Ag Land Management Quarterly August 2019

Department of Agricultural Economics Author

08/29/2019 Added

10 Plays

Description

This webinar covers results from the 2019 Nebraska Farm Real Estate Market Survey, including land values and cash rental rates.

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[00:00:11.160]Alright, so, good evening. My name is Alan and I can jump jets is going to be talking here in a second. This is our third of our ag land management quarterly meetings and we are recording it. So if you have friends or others that you would like to have see just
[00:00:27.000]A banter and see the information we share, please share the idea that the website that you registered on and they can get on and watch our recording
[00:00:36.450]So, no that's happening. And we'll cover this at the end, too. But our next meeting will be November I think 18th on the third Monday of November, so
[00:00:46.680]You still doubt the upcoming meeting somebody with that I'll turn it over to Jim and let him do the first part of the program and see. Very good. I'll
[00:00:58.890]Just give me one second here. Okay, here we go. Alright, so my name is Jim Jansen I work as an agricultural economist here at the University of Nebraska, Lincoln. We also have Alan but not like
[00:01:10.320]Elena deals lot in farmland succession and transition issues here at the University
[00:01:16.320]Our contact information is provided on the first slide here so you can get an indication if you'd like to contact us how to get ahold of us.
[00:01:23.880]Elena, and I travel the state quite a bit. Alan, especially and I spent a lot of my time in the greater Eastern Nebraska area as well as some work out west.
[00:01:32.100]To day we wrapped up another landlord tenant Kashrut meeting, which is a popular meeting series and Alan and I have been working on together for about the last five years.
[00:01:41.550]So we'll be highlighting today, basically a two part presentation and shooting for about an hour, give or take.
[00:01:48.240]Also, we'll be attempting to monitor the discussion pain with zoom. So if you have a question, just go ahead and type it in there as we're going along.
[00:01:57.030]We had about three questions submitted. We also had a few extra ones, but we kind of tried to boil them down to about three questions.
[00:02:04.020]And we'll go ahead and discuss those towards end of the presentation. So it's basically a three part presentation this late afternoon or evening.
[00:02:12.900]First part. We're going to give a summary on the final report estimates from the Nebraska our real estate market survey report.
[00:02:21.090]First part will be on head cultural land values as well as cash rental rates and also a quick discussion on the special features section of the Nebraska farm real estate report.
[00:02:31.800]Alan's portion will be focusing a little bit more on communication issues primarily communication issues related to these arrangements.
[00:02:39.450]So what is happening to the current crop progress out in the field that you got to be standing out there to take a look at really what's happening.
[00:02:46.860]And also we're approaching deadline, very important deadline on terminating verbal leases now and we'll cover how do we do that, why do we want to we go to a written list and things that nature.
[00:03:00.030]So as I said, if you have any questions, go ahead and submit those to the chat pane and Eleanor, I will try to monitor that as we're going along and we'll go ahead and get started.
[00:03:11.970]So this first part is the brass current real estate survey survey in the final report estimates from the report, it was put together by myself. June Jansen as well as Jeff Stokes now chair egg finance here at the University of Nebraska, Lincoln.
[00:03:29.340]First part, Nebraska, our real estate report is an annual survey of land industry professionals across Nebraska. These include certified general egg appraisers farm and ranch management companies.
[00:03:42.060]Professional agricultural bankers and others are engaged in the egg industry as part of the survey we do two different things. The preliminary estimates, which were featured in earlier webinars.
[00:03:54.570]Is published the second Wednesday in March. Each year the final report, which provides additional detailed beyond the preliminary estimates, things like power land transactions being financed.
[00:04:07.920]How many eggs and sales were across Nebraska, things of that nature that's published in the final report two great ways to find additional information on
[00:04:18.390]The rest part real estate report you can do one or two things. First is, there's a link on the slide. Peggy contact you and know that edu backslash real estate.
[00:04:28.890]On the real estate website we get really good summary on our report current report, as well as historical reports for the state in Nebraska.
[00:04:38.070]And our preliminary estimate information is also on on that webpage. If you don't do the computer thing which, if you're online tonight. I imagine you would be able to find the information. But if you
[00:04:50.220]Have an older relative that you might be helping out or whatever the case might be under those circumstances, you might send them to a local extension office here in Nebraska many
[00:05:01.290]office managers have the ability to run off a few pages for they keep a few pages on file in the front display or Pisco, to summarize current publications from the university in the primary one a lot of people like to take a look at his Nebraska farm real estate report.
[00:05:19.890]So, as we said before in prior discussions, the state, Nebraska, we have 93 different counties. These county span.
