Videos provide financial tips, explain mediation

Chad Hart, ISU Extension Grain Marketing Economist, highlights new Iowa State University Extension and Outreach videos for today’s current farm financial situation.

With commodity prices low and projected to stay that way over the next couple years, farmers have begun to feel the pinch in their pocketbooks. This has made managing the finances of the farm that much more important. With this in mind, Iowa State University Extension and Outreach has released two videos that deal with the current farm financial situation and what can be done to alleviate financial pressure.

I host the first video, titled Tips for Managing Margins. It offers ideas for how to weather the next few years of low crop prices like protecting capital, reviewing production costs and renegotiating loans.

The second video, called Understanding Farm Mediation, was created in partnership with Iowa Mediation Service and is about the process of mediation. Mediation is an option available to farmers as they work with their creditors to find a mutually beneficial solution to a delinquent secured agricultural debt of $20,000 or more.

This short video provides tips to help farmers better understand what mediation is and when it may be necessary. It describes the process and provides a step-by-step guide on how to prepare for mediation.

While mediation is available should it be needed, ISU Extension and Outreach also provides these financial resources to help farmers create a financial plan for their operation:

  • The Iowa Concern Hotline provides free legal information to both rural and urban Iowans. Services are available 24 hours a day, 7 days a week by calling 1-800-447-1985.
  • The Center for Agricultural Law and Taxation provides information about the application of developments in agricultural law and taxation.
  • Farm Financial Associates are available to provide a no-cost look at a farm’s complete financial situation.
  • The Beginning Farmer Center helps inform and support those who are getting started in farming. It also works with established farmers on succession planning for when they leave the industry.

Share this post

“Ag Cycles” and Iowa Agriculture

John Lawrence , ISU Extension Director for Ag and Natural Resources, provides an update of analysis completed and information available.

ISU Extension and the ISU Economics Department have put together a series of papers titled “Ag Cycles.” This collection of papers is an analysis of the current state of Iowa agriculture from the crop, livestock, and land market perspective. It examines the question of price levels and price risk going forward. It also includes a recent analysis and papers from the Federal Reserve Bank of Kansas City, which examines previous agricultural cycles and how they played out through borrower’s behavior. Combined, this analysis provides lessons from the past and milestones as potential guides to the future.

Agricultural production and prices have always been cyclical. The influence of weather on production is one factor. The tendency of individuals to react rather than anticipate market signals also contributes to boom and bust periods. The length of the cycle differs with the commodity, and the weather and cyclical prices in one commodity will influence cyclical behavior in another market.

 This analysis is not intended to be a forecast of annual prices in the coming months or years. Nor is it predicting gloom and doom for agriculture. Rather, it is intended to help put current economic conditions into a historic context, better understand the factors that will influence prices and margins in the future, and help you prepare for whatever direction the market turns.

This series of papers can be found in Ag Decision Maker at http://www.extension.iastate.edu/agdm/info/agcycles.html.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Share this post

Farmland Values Continuing to Rise

Mike Duffy
Mike Duffy

Contributed by Mike Duffy, Extension Farm Management Specialist, mduffy@iastate.edu.

Participants at this year’s Iowa State University Soil Management and Land Valuation (SMLVC) conference projected Iowa farmland values would average $9,425 per acre on November 1st of this year.  This would represent a 14% increase over the Iowa State University land value survey the increase would be from November to November.

The conference participants also estimate land values 18 month in advance.  The estimate for November 1st 2014 is an average $10,042 per acre.  This is a 6.5% increase over their projection for November 1st 2013.

The SMLVC is the longest running conference at Iowa State.  This was the 86th year.  Since 1964 the participants, mostly farm managers, rural appraisers, lenders and real estate brokers, have been asked to project land values 6 and 18 months in advance.  In addition they are asked to estimate the value for two distant years.  The conference is approved for continuing education credit for real estate brokers and appraisers.  This year 280 people attended the conference.

The participants are usually very accurate for the 6 month projection.  Since 1964 the 6 month projections have averaged 2% below the final Iowa State land value estimate.  The group is slightly worse for the 18 month projection averaging 6% below the ISU value.  For the past decade the group has averaged only 1% higher for 6 month projection but the 18 month projections over the past decade have averaged 9% below the final ISU land values for that year. 

The estimates have varied widely in times of rapidly changing land values.  The group missed the major turns in land values over the past 50 years.  Nonetheless they have averaged very close to the final land value for the year.

The group projected the high one-third of Iowa farmland would average $11,599 per acre on November 1, 2013.  They also projected the average and low third would be $9,260 and $7,379 per acre respectively. 

What will land values do in the coming months is an open question.  Will the experts’ projection miss a major turn or will they continue to be quite accurate with their forecasts?  No one knows for sure but the groups’ projections do represent the collective thinking of a large number of farmland experts in Iowa.

There is considerable discussion whether or not Iowa farmland is on a speculative bubble.  For now the fundamentals of high income and low interest rates continue to hold.  For how long is a legitimate question but at least for now the experts expect land to continue to increase but at a slower rate.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

Share this post

ISU Extension offers financial planning assistance

Mike Duffy, ISU Extension Economist, provides information on the Farm Financial Planning Program.

duffysmFarm Financial Planning is Iowa State University Extension’s farm financial analysis program. It consists of one-on-one confidential financial counseling, a computerized analysis of the farm business, and referral to other extension programs or outside services that may be useful.

What does it do?
Farm Financial Planning helps you evaluate your farm business and determine whether or not a change is desirable. It provides an in-depth plan for the farm business so the operator and the lender can make decisions for the future.

The computer analysis looks at profitability, liquidity, solvency, and risk-bearing ability. This information is provided for three or more alternative plans at a time. Examples of alternative plans could be the addition, expansion or phasing out of a livestock operation, or buying, selling or renting land. Farm Financial Planning can help evaluate ways to correct negative cash flow and profitability problems.

A trained extension associate meets with the family to discuss the results of the analysis and the possible effects if changes are made. The extension worker may introduce other farm and family financial materials or information about outside sources of help.

How much does it cost?
The service is currently available at no charge through a grant made possible by CF Industries.

How do I make an appointment?
To set up an appointment, contact the associate in your area. For more information, contact your ISU Extension county office or the Beginning Farmer Center at 1-877-232-1999.

Find the Farm Financial Associate in your area and more information at: http://www.extension.iastate.edu/farmanalysis/.

Share this post

Client Corner: Where can I find cash flow spreadsheets?

Where would I go to find easy-to-use cash flow spreadsheets for my farm operation?

The Ag Decision Maker web site provides several options for cash flow spreadsheets, ranging from a simple projection to a detailed multiple crop option. Information Files are also available to provide assistance in understanding cash flow analysis. To see the options available, visit: http://www.extension.iastate.edu/agdm/decisionaidswd.html#f. The video below will guide you to the cash flow spreadsheets available on Ag Decision Maker.

Share this post


Ag Decision Maker

Archives