What caused the problems of the 70’s & 80’s… Does history repeat itself? Denver, Colorado October 28, 2009

Virgil H. Holtgrewe Holtgrewe Ag-Services, Inc. 6 Skyline Drive Lakewood, CO Phone & Fax

Agricultural Crisis Late 1970’s to early 1980’s What caused it? –Low commodity prices –Available credit –Expansion of farm operations –High interest rates Historical highs of 15 to 18% or higher.

Results Agricultural community was first Bankruptcy Foreclosures.

Appraisal Problems –Appraisal is historical information, Forecast market value of land??? New sales need to be used No Sales Market trends, hard to predict –No sales activity = changing market Borrowers did not recognize downturn –Final outcome - drop of 40% to 50%.

Recovery Three to five years to recover Appreciation in line with economic growth NO BAIL OUT PROGRAM.

Changes Made No experience with high interest rates New regulations for appraisers –Appraisal Foundation Established in Colorado Appraisal Certification –Began in June of 1992.

Education and CE ASFMRA developed education programs. –13 core courses + 40 seminars 399 education hours for ARA 300 education hours for General Certification.

Repeat high prices for wheat & corn –Ethanol major factor for increase –Land values accelerated with high commodity prices –Livestock feeders operated at a loss.

Energy Crunch Cost of production increased, YearWheatCorn 2003$84.48$ $127.84$ Inc. 66%59%

History Lesson External Obsolescence Generally incurable by owner or tenant. Market Values correspond with economic box. Spike outside of the box Can create a domino disaster.