[00:05:27.570]Approximately 45 million acres of agricultural ground across the state of Nebraska. That being said,
[00:05:35.100]We divide the state into hate different regions. These eight different regions, some folks referred to them as a crop reporting district.
[00:05:43.320]But these regions share similar production attributes. The example is afternoon Alan and I did a landlord tenant Katrin leading in St. Paul, Nebraska, which is
[00:05:53.940]Located in Howard County, how it or Howard County would be in the Central District, along with major cities such as well. Flow county has Carney and Custer county has broken bow.
[00:06:06.840]Sometimes when you have a property that's right on the border of one of these two districts, you might have
[00:06:12.450]Property Owner that Paul is a trends of one region over the other classic example is southern Lancaster County, my all the
[00:06:20.760]Southeast district. A LITTLE BIT CLOSER THAN THE EAST district because Lancaster County is a very long district and the geography changes a little bit across the state. So we'll be summarizing the information based on these regions and I'll briefly highlight some of our findings.
[00:06:38.310]hater cultural land values, taking a step back for the entire state of Nebraska agricultural land values have fluctuated in recent years.
[00:06:48.240]We've seen a run up in prices for major commodities. We grew in the state starting in about 2007 and peeking around 2012 13
[00:06:57.540]land values are lagging that but they did policy fairly fast. About five years ago. They peaked in 13 1415 depending on what area of the state you're in.
[00:07:07.920]But now, according to the state average were off roughly 20% compared to this period of time, five years ago.
[00:07:15.900]And obviously that's a challenge from any landowners is their real estate taxes still remain high. Remember, real estate taxes are based off assessed value, not necessarily the market value.
[00:07:27.180]challenge faced by many of our tenants across the state relates to input expenses for the major commodities that we grow in this state. So slide gives us a good idea that
[00:07:36.450]We've seen a run up and a lot of our commodities and major inputs used to grow those commodities. So the challenges. Many tenants are facing our current input expenses relative to the value boat racing.
[00:07:48.690]On the other side of the deal, the Brassica all lamb average value. Yes, we're still historically high values, but we have high land ownership expenses in the primary one being property taxes.
[00:08:04.200]taking a quick look here at cash rent, cash ran across the state for side we have here. It provides an average on average cash rental rate for dry line cropland in the
[00:08:15.840]Season overall in the standard Brasco we've seen a gradual decline and dry land cropland compared to the prior year.
[00:08:23.640]We did see one case in East district where it was up slightly, but we're seeing fairly small changes in either direction which is indicative that we're still seeing
[00:08:33.240]Cash journal rates might be a little bit sticky but tending to trend down across time, given our current situation with the finances on many farms across the state of Nebraska.
[00:08:45.690]In addition to the average. So the average reflects all the responses are sent in for a particular area. In addition to the average we have the average of the high third grade, and the average of the lower third grade.
[00:08:57.540]So if you took the top third of cash rental rates knitting average on them. That's what we asked folks that take the survey.
[00:09:04.410]That would be related to the hydrate and also in your area where you operate. So say for example, northeast northwest Nebraska.
[00:09:12.360]The average of the lower third or the low grade would be indicative of a low third of cash rent.
[00:09:17.940]So as we look across the state, Nebraska, we see that cash flow rates have a fairly good range these ranges reflect different attributes such as the quality of the land.
[00:09:27.540]Rainfall is a definite feature on dry land cropland as well as how competitive, the general area is inside of the state in Nebraska for these different regions.
[00:09:40.050]In addition to the dry land craft plan. We also report the center pivot irrigated cropland rental rates. These rental rates assume that the land owner owns the entire irrigation system.
[00:09:52.800]For center pivot irrigated rental rates that would include the pivot power unit as well as pump.
[00:09:59.670]You have a case where a tenant is providing one of these inputs or one of these things use for irrigation.
[00:10:06.180]You might consider discounting their rental rate to reflect the contribution that the tenants making to the least because in irrigated catch rental rate. In addition to accounting for
[00:10:18.720]The quality of the land where else getting return on mean to invest in the irrigation system paid things such as insurance on the equipment, whatever it might be.
[00:10:31.080]In addition to the average. We also have the average of the high third grade, and the average of the low third grade.
[00:10:37.950]These ranges reflect similar to the dry land, things like How competitive is an area. What type of ground. Do we have things that nature, but also who's willing to maintain the irrigation system.
[00:10:49.920]That's a big driving force because if we have a situation where a tenant is willing to do some of these things.
[00:10:55.650]That would be an indication that they're providing something to the landlord. Because remember, if they provide an improvement or helping maintain or build upon what's currently there.
