding that soil in place. They were doing the right thing. And they were maintaining the long-term productivity, as well, of that farm.”
Aronowitz said Peoples Company embraces conservation practices throughout tillable and non-tillable managed acres with a goal of minimizing soil erosion in all farming operations and mitigating the impacts of soil or productivity loss on a farm’s balance sheet. The Iowa State University graduate said everyone has a part to play and that it is people coming together from all areas of the agriculture industry that will have the greatest impact on uncovering new innovations in soil conservation – while at the same time improving water quality.
“This is no longer just an issue important to a handful of small farmers,” she said. “It is the future of how we farm and buy or sell land here.”
“We’re no longer thinking in black-and-white,” Bruere said. “This is about managing for the future and managing for long-term appreciation more so than the cash return piece. You have to start with one farm first and make it work before you can scale it. You have to document that it’s working. You have to communicate that.”
“To be able to show that the folks managing this farm went above and beyond the simple practice of getting the crop in and getting the crop out of the ground – and sold – can create value in that farm beyond just what the soil looks like or where it sits,” Northey said. “A company reaching out and being a part of this is very important. This is how we learn the pieces that will get us to that better information 10 years from now.”
We live in a society where we can find almost any information we are looking for by simply doing an internet search.
You can find anything from college basketball stats in 1978, to the part number of a headlight for a new John Deere R Series tractor. On the other hand, farm owners or potential farm buyers need to do a lot more research to find property information, and some may not even be available.
When combining all of the new technologies in today’s agriculture industry, including data collecting software and new differences in crop insurance plans with yield history and field knowledge gained by a farmer over the years, it’s easy to see the overload of information we could have on each individual farm.
That being said, it takes more than a high Corn Suitability Rating or CSR value to get the top dollar out of a farm.
Compiling all of this information can make a large difference in the overall price of a farm when it is sold, or the cash rent numbers collected. A farm that has current tile maps, fertilizer maps, yield data, and soil test data will traditionally bring a sales or cash rent premium over a similar farm with less information available. Many of today’s farmers have sophisticated data tracking software or have a working relationship with outside companies to provide them with data to enhance their yields. If a farm is being rented by a farmer, most of this information is rightfully owned by that operator. In those situations, the landowner conceivably should be writing language into their lease agreements allowing access to certain information if they decide to sell.
There are many instances where a string or two of tile was added by a farmer to improve the drainage, but they were never mapped out, similar to yield and fertilizer data which were never stored into memory and were long lost by the time a farm was ready to change hands.
Although collecting all of this information is the first and arguably the most important step, understanding what is collected is also very important. Increasing yield and preventing erosion are two of the best ways to add value to a farm, and the data collected can tell you where tile, fertilizer, waterways, or grass strips may need to be added to enhance the tillable acres.
Whether you are a farm operator, a farming landowner, or a non-farming landowner, collecting data and understanding how to use it to produce optimum results of each individual farm should be a top priority. With farm operations growing larger, there are more opportunities for tenant/landowner relationships to grow. Sharing information helps both parties by improving the land to help the current operator maximize yield along with increasing the value of the farm.
A few examples would be testing soil and adding fertilizer where needed, investing in tile and waterway work, and understanding situations where it may be best to increase or decrease tillable acres, such as removing trees or enrolling wet or erodible ground into a conservation program.
The latest farm bill has brought on new factors that could affect the value of the farm, too. The landowner has the option to update the base acres, and the farm operator can chose between PLC and ARC farm programs. The option that is chosen will be locked in through 2018, with the final payment coming in 2019, regardless if the farm changes hands during that time.
In closing, compiling and understanding all of the information associated with a farm can add value both annually and at the time of a sale. If a landowner doesn’t want to take the hands-on approach such as compiling data and working with a farm operator to improve their property, a land management company such as Peoples Company can be a very affordable way to add value to the farm.
Farmers and investors are becoming more and more sophisticated in buying and renting farm ground and are demanding information on yield, fertility, and drainage before they will pay a premium for land. In today’s market, that could be the difference between a sale or a no-sale.
As the late entrepreneur Victor Kiam once said, “Information is a negotiator’s greatest weapon.”
Travis Smock is a Land Sales Associate with Peoples Company. He may be reached at Travis.Smock@PeoplesCompany.com.
Oil and energy entrepreneur T. Boone Pickens shares with Neil Cavutoa of Fox Business News a global outlook on production, inventories and oil prices heading into 2015.
