Latest / AG Bull / AG Squawk with Davis Michaelsen | Paul Schadegg | Farmland at a Crossroads

Transcript

AG Squawk with Davis Michaelsen | Paul Schadegg | Farmland at a Crossroads · AG Bull

• 0:11
  SPEAKER_02: Twas a report day today, in case you hadn't heard.
• 0:15
  SPEAKER_02: The markets were primed heading into USDA's data dump, and those markets did not disappoint once the data was released.
• 0:24
  SPEAKER_02: I don't want to dwell on the report data today.
• 0:27
  SPEAKER_02: My guest wrote something recently that I will I really want farmers to ponder as they climb into their captain's chairs or perhaps their easy chairs for harvest.
• 0:50
  SPEAKER_02: From behind the big blue, bodacious microphone of Ag Bull, your pal Davis Michelson here for Ag Squawk in the afternoon.
• 0:58
  SPEAKER_02: So glad that you've joined us here on August 12, a Wednesday.
• 1:02
  SPEAKER_02: We're halfway to the weekend gang.
• 1:04
  SPEAKER_02: Although I get it, there's no such thing as the weekend on the farm.
• 1:09
  SPEAKER_02: But those of us behind desks and stuff, I guess, you know, we're waiting for that day.
• 1:12
  SPEAKER_02: And we're halfway there.
• 1:13
  SPEAKER_02: We're halfway there.
• 1:14
  SPEAKER_02: A big day today from USDA.
• 1:17
  SPEAKER_02: And here's the thing.
• 1:19
  SPEAKER_02: Everybody's going to be talking about this report.
• 1:22
  SPEAKER_02: And I know that there are mixed feelings about USDA data dumps among farmers.
• 1:27
  SPEAKER_02: These are the numbers that that we'll be trading now for the time being.
• 1:32
  SPEAKER_02: These are the the ideas and concepts that we have on paper now to work with.
• 1:38
  SPEAKER_02: We are going to do a deep dive here at Ag Bull, but we're going to do it for the premium side.
• 1:44
  SPEAKER_02: Tommy, I think Jed will be involved, probably Joe.
• 1:47
  SPEAKER_02: We're just going to have a quick discussion after we're done taping here for the AgSquawk Afternoon podcast.
• 1:53
  SPEAKER_02: And we'll cover it there for premium subscribers.
• 1:56
  SPEAKER_02: So if you if you really, really want to get that information, and it there's a lot in there.
• 2:01
  SPEAKER_02: There is an awful lot in there.
• 2:02
  SPEAKER_02: Don't let me downplay it too much for you.
• 2:04
  SPEAKER_02: Go to Agbull.com, AgBull.com.
• 2:07
  SPEAKER_02: Take your marketing by the horns with AgBull Intel.
• 2:11
  SPEAKER_02: You can also call 855-737 Farm.
• 2:14
  SPEAKER_02: So we will be talking about the reports, but we're going to put it over on the premium side, out behind that paywall there.
• 2:20
  SPEAKER_02: Lots of goodies behind that paywall that you may be very interested in.
• 2:23
  SPEAKER_02: $25 a month.
• 2:24
  SPEAKER_02: $250 for an entire year.
• 2:28
  SPEAKER_02: I've got Paul Shadeg, Farmers National Company, the president of Farmers National.
• 2:33
  SPEAKER_02: I'm really excited about this conversation.
• 2:35
  SPEAKER_02: Paul and I have spoken before.
• 2:37
  SPEAKER_02: He's always a great interview, gives great insights, and I have something very specific that I want to talk to him about.
• 2:43
  SPEAKER_02: He released an article on farmersnational.com just yesterday.
• 2:48
  SPEAKER_02: If you've watched my shows before, anytime land comes up, I go to succession planning.
• 2:52
  SPEAKER_02: I I go to, well, how are we going to organize transitions here in the land?
• 2:56
  SPEAKER_02: And I I want to I want to get the skinny on what the land market looks like right now.
• 3:00
  SPEAKER_02: I want to talk about how their July went over there at Farmers National.
• 3:05
  SPEAKER_02: Looks like they were they were doing pretty decent biz.
• 3:08
  SPEAKER_02: A lot of land moving.