[00:11:04.440]That's something that stays with the land, even if the tenant is there in future years. So all these things are negotiable. And it's a good point that on my discuss a little bit more here in that kept few slides.
[00:11:18.240]Cow calf hair rental rates, there's two primary right ways to rent grazing land across the state, Nebraska.
[00:11:25.710]First way might be on a per acre basis, a rate that Alan and I both like to talk a lot about a little bit more is on a per month basis. A per month basis would reflect that typical cow calf rental rate for one cow one cap for one month in Nebraska.
[00:11:43.020]If you have a situation where you're renting per se, five months, which is fairly typical Take, for example, and stand the central or eastern part of the state for the monthly rental rate is $50 a pair
[00:11:54.270]If he took 50 times five. That would be $250 I'd be $250 for one cow calf here and as we see across the state western part of the state is a little bit lower northern northeast, we see a little bit higher rates and something below in the southern tier of the state.
[00:12:15.390]In addition to the quality of the land. We also have
[00:12:19.440]The average grades average of the high third grade average a lower third grade and an average of all responses for cow calf pairs.
[00:12:26.910]They things to consider once again on this is maintaining fences control noxious weeds brush, whatever the issues might be
[00:12:35.400]And also ensuring the water source. Do you have a landlord that's paying the power bill on a pump or something like that for stock. Well, that would be really related to the cow calf parents race.
[00:12:49.410]And traffic for my section for this evening, and a lot of Alan get started.
[00:12:54.360]The special features section is here took a quick look at cover crop utilization, as well as consideration for cover crops on cash or
[00:13:04.980]Crop share least arrangements and the first one of the questions we asked the folks taking surveys. What was underlying motivation or what was the reason why they were planting cover crops.
[00:13:16.440]Top two reasons which are very similar conservation soil health, which obviously relate to each other. We're over.
[00:13:23.550]50% of the responses. The other responses were primarily for and I noticed a little debatable about a cover crop, but for either lifestyle grazing or secondary porridge is so to support either cow calf or livestock industry in the state.
[00:13:39.180]And not quite 10% of responses was to capture some form of caution. So this might be some kind of
[00:13:47.580]USDA program or maybe depending on what state you're in some states might offer some kind of cost share to incentivize folks to consider trying to adopt these typically it's maybe just for a couple of years, they usually don't pay every year. But that would be cost your funding.
[00:14:06.210]source of information that was part of the census of egg for 2017 came from the USDA and one point they evaluated was cover crop utilization
[00:14:17.550]Across the United States and we took a look at summarizing this by region. We also did this on a county basis, on a county basis. We have a corn husker economics article
[00:14:30.390]That's currently out big thing is we see about cover crop utilization on about 3% of the crowd playmakers across the state. They take home from this down on the final row.
[00:14:44.970]The state of Nebraska seen them on a cover crop acres. About three quarters of a million acres debate roughly doubled from 2012 to 2017 so that's a good thing because
[00:14:55.650]Cover crops can provide different things with increasing soil fertility maintaining nutrients, whatever the case might be. If you're interested, do a quick search for cover crop practices cornhusker economics, you can find an article that Jeff Stokes, and I wrote on this topic.
[00:15:15.390]And final slide we have here is considerations on discounting. So what is meant by this slide is if you have a tenant that is willing to plant a cover crop might you consider discounting the cash rent to reflect
[00:15:31.140]For that tense contribution to that. I mean, am I going to give $20 an acre off on the cash rent that they consider planning a cover crop or trying one of these new things out.
[00:15:40.830]Overwhelmingly, we didn't see very many folks taking any kind of a discount if attendance willing to plan a cover crop.
[00:15:48.540]my professional opinion, I would offer I would consider offering maybe half of the establishment expense for cover crop.
[00:15:55.620]Because if we're trying to improve the overall value for property cover crops is a great way to look at it when it's works in the right circumstance, with the tenant in one way to incentivize people to do something is to provide some kind of a discount
[00:16:08.820]So I'm not seeing any questions at this point in time. So we'll pray this, go ahead and hold those until Alan gets through his section, but we're going to get started here on landlord and tenant communication issues and I'll switch it over now.
[00:16:23.670]Okay, so
[00:16:26.010]We're that time of the year where we need to be thinking about what happened this year and Joe, what might be happening, going on to the future.
[00:16:32.550]And so what to do to cover some things that are late growing season items that need to be covered thought about and considered as we go forward.
[00:16:41.550]So go on and say that now's the time to be. I like to say it outstanding in a field to be checking out what's happening with the proper grazing land.
[00:16:52.140]The tenants should consider taking their land or it out to visit the rental property. I don't even care if it's cash lease or crop share it doesn't matter the tension offer take the landlord out there.
