10492416002003-04-02

1-22-2019 MN Chapter RLI  Conference  Call

Attendees:

  • Terri Jensen, ALC, VP MN Chapter
  • Harlen Helgren, Partner to MN Chapter 2018-2019, Frandsen Bank
  • Chuck Wingert, ALC
  • Eric Distad
  • Terry Dean, ALC
  • Wendy Forthun, ALC
  • Gary Vanderwerf
  • Kristine Fladboe
  • David Hansen
  • Jeff Mead
  • Doug Fenstra

My note-taking may not cover all of the discussions as kept notes very brief to be able to keep up 😊

Discussions:

  • Annual conference topic suggestion: types of financing/deferment of capital gains — examples:  monetized deferred payment transactions; DST’s; 1031’s; charitable unitrusts
  • Harlen’s update from a lender perspective on ag land in 2019:
  • Operations that are payment-free are moving forward easily;
  • Those with land payments, large equipment payments or other payments, may not make it in 2019
  • Farmers are looking for lenders who will work with them
  • Land still selling for those with equity/cash
  • Investors – not as interested
  • 179 depreciation: Harlen wondering if this is really beneficial or not
  • Of 100 customers, issues with 5 or so
  • Interest rates going up; many lenders going to variable rates for equipment and lines of credit; many lenders asking for more collateral (example: put up a bare 80 that is not encumbered with a mortgage, etc)
  • Refinancing occurring, but with interest rates going up, this may not be a good thing as payment may increase vs. decrease
  • Updates from members in regard to what is happening in their area (in order by how people called in and I was able to record names):
  • Chuck Wingert – Mankato: strong market in 2018; saw gains/increase in prices 2017, but offset by 3% decrease in 2018; high quality land with strong interest ($8500-$10,500 range) and stable pricing; still farmers who need/want to expand and investors who want to buy; south MN counties inundated with rain and low yields, then, affected this area and adds to negatives; so surprised how market has held up; estates for the most part are sales; three debt relief sales in 2018.
  • Eric – Kasson: auction in Hayfield 2 wks ago and teamed up with auctioneer; price down from previous auctions
  • Wendy Forthun – Kasson: large auction in April 2018 and Dec 2018; difference in attitude for each with upbeat attitudes in April; not-so-much in Dec 2018; limited number bidders & price change from $9000/acre in April to $8100 in Dec; decline in number of properties sold or for sale; high quality farm prices holding steady; more estate sales; no debt relief sales so far; fewer auctions and more private treaty sales.
  • Terry Dean – Hutchinson: farms in Meeker/Renville Counties; auction in Dec – 160 acres and debated whether to auction or not, but did. 1 strong buyer & brought $6800 – $7215 w/buyer premium/tillable; needs tile.  Neighboring farmer was buyer; investors attended.  Great yields on beans; corn a break-even; sugar beets a disaster due to rains.  Looking positively for China to step up for more purchases.
  • Gary Vanderwerf – Windom: two recent sales ½ mile apart (1/4 sections); one at $8200; one at $8450; stronger than he expected; mostly auctions in his area, but some private treaty sales; neighboring farmer purchased the two above properties; not sure if windmill expectation impacted pricing or not – no mention of windmills in marketing materials.
  • Kristine Fladboe – Willmar area: agree with what’s already been mentioned; more auctions in her area vs. private treaty listings/sales; a number of auctions in 2018 on all types of ground and sold well, but tougher grind now; thankful for few sales due to financial troubles for local farmers; good yields in Kandiyohi Co and good weather & strong Nov auctions as result; more negative in Renville Co due to lots of rain and impact on yields. Kandiyohi Co: good quality, well-tiled farms in $6000-$7000 range; hunting/rec ground in $2-2500 and  $3000-$3500/acre range; $3500-$4500 range for dry ground to go to irrigated.
  • David Hansen – Mankato: welcomed Jeff Mead to Wingert Realty office. Strong demand for gravel pits & David has engineering background to effectively work with this type of property.  Estimate $5000 and up to obtain borings – dependent on # of borings and how deep they area.  Travel  matters on cost paid for land – often because gravel pit buyers are territorial with one contractor purchasing all land in one area…Pricing of gravel pit land is dependent on material in pit; how much is there; overburden to remove to reach material, etc.
  • Jeff Mead – Mankato: agree what he is hearing. Buyers becoming more selective; choice land still has good market; bite-size pieces more attractive from financial standpoint.
  • Doug Fenstra – Willmar: one auction of 85-90 acres a no-sale at auction, but sold after auction; no really good ground sold in past three months; commercial transactions moving and some expansion projects. Doug discussed an auction and I apologize that I missed this part of the conversation as my phone cut out and I had to dial back in.
  • Terri Jensen – Northfield: prices for quality land holding steady; likewise rents in this area. Are those to want/need to sell, hesitation on purchases given commodity prices, tariffs, rising interest rates, unknowns on shutdown impact on FSA offices, etc; huge demand for rural residential sites (with woods, other views – of course); good demand for hunting/rec ground; no debit relief sales in 2018 or 2019 to-date. Doing more private treaty sales vs. auctions – some of these at seller’s request.

Reminder of next conference call date – please add this to your calendar:

Tuesday, April 23, 2019, 10:00 

Reminder will be sent out with call-in and access code prior to the call!

Thank you all for being on this call.   Thank you Harlen for being a partner with the MN Chapter and the lender update provided on this call.

April 23, 2019:

The RLI Minnesota Chapter held its quarterly conference call on April 23, 2019.  43% of the chapter members were on this call.  A discussion of market conditions was held and yielded the following:

  • quality ag land is holding its own;
  • there is a mix of auction and private treaty sales occurring.  Some offices have a steady inventory; some are lacking tillable land inventory to meet demand;
  • hunting/rec land is going well from both an inventory, activity, and pricing standpoint;
  • rents in south, south central, SE MN range from $200-$250/acre;
  • CREP/RIM ground is ranging in price from $500-$750/acre and an overabundance of it is available in some areas, which negatively impacts pricing;
  • cut-up fields yielding $1500-$2500/acre less than a nice square or rectangular field with no divisions from ditches, waterways, etc.;
  • rural building sites in high demand with low inventory and prices are reacting accordingly;
  • expansion farmers still appear to be largest segment of the buying market for tillable ground in south, south central MN;
  • financing for tillable ground:  4-6%; financing available for tillable ground;
  • taxes varying from county to county with lows in Renville Co in the $42/acre range; high in south, south central MN in the $50-$75/acre range;
  • high demand for true pastureground in west central MN;
  • sandy soils in west central MN in the $2000-$2500/acre range; irrigated ground may be in the $3500/acre range;
  • transitional land with activity, particularly on fringes of city; growing need for land leasing opportunities;
  • FINBIN data for 2018:  organic farms were profitable; sugar beets, corn, hog, dairy, livestock were not;
  • input prices still high — similar levels to 4-5 yrs ago when commodity prices were high and land prices were at max….

Reminder was provided for the upcoming RLI Minnesota Chapter Annual Conference that will be held in August and that details will be forthcoming.  An update was provided to members in regard to the new chapter website that includes dates for quarterly conference calls, elections, resources for the land professional, calendar for courses offered by the Chapter and/or National, links back to National RLI blogs, and more!  The chapter website is:  www.rliminnesotachapter.com    No conference call, then, until October 10, 2019 as the annual  meeting will be held between now and October.

RLI Minnesota Chapter Quarterly Meeting Notes