• 3:09
  SPEAKER_02: And then of course I want to get to that article and just just talk about the wealth transfer, the land transfer that uh that is part of the agriculture world.
• 3:21
  SPEAKER_02: And and so we'll uh we'll hope to get some insights on that.
• 3:23
  SPEAKER_02: And when I say as you climb into your captain's chairs, yes, it's about time to to uh start with the combining, with the tractors, with the harvest, it's coming up.
• 3:34
  SPEAKER_02: These are good times to think about these things.
• 3:36
  SPEAKER_02: And then I said, or perhaps your easy chairs, there are non-operators who own land as well who need to think about these things just as much as those with dirt on their boots.
• 3:48
  SPEAKER_02: So I'm really looking forward to the conversation with Paul Shadeg.
• 3:50
  SPEAKER_02: Wow, that was a really long intro to talk about.
• 3:53
  SPEAKER_02: Let's get into the markets.
• 3:55
  SPEAKER_02: We had another daily sale reported 244,000 metric tons of beans for delivery to China for the 26-27 marketing year.
• 4:03
  SPEAKER_02: Just a little news note here because we're gonna look at a wheat market that went completely bonkers today.
• 4:09
  SPEAKER_02: Ukraine struck three Russian grain terminals and Black Sea shipping infrastructure overnight.
• 4:15
  SPEAKER_02: This uh sounds like it was an absolutely destructive, raucous attack from Ukraine on Russian infrastructure.
• 4:23
  SPEAKER_02: They're they're pounding each other's infrastructure at this point, and the markets are definitely responding.
• 4:29
  SPEAKER_02: Wheat futures were feeling their oats this morning, firming 20 cents or better in early session trade.
• 4:35
  SPEAKER_02: Corn was up eight cents, soybeans gained about a nickel, cattle futures went the other way, feeders down sharply to start the day, and fat cattle under moderate pressure, lean hogs posted early session gains.
• 4:47
  SPEAKER_02: A little note here on the energies, ethanol production, weekended August 7th, firmed slightly, but ethanol stockpiles also grew about 1% over the the period there.
• 4:58
  SPEAKER_02: So we we like to see production increasing, but we'd like to see a little bit more usage pull down those stockpiles.
• 5:04
  SPEAKER_02: We're up over 24 million barrels of stockpiles, and that's plenty.
• 5:09
  SPEAKER_02: That's plenty.
• 5:09
  SPEAKER_02: We should we need to be moving this ethanol out the door here.
• 5:12
  SPEAKER_02: Just ahead of the report, corn was up eight cents, soybeans also up around eight cents, and winter wheat was 20 to 25 cents higher on the day.
• 5:21
  SPEAKER_02: Immediately following the report, corn and soybeans shot higher, with each pressing upward toward 13 cent gains.
• 5:29
  SPEAKER_02: Chicago wheat encountered some price pressure as KC wheat held early gains.
• 5:35
  SPEAKER_02: Now we're at we're at 1 p.m.
• 5:37
  SPEAKER_02: here, so I don't think the cattles are even settled quite yet, but I'll I'll give you what I've got.
• 5:41
  SPEAKER_02: I use plus 500 T4 software for up to the minute, real-time quotes, a host of other features, futures, and options.
• 5:49
  SPEAKER_02: Plus 500 T4 software is how we how we figure out where the where the markets are, and I'm going to give those to you now.
• 5:57
  SPEAKER_02: Let's uh, you know what?
• 5:58
  SPEAKER_02: I've got the cattle up right now.
• 5:59
  SPEAKER_02: Let's start with the October feeder cattle, down$6.30.
• 6:03
  SPEAKER_02: Yeah, just ahead of settlement here, down$6.30 at$3.30 and 40.
• 6:08
  SPEAKER_02: Your October fat cattle down$2.45,$2.23.87.5.
• 6:13
  SPEAKER_02: And October lean hog futures up 22.5 cents.
• 6:17
  SPEAKER_02: As of this moment here,$83.55.
• 6:21
  SPEAKER_02: And over to the corns.
• 6:23
  SPEAKER_02: Wow.
• 6:24
  SPEAKER_02: Look at the December corn up 20 cents here.
• 6:26
  SPEAKER_02: Oh, now 19 and 3 quarters.
• 6:28
  SPEAKER_02: Still not closed.