[00:17:02.160]Now's the time for the land or to go check out what's been happening.
[00:17:05.490]Out there and see what's going on. They should be looking at what's happened with the erosion, what's happened with weed control what's happened with the with the overall general health, the property and up the crop.
[00:17:16.170]And just kind of see how things went this year, you get a pretty good sense of what's going on. We just go out there and be outstanding in the field.
[00:17:23.640]Inside of you considering discussing issues about the rental property. If you have challenges. In other words, do you have areas that you didn't get planted. Do you have areas that are eroded.
[00:17:33.720]Do you have areas that need to need some some structural help in terms of rebuilding terraces, or are we addressing WATERWAYS OR, or maybe some pasture ground that needs to have some cedar trees removed.
[00:17:45.750]Now's the time to be talking about those problems and think about what, what strategies, you'd have to fix those things going forward. And now's the time to start those discussions.
[00:17:57.660]Before before it's time to redo the contract, just start having conversations about what might happen I think that'll be an important thing to do.
[00:18:05.130]So good communication occurs when you get the land or agenda out there kind of look at the same thing and come up with strategies on how to deal with any problems you might have. If you're going out on this farm visit. I encourage you to do so be sure you look at
[00:18:19.320]If you have an uneven plant stand, which, in other words, if I I was driving around some cornfields the last weekend.
[00:18:25.710]In West Central Kansas and corn Verizon hide from two or three feet tall, up to 10 feet tall in the same field but anytime we have an uneven stand like that a corn high if you have an uneven.
[00:18:38.490]Yield and many times yield is very poor especially initially you know shooting a short plants so also be looking at to weed issues with resistance and or disease, an insect pressure
[00:18:49.230]The Weed issues is huge right now there with the data in some places in Nebraska, who had enough rain.
[00:18:54.000]To get another flush of weeds. After the lastest spraying has been done.
[00:18:58.410]And that could be a problem. So be sure you kind of check that out and had started having discussions on how what what we're going to need to do to camp week chemistry to get that fixed for next year.
[00:19:07.740]Disease it inside pressure needs to be scouted and checked and known about. So if we need to change varieties on crop selection.
[00:19:16.020]Or if we need to get an airplane out there and spray for some of the insects that that could feel might be done this year.
[00:19:21.150]And also recognize that we're going to have a late harvest problem and all probability, have a late harvest this year I check out your maturity sewer, as you know, close to being finished it says it's really not very close yet my view.
[00:19:33.210]And on grazing land and it's kind of see where you're at, there seems to be plenty of pasture and a lot of places where you have pasture. We have things going on. There's been some adequate rainfall
[00:19:42.900]Also notice where we're at with like I said earlier said earlier the noxious weeds or brush or or the red cedars Eastern red cedars and Eastern two thirds in Nebraska.
[00:19:52.860]Is an issue. So just know where you're at, with all those things that you know how you're moving forward.
[00:19:57.840]And you need to have start to having those discussions can be landlord tenant on what needs to happen. Go into the future. Remember, it's not about the rental rate here. It's about how we're going to manage that farm for the next generation.
[00:20:10.980]Gemini and ever, ever anyone else ever taught in this area believes that the most important thing to do is get out of a handshake or oral agreements and get switched to a written contract terminate all verbal leases.
[00:20:24.060]So even if the lease is going well and you all understand each other and you. It's going great. You don't feel like either at least you still need a written list.
[00:20:32.820]Remember that what we're doing and attend the next slide, but remember the reason we want to have written least it's not for us.
[00:20:38.550]It's for that next generation have to take over after us in case we have an untimely demise in our participation, the operation.
[00:20:46.740]In Nebraska, you're going to terminate your verbal least we have an important deadline coming up here in about 10 days now 1112 days, something like that. So if I wanted my currently Cisco crop at least is in Nebraska after a verbal or a handshake agreement.
[00:21:03.330]They go from March 1 and tell February 28 of February 29. So in other words, the least, in effect, right now started in March 1 of 2019 it goes to February 29 of 2020
[00:21:15.690]Then like next week starts on March 1 2020 and it goes to hell. February 28 2021 the Supreme Court is defined. That's when least starts and that's when least for farm ground stops.
[00:21:28.470]For Supreme Court also said that in order to terminate leads properly notification must be given six months prior to march 1 which means that the notification notification.
[00:21:38.520]To to see sublease on February 29 2020 has to be given prior to September 1 or just a few days. So you have to get that done. You have to get that termination done
[00:21:51.540]If you have any contentious relationship with the tenant at all between landlord tenant office anything good contentious.
