Drake To Host Conference On Sustainable Land Ownership

Drake To Host Conference On Sustainable Land Ownership

Experts in land tenancy, ownership and conservation will present a land owner conference at Drake University on July 28. Public is invited to attend and registration fee is $40 per person.

Experts in land tenancy, ownership and soil and water conservation will provide their insight on various topics at a conference for farmland owners at Drake University in Des Moines on July 28. Iowa Governor Terry Branstad will open the conference with an 8 a.m. address.

The "This Land is Your Land" event is focused on providing absentee and non-operating landowners information to better understand what they must do to enhance and protect their land, their investment, and their legacy. 

Sessions will cover the following issues: land use and soil loss concerns; sustainable farm leasing; equitable lease arrangements; tax changes and considerations for farmland; land ownership responsibility

Speakers representing various Iowa organizations will share their expertise and be available to answer attendee questions. The speakers are:

* Craig Cox, senior vice president for agriculture and natural resources, Environmental Working Group

* Ed Cox, a staff member at the Drake Agricultural Law Center

* Anita O'Gara, vice president for development and communications, Iowa Natural Heritage Foundation

* Mark Gannon, founder, US Farm Lease, Gannon Real Estate

* Marvin Debner, CEO and partner, LWBJ Financial

The registration fee is $40 per person or $75 a couple, which covers attendance, conference materials, plus lunch. The conference begins at 9 a.m. in the Olmsted Center, 2875 University Ave. The event is co-sponsored by US Farm Lease and the Drake University Agricultural Law Center. For the conference full schedule and to register online, visit http://www.farmlandconference.com/ or call 515-232-4002 or 888-232-4002. 

"This Land is Your Land" is theme of this conference, aimed at owners

"There is no one type of sustainable farmland lease," says Ed Cox. "The surveys that Iowa State University Extension economist Mike Duffy and others are doing at ISU show that a greater diversity of ownership exists already in farmland today, and that diversity will grow along with a more dispersed ownership. The trend is for the people owning the land to no longer farm it. More of them are living out of the area and even out of state."

He adds, "Though there is no one type of sustainable farm lease, we need to get landowners engaged and talking to their tenants about soil and water conservation and seeing how they can work together to develop provisions to enable conservation on the land while maintaining profits."

Are we getting into a situation where landlord's and tenants are having trouble trying to calculate what should be in a lease? "I think as ownership changes hands, there is greater diversity of concerns and priorities on the land. Back in 1982 in Iowa, about 50% of the land was rented on a crop-share lease and about 50% was on a cash-rent lease. Now it's about 80% of the cropland in Iowa is farmed with a cash rent lease."

That's just one example of how things have changed. "Leases need clear standards in them regarding soil conservation and good husbandry practices that are needed on farms today," he adds.

What should be included in a lease? Are conservation costs shared?

"We at the Drake Ag Law Center don't get into specifics as far as the cash rental amount," says Ed Cox. But some of our other speakers have good information on that. Also, Iowa State Extension does a good job with its annual survey showing the county averages for cash rent which landlords and tenants can use as a benchmark to work from in negotiating their rental agreements."

This conference is aimed at landowners, so they can be brought up to date, says Mark Gannon, another one of the speakers. "They have been behind and we are going to try to bring them up to date regarding the current costs and returns for agriculture. One of the studies I point to is that traditionally cash rent has been about 33% of the gross for corn ground and maybe closer to 40% to 45% on soybean ground. That's ISU data and people have kind of gotten away from that in recent years. What we are trying to do is establish a fair lease for both parties."

Gannon says his advisory service, U.S. Farm Lease, now offers a standard flexible lease for its clients. That lease can let the rent vary according to grain prices and yields. "Also, we want to show owners that they need to keep good records. Most of them don't have good records. That's one of my frustrations in my 27 years of managing land and farms is that most landowners don't have good records. About 95% of the land that is rented in Iowa is managed by the owners themselves. Only 5% of the land is what farm managers actually manage. So we're trying to get to those owners and trying to help them out and there is a lot of great farm operators in Iowa and a lot of them are willing to really treat the landowners well when renting land."

Are we seeing more land in Iowa being bought by non-farm investors?

"Iowa has a corporate farming law," says Gannon. "So you aren't getting the trust funds coming in here and investing in farmland in Iowa. Nebraska got rid of their anti-corporate farming law several years ago and money from outside that state is now moving in there and buying up farmland. There's also a lot of that going on in Illinois and Indiana. But in Iowa we're seeing mostly individuals, many times local farmers, buying the land. Those that have the money are buying the land."

People can't understand how you can pay $8,000 or $9,000 or more per acre for cropland. But if you look at the returns right now, it's understandable as to what the farmland buyers are looking at and how they are making the numbers work, says Gannon. "They believe long-term that Iowa is going to produce food for the world and I firmly believe that it will too. When I was at ISU as a student years ago the professors told us 50% of the class A land in the world was in Iowa and Illiniois. And that's not going to change."

He adds, "One of the things we are emphasizing at this meeting is there is a lot of soil loss occurring in Iowa and other farm states today. One of the people who is going to talk is Craig Cox, with the Environmental Working Group, which wrote the "Losing Ground" report, which is based on ISU's studies. We really have to get a handle on our soil loss in Iowa. It isn't just southern Iowa that is losing soil. It is Story County, Grundy County, it's everywhere. A lot of people aren't paying attention to that and that is probably the main emphasis of what we are trying to do here. Really not talk about dollars and cents but talk about the fact that we have to preserve this land. Governor Branstad is going to lead this conference off and that is going to be one of his main points. Iowa must make its ag production sustainable and viable for hundreds of years to come, and more."

Are farmland values today too high, in a bubble that's going to burst?

"It's all going to depend on commodity prices," says Gannon. "What is fueling the land price boom now is a lot of farmers are setting the market prices for their land. The investors are there but the farms that I've seen selling on the high end of the land value range recently have been a lot of long-term owners and farm operators who have low or no debt and their leases are favorable. They know what is going to happen and they've made good money and have money sitting in the bank. They don't see where else they can invest that money and make as much as they can make in owning and farming the land."

Gannon adds, "More power to them. They've worked hard and saved their money and now is the time to buy the neighboring farm. And the returns are there. True, the return on investment may not be outstanding when you get up the highest prices that land is selling for today, but the numbers are still working pretty good and they sure can't put money in the bank at less than 1% and make money doing it."

Big trusts and others are trying to put groups together to buy farmland

That's the point: We've had this cheap money policy for a long time now in the U.S. , says Gannon. When you can go and buy farmland and pencil out a 4% or 5% return and actually own something, that is very attractive to any investor. The bulk of all the sales we've seen, the high dollar sales of land, are being bought by farmers. The sale last week at Conrad, Iowa, was a farmer purchase for over $10,000 per acre. "So the cash is sitting there and rather than pay a big cash rent, the farmer says, we might as well own it ourselves," he notes.

There are trusts that are trying to put groups together and buy ag land.  Several speakers who will be at the conference agree that before the top is put in on farmland prices, that money will start rolling into the land market.

TAGS: USDA Extension
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