• 6:29
  SPEAKER_02: We got about another 20 minutes to go here in the trading session.
• 6:32
  SPEAKER_02: So we're not settled out yet.
• 6:33
  SPEAKER_02: These are not final.
• 6:34
  SPEAKER_02: But De's corn up 20 cents at 480 and a half.
• 6:38
  SPEAKER_02: November soybean futures up 13 and three quarters, 11.82 and a quarter.
• 6:43
  SPEAKER_02: Meal is higher.
• 6:44
  SPEAKER_02: Soybean oil is higher as well.
• 6:46
  SPEAKER_02: Your Chicago December wheat up 22 cents, 670 and a quarter presently, and December KC wheat up 24 and three quarters, 740 and three-quarters.
• 6:58
  SPEAKER_02: As I said, for premium subscribers, we'll get the lowdown, the report details.
• 7:03
  SPEAKER_02: It should be a quick conversation, but we'll make sure and hit the high points.
• 7:06
  SPEAKER_02: I think what really got into the wheat today, because it was a bit quiet in the report for wheat as far as as movement goes, it's it's this uh Russia-Ukraine conflict thing and the infrastructure that that got into the the wheat markets today.
• 7:20
  SPEAKER_02: Let me just look at crude really quick.
• 7:22
  SPEAKER_02: Yeah, nothing to speak of in the DTI crude.
• 7:25
  SPEAKER_02: The October at 81.97, up two cents.
• 7:28
  SPEAKER_02: That's tuppence today.
• 7:30
  SPEAKER_02: Up three cents in the NOVE at 80.34.
• 7:32
  SPEAKER_02: We're hanging right around 80 bucks a barrel.
• 7:35
  SPEAKER_02: Still, as always, unknown what's going to happen with the whore moves straight.
• 7:39
  SPEAKER_02: We'll let you know as soon as we figure it out.
• 7:42
  SPEAKER_02: All right.
• 7:43
  SPEAKER_02: With all that out of the way, I'm very pleased right now to uh bring in a good friend of mine, Paul Shadeg, president of Farmers National Company.
• 7:53
  SPEAKER_02: Paul, it's a uh it's a thrill to see you over here at AgSquawk.
• 7:57
  SPEAKER_02: You and I have talked before a number of times.
• 7:59
  SPEAKER_02: I've always enjoyed our conversations, and I always felt a little smarter when we got done talking, Paul.
• 8:05
  SPEAKER_02: Welcome to AgSquawk.
• 8:06
  SPEAKER_02: Thanks for being here.
• 8:07
  SPEAKER_02: Appreciate your time, sir.
• 8:08
  SPEAKER_00: Thanks, Davis.
• 8:09
  SPEAKER_00: And the feelings mutual.
• 8:11
  SPEAKER_00: We always seem to dig into what the underlying details are.
• 8:15
  SPEAKER_02: Yes, yes.
• 8:16
  SPEAKER_02: Well, let's uh I was looking at your website ahead of the uh program here, and it looks like you guys were pretty busy in July.
• 8:26
  SPEAKER_02: It seems like an awful lot of land moved.
• 8:28
  SPEAKER_02: It was it a typical July for you, or was it about what you expect July to be?
• 8:35
  SPEAKER_00: Yeah, I had a conversation with a client at a meeting here just a few weeks ago, and they talked about how traditionally we used to sell land between October and March.
• 8:45
  SPEAKER_00: And over the past several years, we've seen that really evolve to where we we almost market 12 months out of the year.
• 8:53
  SPEAKER_00: Some are heavier than others, but we have so many non-traditional buyers in the market that it has, you know, they they don't recognize they're not a producer, so they don't recognize the fact that there's crops growing.
• 9:04
  SPEAKER_00: There might be inputs that have to be repaid.
• 9:06
  SPEAKER_00: So what we've seen here in the last number of years is that things kind of slow down in in maybe May and June, but they really start to pick up, and our early season has really moved to the end, middle to the end of July.
• 9:19
  SPEAKER_00: It picks up, we're heavy into August and September.
• 9:23
  SPEAKER_00: That is typically what we would see in the fall.
• 9:26
  SPEAKER_00: You mentioned, did you say non-traditional buyer?
• 9:29
  SPEAKER_02: Yeah.
• 9:31
  SPEAKER_02: Can you can you help me get my head around that a little bit?