[00:21:57.930]Please be sure to terminate the lease with a registered letter to that the other party has to sign for it, you have proof that they've received that signature that they've received that letter to that the least has been stopped.
[00:22:13.290]And determination to six months or termination notice is not applicable to pastures patch releases are typically a five month lease and Eastern Nebraska goes from a first October 1 and
[00:22:24.180]The western Nebraska at the San deals that goes from June 1 to November 1 or in or some variation in between, you typically a five.
[00:22:31.890]month lease and so past releases end they're finished. They're done at the end of the growing season.
[00:22:37.440]So no terminations needed for the next year. As a matter of fact, most tenants. You'd have to ask for the pasture for the following year at some point during that five or six months that you're not six, seven months that you're not out there.
[00:22:48.030]So that's how the verbally, so should be terminated we'd want to get everyone to a written least it's just really important
[00:22:56.220]That Jim Rome on here, the grid leases carry a higher value over verbally. So I'm not sure I have
[00:23:01.680]Specific data on that, but I know that if I was going to assume a lease for someone that I want to have it written
[00:23:08.010]And that would that would be worth more to me than a verbally. So I guess I agree with him.
[00:23:12.060]Hey protects both, both parties under the contract protect their rights and it gives specifies and give specific duties and rights of each party. Party, which are spelled out in the contract.
[00:23:21.840]And documents least terms for unforeseen events new words we again like I said earlier, we're not writing a lease with the idea that we're
[00:23:31.590]We need to have a written least to take care of it at least between my myself and one of my relatives, for instance, but if we would pass away, or if I would happen to become
[00:23:42.930]Go into the nursing home become able able to answer for myself and now my son or my wife or someone has to take over on at least then therefore there's something written down i to be honest with you, I've had
[00:23:53.760]primarily women landowners women are happens to be primarily women. I don't think anything's wrong with that as you step into what happens to be
[00:24:02.400]That are in their 40s, 50s and early 60s. It'll come to me and go,
[00:24:05.970]I'm a dad at far grounded to ivy ivy executor of that work mom and dad passed away. And now I found out that the lease was not written down. I have unwritten least and I have a tenant.
[00:24:16.320]And so I guess I get to go to talk to the tenant and ask them with the lease terms are. And I said, Yeah, I guess you do
[00:24:21.450]And so that's that's a scary thing for people. I think that have things written down everything spelled out as a really important thing
[00:24:28.200]To have in place to make sure that this happened because it's absentee third party, which would be this daughter or this yeah basically daughter or daughter in law may not have current knowledge or expertise to negative Street to appropriately managed at least correctly.
[00:24:45.270]If you want more information on how to get or at least put in place. There's a website called egg least one on one dot o RG
[00:24:52.410]Those free PDF files that contain least for leases, it's under the Aggies one on one, you look into the document library.
[00:24:59.910]And you click on a document library and you get all kinds of resources available to you. There's Elise there for pasture ground. There's least there for crop chair farmland. At least there for cash.
[00:25:09.810]Farmland and so you can. There's billable billable Portable Document Format files PDF files and you click on one of them pull up, pull them up and you could feel the
[00:25:21.720]You can you can fill them out online or print them and fill them out those forms don't all there. There it is right there at their down below here on the screen there. Here, I'll try and
[00:25:33.300]Get my mouse over it. Maybe you can see they have pastoralists crops year leases, that sort of thing.
[00:25:39.120]The other one we get some question about is over here on the left hand side, I guess maybe didn't show up but down here at the bottom left hand side, there's even some information about leasing arrangements for a farm buildings and stuff that that information is on that website to
[00:25:55.410]Okay, what's next. Oh yeah, there are our question and answer period. Okay, so
[00:26:01.560]We're it's time to see if we have any questions that have come in and it doesn't look like we have go down to the
[00:26:08.340]If you have a question. Go to the Q AMP a card and we'll get to that. Now we've had some questions submitted to us at a time. So we're going to answer them first.
[00:26:16.560]And in the meantime, if you want us to type something into Q AMP. A, you can certainly do that. Okay. My parents indicated that our hair too far, but I will not
[00:26:26.970]I do not, I do not believe that they have to. I have these which wishes and writing, should I worry about having this in writing or legal document. OK, so
[00:26:34.920]My parents indicate that I want to know the words, the parents that hey someday. It's done you describe the years some way someday daughter to solve the years but I don't think this is right written down.
[00:26:44.460]Well, it's not written down, it may not be true. So don't make that don't ever make that assumption.
[00:26:50.430]So yes, extending ones riffs wishes in written form is important because you could have unforeseen events.
[00:26:57.810]If your parents say someday this will all be yours. And then they pass away from a car accident or something like that.
