The world we live in...

[HawkGold]

False. It’s high prices.

Capital gains effect would be so minuscule as to be statistical noise.

When you’re talking $4 million dollars to buy a quarter section of land, no one without either already having a ton of cash on hand, or enough collateral to get cheap loans, can buy anything.

Capital gains doesn’t have shit to do with deterrence on that kind of money.

Where are you coming up with this stuff? Is Illinois in some kind of time warp?

Land available for sale is at historical lows. Supply/demand. No supply and extra cash in part due to prices and in part due to Trup extending social welfare to farmers. Biggest issues...lack of sales due to tax law changes over the years favoring the existing owners. Look at the FED exemptions on estate taxes. Some due to Iowa laws making it hard to collect at risk debts on farmers by banks. IL banks won't lend to Iowa farmers for that reason.

LASTLY IL property taxes have exploded due to a number of reasons but in part because IL is a tax outflow state and Iowa is a tax inflow state.

 

[HawkGold]

Precip amounts don’t really mean anything anymore when it comes to corn and beans.

As I’ve mentioned several times here before, crop genetics have solved that problem. Western Iowa has been in extreme/exceptional drought for the better part of a decade yet yields are still setting records every year. That’s not hyperbole

You’re also forgetting that drainage improvement costs a lot of money. A LOT of money, and the larger area you’re talking, the more your returns diminish. Improving yields by say, 10% is more than wiped out by the money spent improving drainage. It’s a net negative dollar-wise. Always has been.

Just not correct. We haven't had a hot and dry situation in a long time across a broad area. 1980, 1983, 1988, 2012. Nothing close. GMO does reduce insect damage prevalent in hot dry patterns so I'll give that.

Though we've been dry, we still get scattered Rain and big dumps. East and Central IL is very flat. SE Iowa is quite flat away from the valleys. Just not that simple.

And rain is important. Year in and year out 115 day corn will in long run beat 108 day corn.

Then we could go into basis which doesn't look fav on north Iowa at all on beans and corn. You in NW Iowa get clobbered on basis. Which would offset the perceived yield advantage that doesn't exist.when comparing states

 

[HawkGold]

False. It’s high prices.

Capital gains effect would be so minuscule as to be statistical noise.

When you’re talking $4 million dollars to buy a quarter section of land, no one without either already having a ton of cash on hand, or enough collateral to get cheap loans, can buy anything.

Capital gains doesn’t have shit to do with deterrence on that kind of money.

Where are you coming up with this stuff? Is Illinois in some kind of time warp?

Can u discuss without insults. BTW wealthy farm owners actually do pay attention to taxes and value basis.

 

[HawkGold]

Fry, Iowa estate tax is less to begin with and is being repealed. Land holders are waiting to some degree which has diminished supply.

 

[HawkGold]

I took 2 counties 1 in each state.

Lyon (IA) and Piatt (IL). Similar in size (Lyon somewhat bigger) and uniformity. Piatt does have a river valley with poor soils.

Yields back to 2014. Irrigation not an issue in either county.

		Corn
	Lyon		Piatt
	217.4​		212​	2021​
	197​		210.6​
	186.6​		199.7​
	193​		241.8​
	218.9​		216.7​
	206.9​		218.7​
	196​		220.5​
	172.9​		235.2​	2014​
Ave	198.6​		219.4​
		Soy
	62​		76.1​	2021​
	60.8​		71.7​
	54.8​		77.4​
	60.6​		69.4​
	63.8​		71.3​
	66.1​		73.1​
	61.1​		69.3​
	53.7​		58.2​	2014​
Ave	60.4​		70.8​

 

[HawkGold]

Corn basis - Map. NW Iowa gets smoked and it's not even close.

 

[HawkGold]

Current Soybean basis. Reflects distance and protein levels. Further south, better protein in general. NW Iowa currently has a more narrow basis on beans and inverted on corn due to the dry weather. IL smashed yield records so basis is historically wider.

 

[HawkGold]

The world buys soybeans on protein and oil. NW Iowa is at a disadvantage. Further south...better bean... better prices.

 

[HawkGold]

Therefore the cost of farmland though driven by yields and profits isn't highly correlated to yields and prices in other locations. Taxes, alternative enterprises and other factors are driving it. NW Iowa farmers are not more profitable on cash grain.

A customer of mine recently sold a piece of gound (40 acres) that was high class C/low class B for $24k per acre. The drive behind it was the proximity to a Toyota plant that wants to reduce it Carbon usage by putting up solar panels. The land doesn't have a lot of commercial value except for the panels.

NW Iowa is high. But what drives it is fierce competition between warring neighbors with cash. The averages even in NW Iowa isn't nearly as high as the extremes. My guess is that EC IL is as high on average or higher. In 2014, I watched Becks and Jimmy Johns bid almost 15k on land on 1000 contiguous acres pattern tiled. High end in NW Iowa at the time was 17k if my memory is correct. It was a war between them. Recently a crap piece of ground a mile from me that is HEL sold for 18.2k. 9 miles away a lower Class A sold for 22k. The numbers will show land values were up 15 to 20 percent across the midwest in 2022.

 

[HawkGold]

Prime farmland in your area has a prop tax of $25/$30 per acre. EC IL, average is +40 and prime a lot more.

 

[racerhawk]

In my professional experience it's absolutely astounding the lengths farmers will go to to hide the amount of land and livestock they own. It's just a weird concept, but goes back to the depression era when almost all farmers were struggling and most of them lost everything to the bank. The farmers who were able to acquire more land and had successful operations were looked at like Scrooge McDucks and hated by everyone. Nobody wanted to be that guy, so they kept what they owned a secret all the way to the grave.

