ISU Ag. Decision Maker; – Farmland Purchase analysis – Farmland values – Costs of production – Price assumptions – General update information USDA – FSA – ERS – Other Iowa ag. Development Authority Other

 Total acres  Price per acre  Percent down payment  This will vary depending on institution, credit condition, co-signer, security, etc.  Amount of the loan (balloon)  Interest rate  Current Fed. District average was 5.7 down from 6.13 a year ago

Interest (cont) – Financial position – Terms – Remember beginning farmer loans; FSA, IADA, other; combining them Years and number of payments per year Current or desired rate of return on equity capital; how much do you want to earn; opportunity cost of your money Interest on operating money – 5.85 last quarter; 6.23 last year

USDA payments; not as big as they used to be but still important; CRP and other long term type payments Annual income from other sources; animals, leases, building rents, etc. BE sure to include costs associated with the income

 Quite a variation; Iowa tax based on productivity but it’s a really confusing formula;  Same county; $22.85 ($.29 point) $26.94 ($.35pt)  April 8 auction, Mitchell county; 90 CSR $10,000 with $33.09 taxes ($.37 pt)  April 7 Iowa county, 62 CSR, $6,750, $20.47 or $.33 point  March 31, Cerro Gordo, 81.6 CSR, $9,000, $25.64 or $.31 pt

 Other annual ownership costs; fencing, tile, so forth  Closing costs  Expected increase in value over time (%)  Percent rate of cash return on farmland; capitalization rate  Initial investment needed for improvements  Initial investment needed for extra machinery if needed

 Will land be rented, if so, how and how much  Custom farmed; what is your share  If you are farming it yourself-  Anticipated crop rotation  Number of acres of each crop; remember if you are having 100% corn, then 100% beans, etc. to account for all the acres over time. This is trickier the more crops you have and the longer the rotation

Expected yield and variance; impact of alternative yield assumptions must be included Expected price and variance; same as with yield as far as evaluating a range of prices Other income; corn stover, grazing, etc. (remember costs) Nonland costs of crop production; seed, chemicals, fertilizer, machinery, etc. All the costs to put in the crop, except the land cost; be sure to include interest on borrowed operating funds

 Be realistic in your evaluation  Remember that land ownership takes time; land tenure ladder  Carefully evaluate alternative possibilities  Get as much information as you can  Make your decisions based on your circumstances, not someone else's