[00:27:03.840]Guess what your brothers and sisters, if you have that that that happened to you will be
[00:27:10.320]Wondering, you know what's what's happening with that. And unless it's spelled out, then you're going to go to do the the
[00:27:17.670]To go what's what's probate is your a probate their leaves their probate there a state and that will meet each one each, each of the kids will get an equal amount
[00:27:26.700]And so that's what you want to have happen. Great. If that's not what you want to have happen, then you have to make a different
[00:27:32.220]You have to make different plans and so legal documents. It's your wishes of the parents are carried out and
[00:27:38.940]It assets big project as well with proper state clients are written in handled. That's, that's part of my regular life.
[00:27:45.630]And so if you need to get to one of our state meetings, keep watching and we'll try and get some of those scheduled this winter.
[00:27:52.650]Okay, next question is what provisions needs to be written verbal lease termination letter or a terminated, please. How do I get that done. Well, we don't know forum for this. There's no form letter.
[00:28:02.850]But we would suggest that these, you have these things covered, you'd have to, you'd have to date the letter.
[00:28:08.010]You have to have the name and address it both the landlord and tenant and maybe specify the landlord is that your sister such the tenant is such as such as such.
[00:28:16.710]legal description of property and where the properties that Township range of those kinds of things, legal description.
[00:28:23.040]And the term stating determination least. In other words, I simply want to terminate the least ending February 29 2020 and
[00:28:34.080]Please, please know that determination is pleased we expect all crops be harvested and we expect all your equipment to be off the lease, anything like that, that comes up and if you have anything that you want to if you have anything that you want to make sure your
[00:28:48.900]Have other than that, that in the letter you just add that to it. Again, we don't have a form letter, but those are the main things that are taking care of us.
[00:28:57.810]Oh yeah. The other thing to consider. I think I mentioned this earlier. I'm sure I did that I'll mention it again.
[00:29:03.690]If you have any kind of contentious relationship between land on content. Be sure to send this letter via REGISTERED MAIL. So the other party has to sign for it.
[00:29:11.790]So that you have legal proof they receive that letter that at least is terminated.
[00:29:16.380]So be sure to handle it properly and get it done prior to September 1 at one, one call come in to where a tenant said, I've been terminated from my lease, but I didn't get my letter till September 4 because of mail on Labor Day and all those kind of things and
[00:29:33.030]Basically I checked with the lawyer and the lawyer said no is at least it's valid for another whole year because it had to be received by September 1. And so if you would like me to help him with that case I'd be happy to argue that with him.
[00:29:46.050]So it's a forest very enforceable day
[00:29:50.640]Another question that came up is during a three year lease on a parcel ground. The land is sold during the second year. What happens the least well
[00:29:59.790]If you have a rigid least and it's been executed properly and it's been signed by both parties and it's in effect, the least still stays in effect, we don't care how many times a land good soul.
[00:30:10.380]The lease is still in effect. The only thing that will happen is that the tenant will pay the new landlord according to police it's put into place so under mutual terms new landlord tenant could agree terminated least if voluntary agreed upon, or there are some
[00:30:28.560]Restitution to the tenant and the current 10 will have property until they had their properties and then least until the end of beliefs and that that question actually came to me you're about to two or three weeks ago and that is absolutely correct.
[00:30:41.040]So that without that question. Okay, what see where we got next. Okay, online. What do we have here. This one said
[00:30:50.250]Open answer dismissed. I had to send to me early, so maybe duplicate was. That was the question. Yeah, sure. We had one question.
[00:30:58.890]All right. When Cheryl you submitted one question I had sent in
[00:31:03.570]This in earlier today. So maybe a duplicate I met quite sure what question you submitted, but Eleanor and I will stay on here for a few minutes.
[00:31:13.920]Now that you're towards the end of the growing season. Let's hear where consumer. There it is. OK. So the question we got will the screen this to the group, what are the considerations of party would
[00:31:27.000]would offer to gifted center pivot to a relative who is grab the irrigating family farm.
[00:31:34.230]So the question is, okay, you have to travel and say you have gravity irrigated parcel land and somebody wanted to get the other party a center pivot because center pivots might be more effective or more efficient and banning drink water.
[00:31:46.860]What are the tax ramifications for such it for gifting that asset no repayment. It is expected. So there's basically turning the title over on the piece of equipment.
[00:31:59.400]I'm not, I'm not a CPA, my guess is you probably want to get an opinion of value of that. So you have some way to identify what the basis is
[00:32:07.620]Older, you know, just like a car pivots decline in value over time as well. So I would be surprised to see
[00:32:13.650]A decline in value. So a third party opinion might be someone, such as a pivot installation or maintenance company would be a good example.