• 9:33
  SPEAKER_02: Who is that?
• 9:33
  SPEAKER_00: Well, what we would consider a non-traditional buyer is someone that maybe doesn't have a lot of connection back to the farms.
• 9:41
  SPEAKER_00: Maybe they are a local investor.
• 9:44
  SPEAKER_00: I have one of my guys always talks about the guy that owns the pharmacy, and he's always owned and run the pharmacy, but he sees value in agland and he wants it to be close, so he'll buy a local farm and lease it out.
• 9:55
  SPEAKER_00: And then you you have your typical investors, large investors, small investors that I call non non-traditional.
• 10:03
  SPEAKER_02: All right, very good.
• 10:03
  SPEAKER_02: So you're saying my dentist may actually own some farmland and uh not even know how to drive a tractor.
• 10:08
  SPEAKER_02: Is that possible?
• 10:09
  SPEAKER_02: That's very possible.
• 10:11
  SPEAKER_02: Very possible.
• 10:11
  SPEAKER_02: All right.
• 10:12
  SPEAKER_02: How how much, how aggressive do those non-traditional buyers get?
• 10:16
  SPEAKER_02: I mean, is is is their heart set on it?
• 10:18
  SPEAKER_02: Because I know that there's an emotional component that that we'll probably get to when we talk about your piece for the website.
• 10:25
  SPEAKER_02: But if you're coming in just on a sort of a dollars and cents, this looks like it's going to pencil out pretty solid for us long term and is a good long-term investment.
• 10:34
  SPEAKER_02: How hot to trot are they as compared to you know Joe Farmer, who's been driving by this half section since he was 12 years old, and now it's finally come up for sale?
• 10:43
  SPEAKER_00: Yeah, the difference, the difference between those two buyers is that you know, the they're with the producer, there's some emotion there, just as you indicated, that they they've had a farm next to them that's never they've never seen it come up for sale, and now's their opportunity.
• 10:58
  SPEAKER_00: So they're gonna bid with some emotion.
• 11:00
  SPEAKER_00: Those investors, non-traditional buyers, they're going to have very little emotion.
• 11:05
  SPEAKER_00: It's strictly a business decision.
• 11:07
  SPEAKER_00: So they they tend to bid to a level and stop.
• 11:10
  SPEAKER_00: Whereas a producer may have an idea where they want to bid, and you know, they're they they have to take advantage of an opportunity that may not happen again.
• 11:19
  SPEAKER_02: Do you see some of those non-traditional investors make mistakes that a farmer might not make when deciding how much to bid up on a piece of property or which piece of property is is going to work out for them and and for their their portfolio and for their designs?
• 11:35
  SPEAKER_00: Yeah, definitely.
• 11:36
  SPEAKER_00: Over the past 25 years, I've seen it happen.
• 11:39
  SPEAKER_00: Not so much now, because today's buyers are much more educated.
• 11:43
  SPEAKER_00: There's there's many more resources to look at to help analyze a property.
• 11:48
  SPEAKER_00: And a lot of them have understood now that they need to bring bring professionals in to help them make those decisions and not make mistakes like you indicated.
• 11:58
  SPEAKER_00: And, you know, it could be anything.
• 11:59
  SPEAKER_00: If you go out west, it could have to do with groundwater.
• 12:02
  SPEAKER_00: Maybe they don't understand the dynamics of an irrigation well and what may or may not show that that well is is on its last legs.
• 12:11
  SPEAKER_00: Or it might be in the east that there's a farm that looks like it's a great buy, but doesn't have the correct tiling and and maybe fertility issues.
• 12:22
  SPEAKER_02: I don't know if I'm throwing a shameless free commercial at you here or not, but it when you talk about bringing in a professional, and it it could be about anybody, but this is the sort of stuff that Farmers National does, isn't it?
• 12:34
  SPEAKER_02: Don't you go through and you you assess the the land and the the potential and all this sort of stuff and help your help your potential buyers do uh figure out if it's a good good fit or not.
• 12:44
  SPEAKER_00: Yeah, and with the resources that we have today and resources we've developed internally, you can what used to take us maybe if an investor called and said, Hey, I'm looking at this farm, can you help me analyze it?
• 12:56
  SPEAKER_00: You know, it might take us several days.