Upcoming Land Investment Expo speaker Dennis Gartman, editor of The Gartman Letter, comments on the uncomfortable position of the Russian economy in light of a “collapsing” rouble. His remarks on CNBC include predictions of political turmoil – given an “unsmart” of Vladimir Putin – as well as a Russian rouble that Gartman said was moving quickly toward 70 to the dollar. “In the world of foreign exchange, a 5-percent move in foreign exchange in the course of a year is a big move,” he said. “Here we’ve moved 30 percent in the course of four months.” Click below to watch the video, here to read more about Mr. Gartman, or here register to hear from him live at the Land Expo in January 2015.
The Land Investment Monthly is a round-up of articles and headlines published by the farm press, business media and financial publications with insights into buying, selling or investing in farmland, recreational ground or development ground. Follow Steve Bruere @SBruere on Twitter and find Peoples Company on Facebook for the latest land listings, auction results, upcoming events and real estate news. Subscribe to my monthly updates or request access to a hard copy of my Land Investor newsletter by sending an email to Steve@PeoplesCompany.com and including “Land Investment Monthly” in the subject line.
Real Estate Magnate Donald J. Trump will headline 2015 Land Investment Expo, January 23, 2015, at the Sheraton West Des Moines Hotel. Farm producers and agricultural real estate professionals will hear from one of the best known real estate entrepreneurs on earth. Register here. Mr. Trump, as been called the archetypal businessman and a dealmaker without peer. He is expected to remark on his personal experiences in the real estate industry, the current state of the real estate market, and how to get ahead of the competition. Mr. Trump is chairman and president of The Trump Organization, New York, which bills itself as “the world’s only global luxury real estate super-brand.” His many books include the best-selling business book of all time, “The Art of the Deal,” “Trump: The Best Real Estate Advice I Ever Received,” and a string of instructive best-selling titles such as, “How to Get Rich,” “The Way to the Top,” and “Think Like a Billionaire.”
A guest post with presentation slides by Paul Neiffer of CliftonLarsonAllen LLP reflects the CPA’s perspective on choices surrounding the new farm bill. Neiffer, who spoke in front of a full house at Peoples Company’s “Big Questions” seminar on November 3, said “What should I do?” is typically among the first questions he is asked on the subject.
Farmland Investment Center reported that a deal to purchase seven farms totaling 6,819 acres in South Carolina has been struck by Farmland Partners Inc., according to the Farmland Investment Center. Farmland Partners entered into an agreement to pay $28 million for the row crops farms, intending to lever the purchase with debt representing approximately 60 percent of the purchase price and sign multi-year leases with the seller and other third-party tenants. Eight purchase agreements to acquire farms in Colorado, Arkansas and Nebraska for about $18 million in cash were also announced.
The addition of no fewer than 4,500 acres of farmland in an unincorporated Florida community were recently added to the real estate investment empire of legendary tech entrepreneur and Microsoft founder Bill Gates. Cascade Investments, the overseer of the Gates family fortune, is reportedly getting into agriculture and now owns more than 100,000 acres of farmland in multiple states. Gates’ net worth has been estimated by Forbes magazine at $80 billion, making him the richest man in the world.
Government bonds have returned $1 trillion in the form of price gains and interest for investors in the past six years, debunking the “fed naysayers” who have denounced Federal Reserve monetary policy since the financial crisis. Bloomberg reported in September on the resilience and performance of interest-bearing U.S. Treasuries, “a rebuke to the chorus of skeptics.” Buying and holding longer-dated U.S. bonds have this year alone rallied 14.2 percent, and beat the 10.2 percent return for the Standard & Poor’s 500 Index of American stocks.
The positive fundamentals of farmland are attracting lots of attention from Wall Street, and the market is showing signs of resilience even as commodities prices have leveled off. Jeff Caldwell with Successful Farming magazine published my remarks and the comments of Peoples Company’s Ron Beach in an article about rising investor interest in a highly productive asset class.
Long-time Peoples Company client Scott Oakes contrasts the farmland market of the 1980s with variables of today, including continued low interest rates, corn prices that are nearly double that of 1988, and the fact that China is no longer competing with us for corn exports. “These are the main reasons that I am confident in saying, ‘This isn’t your father’s land market.’
CLIVE, Iowa – Farm producers and agricultural real estate professionals will hear from one of the best known real estate entrepreneurs on earth, Donald J. Trump, at the 2015 Land Investment Expo on January 23, at the Sheraton West Des Moines Hotel.