[00:32:22.560]I do know that I believe you can give so many thousand dollars of a couple of saying older couple can gift.
[00:32:30.870]I free. I think it's is it 35 here and I can answer that. So my deal. So just know that you have a you may have a gift in place here and there is no gift tax as long as the gift is
[00:32:45.510]Less than $15,000 between two people. So in other words, if I had to pivot on when it gets to Jim. I think it's worth less than 15,000 then
[00:32:57.360]It just goes, it's a gift if it's worth more than 15,000 and then I can either he can either take it to gift tax on or I can have my wife.
[00:33:07.830]Gift him up to another 15,000 so you could go. We could go. My wife and I could both go up to a baby 30,000 to one person if Jim happen to be married, then you can do that again.
[00:33:18.510]I could give you I can give you up to 15,000 his wife, my wife could give 15,000 to his wife see can you can get up to a $60,000 value gifted
[00:33:27.690]In a situation like this without tax ramifications for the for the gift for the gift, even for the person receiving the gift.
[00:33:35.460]And if you have standard those limits and you don't have to also reported under your state tax limit either. Yeah. Main thing is check with the CPA or attorney, whoever you tax work with
[00:33:46.050]Doesn't make double check the numbers down quoted, I believe that correct as well. The big thing is it a couple of can gift state 30,000 a year to someone, the pivot is worth 60,000
[00:33:56.010]Maybe give half of the interest in 2019 maybe do it near the end of the year.
[00:34:00.450]Turn around and get through, so the paper carried out in the first year and give the other 30,000 see at 60,000 moving apparently chart, but it was the big key here is have some documentation of what that
[00:34:11.460]Pivot is what are they need machine is worth by a third party so that it could be proven, you know, with IRS or with a quarter law.
[00:34:20.880]Okay, so we got one other question here, and we'll keep answering these we have plenty of time that I think we're running ahead of time.
[00:34:27.900]So the question is, what happens if you have a written list that continues, year to year until terminated and the landlord cells are in that one more time. What happens if you have a written least that continues, year to year until terminated and the landlord sells
[00:34:47.100]I'm not sure where you're where you're going with that. I guess I'm not quite understanding because if I have a
[00:34:52.320]Written least that continues, year to year. That makes sense. I get that. So, one year leads to just rolls off or continues, year to year.
[00:34:59.760]You still have to terminated by September. Well, okay. So if you ever written least you follow the termination that's outlined in the written lease.
[00:35:09.630]Please have a termination clause and the leads that says this is a hobby how this lease is terminated.
[00:35:15.300]Unless we have that, then I think the sixth my understanding, check with lawyer but my understanding is the six month rule. It's still apply. So
[00:35:23.340]The landlord itself. The least goes with the land. In other words, if it's after September 1 the landlord sell sometimes winner, the lease is still in effect because the rollover
[00:35:32.820]Because you didn't terminated, then the land would be sold with that least in effect for one more year you got both things to kind of consider there.
[00:35:41.220]It's exactly right. And then down into the on the one side here unless you can come up and say, if the property self.
[00:35:47.940]Stated current landowner dies property sells and you have announced at least for 2020
[00:35:53.160]Unless the new property owner and the current holder of the other of the least the current tenant mutually agree, maybe sometimes you can do like a small buyout the new land owner might say, hey,
[00:36:04.560]Give me a 3500 bucks be agreed to vacate this, I want to farm it and they're not required to do that and attendance at acquire acquire to agree to that.
[00:36:12.810]But you see classic things like that in town. The classic example is if you have a rental house say mom and dad own rental house, but they are in some kind of assisted living they passed away.
[00:36:23.400]One of the kids inherits property, but they want to live there. You kept current tenant there. Well, the current lease Hastert terms of the current lease have to run out until the contract is over.
[00:36:38.220]I don't see any other questions here. We got a few people on yet so that's good. We got a few more is we're kind of going on.
[00:36:45.210]If you got any other questions down and I have state to three more slides here who back to go. Yeah, yeah. Go back to go back and get those slides. And I think our contact informations on one of them correct landlord tenant meetings. We have two left for the summer of 2019
[00:37:02.790]And with the leases that we are excuse me with the meetings that we have scheduled for the summer, we have two left. We provide the contact information here and with the contact information.
[00:37:17.250]The contact information for these meetings. One is tomorrow at 9am I'm willing to bet Randy.
[00:37:23.310]Randy prior would probably let you into the meeting, we can have a ton more people come but it's, it can be held in we're well over
[00:37:29.430]Get that office a call. If you have any other questions, Lancaster County, we're going to have one here on why was a Wednesday afternoon. I know they're tight on room and handouts and make sure you call ahead.