• 12:57
  SPEAKER_00: We may have to drive out to the property, dig up some some records.
• 13:00
  SPEAKER_00: A lot of those records are at our hand, and what used to take us, you know, a few days, maybe now will take us a few minutes.
• 13:08
  SPEAKER_02: Yeah, yeah, absolutely.
• 13:10
  SPEAKER_02: Well, and like you said, just the the level of information that is available to us just on on clicking on the Google Maker here can uh can certainly take and help fill in some of those gaps as well.
• 13:25
  SPEAKER_02: That's that's interesting.
• 13:27
  SPEAKER_02: How does you know what before I get to this question?
• 13:30
  SPEAKER_02: Let's talk about because we're still kind of talking about July.
• 13:33
  SPEAKER_02: What sorts of land are you seeing in high demand currently?
• 13:38
  SPEAKER_02: Is it, you know, when I think about farmland, I'm thinking, oh gosh, you they want the top quality ground, they gotta have the best of the best, and that's what's driving prices.
• 13:48
  SPEAKER_02: Is that a safe assumption, Paul?
• 13:50
  SPEAKER_00: Yeah, definitely a safe assumption.
• 13:52
  SPEAKER_00: You know, typically we see the strongest demand in those high-producing areas like Iowa, eastern Nebraska, Illinois, eastern South Dakota, eastern Kansas.
• 14:03
  SPEAKER_00: And when we the market seems to shift initially in those areas that are struggling.
• 14:09
  SPEAKER_00: So you get out west where they've had some drought, having some irrigation water concerns, then that's where we see people step back and we start to see the slowdown in the market in those areas first.
• 14:22
  SPEAKER_00: And with that being said, we're still seeing uh really good values on land in in those western areas where I, you know, I've indicated that you might have the drought and things like that.
• 14:34
  SPEAKER_00: But the when you get east, Iowa and Nebraska, and those areas, it really rolls down to competition because we can have we can sell a farm that might be you know 20 miles down the road that maybe doesn't have quite as much competition, maybe not quite as good a CSR ratings, and then you get into an area that has some a lot of competition, and it'll drive that above what we consider market value.
• 14:58
  SPEAKER_00: Yeah.
• 14:59
  SPEAKER_02: Well, I I did have in my notes a little further down here, but but we're kind of there now.
• 15:04
  SPEAKER_02: If if we could talk about some pasture ground and maybe some tendencies among buyers, I as you mentioned and and we've kind of chronicled here, it's been it's been dry in some key grazing areas.
• 15:17
  SPEAKER_02: Does that necessarily signal an opportunity for motivated buyers, or can it be in in some cases kind of the kiss of death?
• 15:25
  SPEAKER_02: Oh, this is this is dry ground and and now it's subject to to dryness, and and so now maybe I'm less interested in purchasing that ground.
• 15:33
  SPEAKER_02: How does that fall?
• 15:35
  SPEAKER_00: Yeah, when when we talk about grazing land, uh investors typically don't get very interested in grazing land because the returns are just not quite there.
• 15:45
  SPEAKER_01: Okay.
• 15:46
  SPEAKER_00: And but then when we look at where is that where where is that market today and and what's driving it, we have to understand that today's producer doesn't think about just today.
• 15:58
  SPEAKER_00: They think about what they're gonna do in the future.
• 16:01
  SPEAKER_00: And so for livestock producers, if there's pasture land that comes up for sale, there'll be interest in that because they're not not looking so much as it looks today.
• 16:11
  SPEAKER_00: There might be a slight discount because it's dry and and they're not able to graze it initially, but they're thinking about five years from now.
• 16:19
  SPEAKER_00: And especially livestock producers, if they're trying to rebuild a herd and they're thinking we're gonna need more grass down the road, they're not they're not gonna think about what it looks like today.
• 16:28
  SPEAKER_00: They're gonna think they're start planning about what they want it to look like five years from now.
• 16:32
  SPEAKER_00: And so there'll there'll still be interest, there's still opportunity for sellers and buyers alike there.
• 16:39
  SPEAKER_02: Well, that's that's interesting.
• 16:40
  SPEAKER_02: It feels like one of the early indications that I'm thinking about cattle producers now.
• 16:46
  SPEAKER_02: The cattle producers are ready to begin rebuilding herds, could possibly be acquiring some some more acres.
