Tag Archives: drought
End Of Drought Boosts Prospects For NZ Land Prices
The ending of New Zealand’s drought has handed the country’s farmland market a “strong platform” for the important spring season, real estate professionals said, amid bright hopes for the important dairy sector too. Economic data on Thursday highlighted the impact to New Zealand agriculture from one of the worst droughts on record, with the sector seen shrinking 4.8% in the April-to-June period from the previous quarter, thanks largely to the impact on dairy farms of poor pasture conditions. “Dairy production was the biggest contributor to the fall, while sheep and cattle farming also fell,” the official statistics office in New Zealand, the top milk exporting country, said. However, country’s real estate institute, Reinz, flagged a “mood of optimism prevailing in the rural sector” now that rains have returned, with “kind weather” meaning that early spring grass growth is “the best experienced by many”. ‘Buoyant market’ “The livestock market in saleyards around the country is buoyant and a healthy barometer for the rural environment,” Reinz spokesman Brian Peacocke said. “Because of those conditions, the majority of farmers are in good spirits.” With less pressure to sell farms, “the net result across New Zealand is strong demand, particularly for quality, sensibly-priced property, and a current shortage of supply”. Rising prices New Zealand farmland prices in the June-to-August period were 10.3% higher than in the same three months of 2012, according to a Reinz index adjusting for location, size and type of properties sold. The unadjusted value of land sold in the period averaged NZ$21,676 per hectare, up 21% year on year. In dairy, the raw farmland value rose to NZ$32,234 per hectare, up 32% from the NZ$24,492 per hectare a year before, with sites sold typically of about 130 hectares. However, the biggest number of sales was of smaller, and cheaper, grazing properties, averaging 53 hectares, which also saw stronger growth in unadjusted land values, of 48% to NZ$16.744 per hectare. ‘Exacerbate supply tightness’ The resilience in dairy farm prices, despite a particular downturn in the sector’s fortunes because of drought, comes amid a resilience in world milk prices, which are being supported by firm demand at a time even as output in New Zealand and Australia is recovering. “Production in New Zealand and Australia is having a good start to the new dairy season, but is unlikely to be able to fully supply the market in the immediate future,” National Australia Bank said on Friday. While output growth in Europe and the US has also recovered from poor starts to calendar 2013, when production was held back by a cold spring and elevated feed prices, “most of the production in these regions will be directed at domestic consumption rather than exports”. NAB flagged the boost to prices from a decision by New Zealand-based Fonterra, the top dairy exporting company, to cut sales of milk through commodity channels in a shift to focusing on higher value products. “This is likely to exacerbate the supply tightness situation in the short term and keep prices high,” NAB said. “However, it is not clear how quickly the market will be able to respond to these price signals.” Continue reading
Drought Plagues 50 Million Acres Of Corn
Drought plagues 50 million acres of corn Angela Bowman, Staff Writer September 6, 2013 The Drought Monitor map released on Sept. 5, 2013. More hot and dry late-summer weather left the Corn Belt short on rain and deep in drought. The latest Drought Monitor report from the National Drought Mitigation Center showed drought intensifying in the Corn Belt and persisting in the West. “After such an ideal start to the growing season, the past two months have been much drier than usual, with temperatures slowly increasing,” said David Miskus, this week’s U.S. Drought Monitor author, in narrative accompanying the map. In the heart of America’s breadbasket, the drought leaves crops parched and farmers praying for rain. Last month, Iowa saw its seventh-driest August in 141 years of reporting, following its ninth-driest July. Nearly one-third of the state is in severe or worse drought, up from 22 percent reported last week. Yet, this pales in comparison to other states deep in drought, including Nebraska (66 percent in severe to exceptional drought), Kansas (39 percent in severe to exceptional drought) and Texas (64 percent in severe to exceptional drought). More than half of the nation’s corn and 42 percent of soybeans are now growing in drought conditions. “Given that U.S. producers planted an estimated 97.4 million acres of corn and 77.2 million acres of soybeans in 2013, current drought figures suggest that more than 50 million acres (nearly 80,000 square miles) of corn and some 32 million acres (more than 50,000 square miles) of soybeans are presently being affected by drought,” said Brad Rippey, meteorologist in the U.S. Department of Agriculture’s Office of the Chief Economist. “According to USDA, nearly one-sixth of the U.S. corn (16 percent) and soybeans (15 percent) were rated in very poor to poor condition on September 1. A year ago, near the height of the Drought of 2012, very poor to poor ratings stood at 52 percent of the corn and 37 percent of the soybeans.” While the Corn Belt dried out, part of the Southwest and West benefitted from the monsoon moisture. Ninety-seven percent of California remains in moderate or worse drought, marking the first time this number has fallen below 98 percent in nearly six months. Click here to see the full map. Continue reading
Indiana’s Farmland Values Up Again In 2013
Thursday, August 29, 2013 WEST LAFAYETTE, Ind. — Last year’s drought did little to slow the pace of rising farmland values and cash rents. They are up this year in a big way again, according to a Purdue University study. Drought last year sent corn and soybean prices soaring to all-time highs, which, along with crop insurance indemnities, meant better-than-expected farm incomes. High net farm income, low interest rates and high farmland demand with limited supply combined to push the state’s land values upward by anywhere from 14.7 to 19.1 percent, depending on productivity. Statewide cash rents increased by 9.4 to 10.9 percent. “While the 2012 Indiana crop suffered from the worst drought since 1988, the increase in farmland values did not bother to slow down,” said Craig Dobbins, Purdue Extension agricultural economist. The biggest increases were in high-productivity land, which jumped by 19.1 percent to $9,177 per acre. Average-productivity land increased 17.1 percent to $7,446 per acre, and poor-productivity land was up by 14.7 percent to $5,750 per acre. Land values, cash rents and farmland productivity were estimated for the study by surveying Indiana rural appraisers, agricultural loan officers, Farm Service Agency personnel, farm managers and farmers. The 261 respondents were asked to estimate long-term corn yields for poor, average and top-quality land. The state’s average long-term corn yields for poor, average and top-quality land were 127, 160 and 193 bushels per acre, respectively. Another area that saw growth is the transitional land market, Dobbins said. “The transitional land market — that is, farmland moving out of agriculture — seems to have sprung back to life,” he said. “This is a specialized market, with transitional land value strongly influenced by the planned use and location.” Overall, the survey showed a 24.4 percent increase in average transitional land value, up to $10,581 per acre. However, the estimated values from the 2013 survey varied widely — from $2,500 to $45,000 per acre. The median value was $9,500 per acre — $1,500 per acre more than in 2012. “Because of the wide variation in transitional land values, the median value might give a more meaningful picture than the average,” Dobbins said. Cash rents increased statewide, with the largest jump found in high-productivity land. Top-quality land increased by 10.9 percent or $29 per acre. Rent for average-quality land was up by 10.1 percent, or $21 per acre, and rent for poor-quality land was up 9.4 percent, or $15 per acre. The survey also assessed expectations for where farmland values and cash rents are headed in the future. Dobbins said the consensus is that increases will slow and, in some regions, values might stall or decline slightly. Forty-three percent of the survey participants said they thought farmland values would increase by an average 11.7 percent over the next five years. That means they expect an average annual increase of 2.2 percent. Thirty-five percent of the respondents thought farmland values would decline by an average of 12.3 percent over the next five years — an annual decline of 2.3 percent. The remaining 22 percent expected no change. Continue reading