[00:37:41.280]And I believe the start time is going to be a one to 412 415 or. So the big thing that we got coming up, Alan and I are project directors on a project called managing agricultural land in 2020 and beyond star landlord tenant meeting series for this upcoming winter. Be sure to
[00:38:01.410]Take a look at your local extension office or if you're able to name the contact information if you get an email on this meeting today will try to put the word out that way too. But we'll probably do.
[00:38:12.840]Tend to maybe even 15 landlord tenant cash rent meeting starting late November depending on harvest through
[00:38:19.230]Say march of 2020 and give or take a month or two, we are busier this year with farm domains and Alan has a lot of
[00:38:26.100]Farm succession transition duties take care of as well. So be sure to keep your eyes out for that we've had some really good comments today especially, we had a little bit longer meeting that a free lunch with it today, but
[00:38:38.040]Really good turnout and St. Paul. We had about 36 people come in really good comments after the meeting or over. So there's a lot of people whether a landlord or a tenant that seems to be getting good information. I'm going to slip down to the last slide here we
[00:38:52.770]Have right here and topics, our landlord tenant meeting. One thing I want to highlight in my section.
[00:39:01.080]For the the website for this program, we're going to have county level cache trend estimates, they're actually being published in early September. But we're going to try and highlight those in November.
[00:39:11.550]And I thought it might be worth taking a look at some of those prevent plan a trip that we've had across state line, according to the website. These were the two
[00:39:21.360]Topics, you had listed under their kind of closing out the least and considerations for 2020 I'm sure they'll be some topics will add to that.
[00:39:29.430]And once again, we'll try to cover any questions. And let me double check here. I think we got one more, one more question. Don't see the
[00:39:38.130]There's our contact information, you get a hold of us, please, please.
[00:39:43.230]Give us one of gives the call, or leave us an email message and we'll be glad to get back to you. And I think we can go back to that slide. Quick, we got time trial and error rates for northeast.
[00:39:53.040]We got a question here. What is the dry land cash rental rates, just want to remind you that recording tonight vein. I believe that's your first name. This will be posted online. So give us a couple days. But will it will be getting up here online, I'll be honest, going right back up here.
[00:40:14.100]Jane. Here we go.
[00:40:16.410]Every reported for northeast Nebraska was about 205 and acre down just slightly compared to 2018 at 2% and the other side here will get the range.
[00:40:28.020]We had an average on the high third grade at 245 and nature average on the lower third grade average of all both third responses of 170
[00:40:38.070]Yeah. Average of 205 and when you stand when you're looking at this slide. You're looking at those numbers. If you're the tenant, the only number, you'll see is 170
[00:40:46.860]And if you're the landlord, the only number, you'll see is 245
[00:40:51.720]So just understand that you do tend to have a little rose colored glasses on, depending on who you are. So really the
[00:40:57.720]Issue that you will find number. I know that it's not increasing and stay the same or decrease slightly
[00:41:02.190]The other thing to point out to you guys k will be publishing the county level cache rental rate assessments here in September. So we'll be sure
[00:41:09.990]That provides a we kind of use both of the sets of information, the county level estimates, give us an idea on a certain area of the state. How did they catch renewal rates tend to bury and
[00:41:21.000]You know, northeast Nebraska. We Tennessee's Theatre Wing data Dixon, the northeast corner. It says, okay, there are
[00:41:29.610]Just a pure Missouri. I'm sorry. Yeah, yeah. So they buy us to basically if you see the county level rents for those counties up there and it very northeast corner, they tend to bias the
[00:41:39.180]rental rates for the for the entire district to tend to be a little higher than the rest of the district is
[00:41:45.480]All right, we're right on time tonight. We're actually a few minutes early. But once again, this is something new that Alan and I have tried this year. I think it's been a learning point on our part, learning how to get these connections to all work and
[00:41:57.990]Preparation on our part and say technology never ceases to work perfectly. But we got to work again tonight. So we're happy about that. And we're going to end well. Again, we'll get this to make sure we are recording
[00:42:08.670]Stopped here in a minute. And we will make sure it's available for everybody to have and see. And again, here's how you contact us. I think Jim's going to go back to that last contact slide.
[00:42:18.210]Now lemur contact information up. I think we're gonna go ahead and probably kill the recording. Now I think so, too, and not seen I'll double check the questions, but we had some good questions. We, these are
[00:42:30.660]Some other things here. So we're going to go ahead and
[00:42:34.170]Stop recording and both
[00:42:38.730]And growing

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Ag Land Management Quarterly August 2019

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