• 16:54
  SPEAKER_02: Is am I way off on that?
• 16:56
  SPEAKER_02: Have you seen any indication yet of herd rebuilding?
• 16:59
  SPEAKER_02: I'd I it would be an early indication, but am I just way off?
• 17:03
  SPEAKER_02: Am I all wet on that?
• 17:05
  SPEAKER_00: I think we're we're we're not seeing as much when you look at at pasture land values.
• 17:10
  SPEAKER_00: I anticipated the the cattle market the way it's been here recently.
• 17:15
  SPEAKER_00: You would think that there would be a huge demand for pasture, and there's demand, it's just not to the level you would think it would be with cattle markets the way they are.
• 17:26
  SPEAKER_00: And a lot of that is overall, expenses are high, and there's other other things that come into play there.
• 17:34
  SPEAKER_00: One thing that would really help is if we have a lot of young producers that would just love to get into the cattle business, and the entry point is so high that we've got to figure out a way to be creative to to figure out a way for them to buy into an operation, to acquire land, and and it's just really tough in in this economic environment.
• 17:58
  SPEAKER_02: Yeah, yeah, absolutely.
• 18:00
  SPEAKER_02: Well, I I think that segues us nicely into this piece here that I read of yours.
• 18:06
  SPEAKER_02: Uh came out just just yesterday, so it's a fresh one.
• 18:10
  SPEAKER_02: It's the title is From One Generation to the Next: Securing Farmland's Future.
• 18:16
  SPEAKER_02: It's right on the website there at farmersnational.com under the news heading if you want to read the full article here.
• 18:22
  SPEAKER_02: But I'm gonna I'm gonna just hit a couple of paragraphs right from the jump here.
• 18:26
  SPEAKER_02: You wrote the United States Ag Landscape is entering one of the largest generational transfers of wealth and land ownership in its history, driven primarily by aging landowners and shifting demographics.
• 18:38
  SPEAKER_02: This transition is reshaping not only who owns farmland, but how it is managed, valued, and preserved for future generations.
• 18:47
  SPEAKER_02: Just a little more here.
• 18:49
  SPEAKER_02: According to statistics provided by American Farmland Trust, more than 40% of U.S.
• 18:53
  SPEAKER_02: ag land is expected to change hands at least once over the next 10 to 20 years, representing over 150 million acres, transitioning to new owners.
• 19:03
  SPEAKER_02: These projections align with broader industry estimates that the transition will be driven by retiring farmers.
• 19:10
  SPEAKER_02: That average age of farmers, Paul, runs right through the center of all of this, doesn't it?
• 19:15
  SPEAKER_00: Yeah, it really does.
• 19:17
  SPEAKER_00: And you know, you kind of started off your show with the market dynamics, and this is a dynamic that I've heard for my whole career in real estate.
• 19:26
  SPEAKER_00: I remember in the late 90s, people going to meetings and people talking about the generational transfer of wealth and the generational transfer of land.
• 19:34
  SPEAKER_00: And so you kept waiting to see signs of that happening, and it never quite happened, and it relates back to the age of producers because producers didn't retire.
• 19:45
  SPEAKER_00: They kept working, a lot of them are way past retirement age, kind of hanging on.
• 19:50
  SPEAKER_00: Some are hanging on because they went through some good times, and others are hanging on because they don't know what else to do or what to do with the land.
• 19:57
  SPEAKER_00: So we've reconsidered that over the years when it never quite happened.
• 20:02
  SPEAKER_00: But I think where we're at today is we're starting to see that happen.
• 20:07
  SPEAKER_00: We're seeing individuals inherit land that they don't know what to do with.
• 20:12
  SPEAKER_00: They may not even know where it's at.
• 20:13
  SPEAKER_00: They might have inherited grandma's farm and they've never been there.
• 20:17
  SPEAKER_00: And so that's when it becomes really important to have a plan.
• 20:22
  SPEAKER_00: You know, the the the someone asked me at a meeting the other day, what's the best thing I can do?
• 20:27
  SPEAKER_00: I said, to have a plan.
• 20:28
  SPEAKER_00: If you own land, you need to have a plan, you'll develop a plan of what you want to happen, who you want it to go to, and maybe does it need to be moved into a different entity, things like that.
