1. Outlook for Land 2008 ABA National Agricultural Bankers Conference
Michael Duffy, Director
Iowa State University Beginning Farmer Center
November 18, 2008

2. Outline
Background
Current situation
Observations
Outlook
Discussion

3. Background
Land values appear to have reached a plateau; property is not bringing what it might have brought a few months ago
There does not appear to be a drop in actual values
Land values are still at record level
Commodity prices have dropped considerably from their highs this summer
Costs of production are increasing rapidly

4. Background
Land continues to change from one generation to the next and trend will likely accelerate
Equal division of land assets among family members will increase non-resident owners, cash rent, and may put more land on the market
Trusts are being more widely used
Many of the purchases are equity financed and farmers continue to be major drivers but if incomes drop so will their interest

9. Costs of Production

17. Land and Cash Rents

28. Debt Situation

37. Land Owner Demographics

44. Observations

46. Observations Conditions can change very quickly
This ‘boom’ period appears to have ended much sooner than anyone thought
Most people are kind of numb right now; just waiting for the other shoe to drop
Farmers appear to be moving back from purchases and taking a wait and see attitude

47. Observations Great deal of uncertainty
Concentration in input industry leads to sticky prices on the down side
Farmers are making decisions to cut costs; Successful Farming survey showed 33% will cutback over 50% and 16% between 26 and 50%
Only 12 percent of the leased land in Iowa uses a flexible lease

48. Outlook The economy is the biggest factor to watch
Commodity prices and input costs determine income and income determines land values
Energy prices and the impact will be important

49. Factors to Watch Public sentiment including environmental concerns
World situation
Impact on food costs
Energy prices
Farmer profitability; costs, especially seed, fertilizers and rents rapidly increasing
Alternative energy

50. Outlook
Values will remain relatively flat depending on how deep recession goes
Energy crisis and renewed strength in biofuel efforts will determine strength
Very uncertain

51. Discussion

52. THANK YOU