1. John Deering Agriculture and Business Management Specialist Colorado State University Extension 2012 Crop Insurance Workshop October 30 th, 2012

2. Agriculture & Business Management Source: USDA, National Agricultural Statistics Service Inflation adjusted using GDP Chain-type deflator, 2005 = 100

3. Agriculture & Business Management Source: USDA, National Agricultural Statistics Service, St. Louis Federal Reserve AAA = Moody’s Seasoned AA Corporate Bond Yield, 10-Year Treasury Constant Maturity

4. Agriculture & Business Management  Recent high net returns from farming  Low interest rates  1031 Exchanges  Pension funds  Neighbors

5. Agriculture & Business Management Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service, Economic Research Service

6. Agriculture & Business Management Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, National Agricultural Statistics Service, Economic Research Service

7. Agriculture & Business Management Real estate values are inflation adjusted to 2005 by the GDP Chain-type deflator Source: USDA, Economic Research Service, St. Louis Federal Reserve

8. Agriculture & Business Management

9. Source: Federal Reserve Bank of Kansas City Tenth Federal Reserve District (Quarterly Agricultural Credit Survey) CO, KS, NE, OK, WY (NM, MO) 2 nd Quarter percentage changes from 1 year prior 200712.5% 200818.3% 20090.4% 20104.8% 201121.3% 201226.4%

10. Agriculture & Business Management Source: Federal Reserve Bank of Kansas City Tenth Federal Reserve District (Quarterly Agricultural Credit Survey) CO, KS, NE, OK, WY (NM, MO) 2 nd Quarter percentage changes from 1 year prior $1,000 in 2006 200712.5% 200818.3% 20090.4% 20104.8% 201121.3% 201226.4%$2,147 in 2012

11. Agriculture & Business Management Source: Woulda coulda shoulda Year Farmland S&P 500Apple Inc. (Adjusted) 2006$1,000 $1,000 $1,000 2012 $2,147 $1,237$9,898

12. Agriculture & Business Management Source: USDA, National Agricultural Statistics Service

13. Agriculture & Business Management Source: Kansas State University Department of Agricultural Economics (Publication: AM-KCD-2011.18)  After Property Tax Ag Rents as % of Value 1951-20102011 CO 5.65%2.37% KS5.81%3.24 % NE6.42 %4.20 % OK4.46 %2.21 % WY6.16 %1.49 %

14. Agriculture & Business Management Percentage of land value Lately a volatile proposition Fixed cash rent Shifts risk to tenant, easier for absentee landlords Crop share rent Increasingly hard on tenants with changes in technology & higher input costs Fixed cash rent floor with “bonus” tied to price & yield Allows landlord to participate in some upside & lowers downside risk for tenant

15. Agriculture & Business Management  Crop Share Lease Agreements  Fixed Cash Crop Lease Agreements  Flexible Cash Crop Lease Agreements  Leasing Arrangements for Cattle  Pasture Leases  Estimating Rental Rates of Crop Land for Landowners & Tenants (Excel Workbook)  CSU Crop Enterprise Budgets (Corn, Alfalfa, Wheat, Sunflowers, Sugarbeets, Millet, Pinto Beans, etc.) http://www.coopext.colostate.edu/ABM/cropbudgets.htm

16. Agriculture & Business Management Estimating Rental Rates of Crop Land for Landowners and Tenants By: Jeffrey E. Tranel Norman Dalsted, PhD Agriculture and Business Management Economists Colorado State University http://www.coopext.colostate.edu/ABM/ Email your questions to: jtranel@colostate.edu This template is designed to help landowners and tenants of crop land compare the portions of production and expenses. You may move to each tab (at the bottom of the screen). Enter your data into any cell with a pale background and blue colored numbers. Programs are available to all without discrimination.

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19.  County assessor offices & webpages (Sale data) ◦ http://www.qpublic.net/co/  Alamosa, Cheyenne, Conejos, Crowley, Custer, Dolores, Fremont, Gunnison, Kit Carson, Las Animas, Lincoln, Mineral, Saguache, San Juan, Sedgwick, Washington, Yuma  USDA/NASS Surveys (Rent survey, county level)  CSU ABM Custom Rates Survey (Rent survey, region) ◦ http://www.coopext.colostate.edu/ABM/custrates.htm

20. Agriculture & Business Management  Nickerson, C., M. Morehart, T. Kuethe, J. Beckman, J. Ifft, and R. Williams (2012) “Trends in U.S. Farmland Values and Ownership” EIB 92 Economic Research Service  Kansas State University Department of Agricultural Economics (Publication: AM-KCD- 2011.18)  Federal Reserve Bank of Kansas City – Tenth Federal Reserve District (Quarterly Agricultural Credit Survey)

21. Agriculture & Business Management John Deering 970-345-2287 john.deering@colostate.edu Lease Arrangement Resources: http://www.coopext.colostate.edu/ABM/investment.htm