Called the archetypal businessman and a dealmaker without peer, Mr. Trump is expected to remark on his personal experiences in the real estate industry, the current state of the real estate market, and how to get ahead of the competition. Mr. Trump is chairman and president of The Trump Organization, New York, which bills itself as “the world’s only global luxury real estate super-brand.” His many books include the best-selling business book of all time, “The Art of the Deal”; “Trump: The Best Real Estate Advice I Ever Received” (2006); as well as a string of instructive best-selling titles such as, “How to Get Rich,” “The Way to the Top,” and “Think Like a Billionaire.”
Mr. Trump’s featured speaking platform at the Land Expo follows the 2014 engagement of T. Boone Pickens, who turned a $2,500 investment into the nation’s largest independent oil company. Correspondingly, Mr. Trump – whose first real estate deals were in middle-class rental housing in Brooklyn, Queens and Staten Island – in 2013 received the T. Boone Pickens Award for entrepreneurial excellence and business leadership from The American Spectator magazine, which described him as an American original.
Presented by real estate firm Peoples Company, the Land Investment Expo is a daylong event that each January attracts the brightest minds in land investing and farm real estate to Central Iowa. Hundreds of bankers, farmers, real estate agents, investors and developers are expected to attend expert educational sessions, visit trade exhibitors, and interact with fellow producers and professionals on-site.
Besides Mr. Trump, whose name is synonymous with prestigious addresses in New York and around the world, programming at the eighth annual Land Investment Expo will look as far afield as sub-Saharan Africa for budding opportunities in real estate. A delegation of Iowans recently back from South Africa, Zambia and Mozambique will reunite for an appraisal with their host, EmVest Agricultural Corp. CEO Susan Payne, who runs a “turf to table” operation in Africa for the diversified agricultural investment company.
Ms. Payne is a repeat Land Expo speaker whose initial, 2011 discussion of the role of agriculture in global food security was followed by a 2013 presentation of her views on untapped investment opportunities in Africa, including emerging farmland markets. This year she will be joined by a crew of “agri-tourists” from the agricultural heartland of the U.S.: noted ag journalist Ken Root, economic analyst Maurice Clark and videographer Michael McClean.
Other expert speakers confirmed for the 2015 Land Investment Expo include:
• Dennis Gartman, an influential investor who closely follows commodities and capital markets as editor and publisher of The Gartman Letter and is a frequent contributor on CNBC and Bloomberg TV;
• Eric O’Keefe, editor of The Land Report, the magazine of the American landowner;
• Simon Atkins, M.B.A., Ph.D., D.Sc., climate risk economist, commodity yield expert and CEO of Advanced Forecasting Corp. of Billings, Montana; and
• Edmond Seifried, Ph.D., executive consultant and chief economist for the Sheshunoff CEO Affiliation Programs, Austin, Texas, high performance education and idea exchanges for community bank CEOs, lenders and technology/operations officers.
Peoples Company President Steve Bruere, the originator of the Land Investment Expo who secures compelling guest speakers each year, said Mr. Trump is a good fit for the top of the 2015 lineup. “With so many superlatives to his name – including the tallest residence in the world right here in the Midwest, the Trump International Hotel & Tower/Chicago – Donald Trump is a true legend in the real estate industry,” Mr. Bruere said.
“He’s been credited with entire market shifts like creating a condominium boom in New York City, and his multiple development projects there had a positive impact in the midst of an economic downturn. He’s a founding member of The Wharton School Real Estate Center at the University of Pennsylvania, which is a leading center of real estate education and research. And of course he’s well-known for his outspoken nature, so we look forward to hearing what he has to say to fellow investors here in Iowa.”
Find more information about or register to attend the 2015 Land Investment Expo at www.LandInvestmentExpo.com, or by phoning 855-800-LAND (5263).
A guest post by Paul Neiffer, CPA, of CliftonLarsonAllen, LLP, on choices surrounding the new farm bill.
I had the privilege of speaking in front of a full house for Peoples Company on Monday November 3, 2014, on the new farm bill. I have given many seminars on the new farm bill this year and one of the key questions that is always asked is, “What should I do?”
I believe I answered that question in the seminar and for most Midwest corn and soybean farmers; that answer is “You should elect ARC and not PLC.” Now that may be different for certain farmers, but in general, I believe this is correct answer.
I have updated the slides to reflect changes since the November 3 seminar, and these slides contain additional information that I did not have time to present at that seminar.
If you need professional help on getting your answer to “What should I do?” our firm is providing a Farm Bill Analysis service for a flat fee of $475. This analysis will answer the following questions:
- Should I reallocate my base acres?
- Should I update my payment yields?
- Which program should I select among PLC, ARC-CO and ARC-IC, and why?
If you are interested in this analysis, please send me an email to Paul.Neiffer@CLAconnect.com.