Fast forward to today and it's still the same only more so. Guys now keep everything as secret as possible because their dad was taught to be that way by granddad who was taught to keep his mouth shut by great grandad and son on and so on. It's hilarious because most ultra wealthy folks want to broadcast what they own and control to anyone who'll listen .

Do these guys still receive government handouts in the form of farm subsidies? I honestly don't know the status of subsidies these days, but you seem to describe a lot of millionaires hoarding cash and land. Hope they aren't on the dole.

 

[okeefe4prez]

Do these guys still receive government handouts in the form of farm subsidies? I honestly don't know the status of subsidies these days, but you seem to describe a lot of millionaires hoarding cash and land. Hope they aren't on the dole.

LMAO.

 

[racerhawk]

LMAO.

I honestly don't follow this issue at all, and it was an honest question, counselor.

 

[Fryowa]

I honestly don't follow this issue at all, and it was an honest question, counselor.

Iowa farmers alone get on average about $1.5 billion a year.

That doesn't count the federal ethanol subsidies paid to fuels producers (farmers will tell you it's not a subsidy, but it's a HUGE tax credit per gallon, potato/po-TAH-to). Also, the largest group (by number) of shareholders in ethanol plants are growers. If that isn't subsidizing them, I don't know what is. I can't complain because I work in the ag industry, but I call it what it is.

Ethanol costs WAY more to produce than what they sell it for. If they did away with the tax credit every plant would shut down within a week, and now it's a big enough industry that fuel markets would explode, so it's never going away until some nerd at a research university figures out how to make some other source of energy to replace it. And even then I wouldn't count on it, because...money.

 

[racerhawk]

LMAO.

Seems like ad hoc programs for subsidizing farmers increased dramatically in recent years. Source: Congressional Budget Office.

 

[NCHawker]

what happened here?

 

[okeefe4prez]

Iowa farmers alone get on average about $1.5 billion a year.

That doesn't count the federal ethanol subsidies paid to fuels producers (farmers will tell you it's not a subsidy, but it's a HUGE tax credit per gallon, potato/po-TAH-to). Also, the largest group (by number) of shareholders in ethanol plants are growers. If that isn't subsidizing them, I don't know what is. I can't complain because I work in the ag industry, but I call it what it is.

Ethanol costs WAY more to produce than what they sell it for. If they did away with the tax credit every plant would shut down within a week, and now it's a big enough industry that fuel markets would explode, so it's never going away until some nerd at a research university figures out how to make some other source of energy to replace it. And even then I wouldn't count on it, because...money.

The best part is if I want to buy clean gasoline that hasn't been adulterated with ethanol it costs 50 cents a gallon more. I run a few tanks of that a year mainly to support a local gas station that only sells ethanol free gas.

I think we're on the second wave of the ethanol facilities. They had a huge building boom, the original investors got wiped out, then the new money (with a huge tailwind by farmers) came in and bought the assets free and clear of the original debt financing and now they print money.

I saw that Chevron bought REGI fairly recently. I know Valero owns a bunch of ethanol plants. I don't think the other oil majors have a big stake in it, though. Valero was basically forced into buying the plants (they even own the one by Fort Dodge) because the government in California was on their nuts so hard about "green energy" so they bought 10 ethanol plants and told them to STFU. California's economy would crumble in a week if it weren't for Valero, yet they get nothing but hate and vitriol from the politburo.

 

[okeefe4prez]

what happened here?



View attachment 9811

It's a logical extension of the first and second posts and it's the offseason.

 

[Fryowa]

The best part is if I want to buy clean gasoline that hasn't been adulterated with ethanol it costs 50 cents a gallon more. I run a few tanks of that a year mainly to support a local gas station that only sells ethanol free gas.

I think we're on the second wave of the ethanol facilities. They had a huge building boom, the original investors got wiped out, then the new money (with a huge tailwind by farmers) came in and bought the assets free and clear of the original debt financing and now they print money.

I saw that Chevron bought REGI fairly recently. I know Valero owns a bunch of ethanol plants. I don't think the other oil majors have a big stake in it, though. Valero was basically forced into buying the plants (they even own the one by Fort Dodge) because the government in California was on their nuts so hard about "green energy" so they bought 10 ethanol plants and told them to STFU. California's economy would crumble in a week if it weren't for Valero, yet they get nothing but hate and vitriol from the politburo.

What's really turning this thing on it's head is now that farmers are so fvckin wealthy and have so much cash, they've figured out they have enough money to start co-ops and they go at it privately instead of needing a biggie like POET or Valero to front the funding and run it. The same people selling the grain to the ethanol co-ops are the ones making money off the ethanol. It's genius. I think it's a great idea, because it forces the conglomerates to toe the line and get competitive. I know several people who hate the huge producers so much that they'll haul grain way out of their way to sell it at a co-op rather than sell to POET. They pay more money in fuel and get no dividends because they aren't in the territory and don't own shares, but they ain't gonna give it to some company that says it's based in Sioux Falls but really run by a lobbyist in DC who's never seen a dirt road in his life.

We have a ton of em crammed into our 4 county area. All of these are within a 30 minute drive...

Ashton - POET
Hartley - Valero-owned, growers can buy shares, I'm sure their watered-down.
Marcus - Little Sioux Corn Processors (grower-owned coop)
Merrill - Lakeview Plymouth Energy (grower-owned coop)
Sioux Center - Siouxland Energy Cooperative (grower-owned coop)

Emmetsburg is about an hour away and they have a POET plant there.

 

[HawkGold]

Seems like ad hoc programs for subsidizing farmers increased dramatically in recent years. Source: Congressional Budget Office.View attachment 9810