• 20:41
  SPEAKER_00: Because that's going to make a big difference in how this how this happens.
• 20:47
  SPEAKER_00: If you don't care, if you want to turn it to cash and and you don't care about the legacy of it or the asset value, then yeah, you can probably set it up to sell.
• 20:57
  SPEAKER_00: And so there's probably we're probably going to see more land come to the market.
• 21:01
  SPEAKER_00: Right now, supplies are really tight, and that's another thing that's driving and holding values.
• 21:06
  SPEAKER_00: But I think we'll we'll start to see some of that loosen up.
• 21:10
  SPEAKER_00: There's going to be some more land come to the market just because people that don't understand how it operates or or what the real asset value is or what the appreciation has been over 25 years, then they're going to go ahead and execute a sale.
• 21:25
  SPEAKER_02: Man, the the pressure to keep the farm alive has has been a very, very real thing.
• 21:33
  SPEAKER_02: And I I think that that's gone into like what you where you started there.
• 21:39
  SPEAKER_02: Farmers basically want to hold on tight to the farm because they feel like, well, this is my granddad farmed out here, my dad farmed out here, and I I I can't take the risk of transitioning too early.
• 21:52
  SPEAKER_02: I I I can't make a bad decision here.
• 21:55
  SPEAKER_02: Paul, this is this is not the sort of of decision a succession plan is no good if you just write it down on a napkin and stuff it in your desk drawer somewhere.
• 22:04
  SPEAKER_02: You need professional help to really, really get this done right, don't you?
• 22:07
  SPEAKER_00: Yeah, we We firmly believe that we we partner ourselves with individuals when we do a state planning webinars.
• 22:16
  SPEAKER_00: That in our in our footprint across 29 states in the US, most all of our regions have contacts with estate attorneys that can help with that, a lot of CPAs that are well versed in in ag.
• 22:30
  SPEAKER_00: And then we can fill in the blanks on the operation side and and certainly assist with that.
• 22:36
  SPEAKER_02: It can get uh complicated in a hurry, especially if, God forbid, suddenly the the patriarch of the family is is gone, you know, by by an accident or or something happens suddenly.
• 22:48
  SPEAKER_02: And now you've got the kids, maybe one lives in Sarasota, you've got one, you know, out in in Portland, and they haven't been on the farm since they left for college.
• 22:59
  SPEAKER_02: Now they've got to try and figure out what to do with these these assets.
• 23:02
  SPEAKER_02: I was talking with Maxie Field.
• 23:04
  SPEAKER_02: We had a great conversation yesterday about H2A workers and how they're more and more in demand because the kids have left the farm.
• 23:12
  SPEAKER_02: And I I do know, and you know, in my bubble, I talk to a lot of uh young producers, and many of them say, well, I went out to college and thought I was going to go one direction and wound up back on the farm there.
• 23:25
  SPEAKER_02: Chad Layman, a perfect example.
• 23:28
  SPEAKER_02: So when when people talk about, oh, farms are consolidating too much, the the average size of the farm is getting getting too big, part of it is is that the young generation leaves the farm and doesn't come back, doesn't want to have anything to do with the operation, and then we have trouble with succession, and people want to complain that that corporate farming has gotten too big and out of control.
• 23:52
  SPEAKER_02: I don't know.
• 23:53
  SPEAKER_02: I feel like it's it's the two are linked together for better or worse.
• 23:58
  SPEAKER_00: Yeah, it if if you want to think about it this way, it's kind of a people problem.
• 24:02
  SPEAKER_01: Yeah.
• 24:02
  SPEAKER_00: I'll I'll equate that back to there were four boys in my family, and if my dad could have bought a 24-row planter, he wouldn't have, or or a 20 24-row planter or a 24-row cultivator, because he had four boys and he did something to do, and he had some old 4010 John Deere's with six-row cultivators, and he could keep all four of us busy, and it was a lot cheaper than trying to buy some big piece of equipment.
• 24:28
  SPEAKER_00: But when you don't have that resource today, that's where you see the larger equipment coming in.
• 24:34
  SPEAKER_00: And in order to pay for that larger equipment, you got to cover more acres.
• 24:38
  SPEAKER_00: So it that's that's just kind of how how that how that's working in today's market, and that's why you're seeing that consolidation.
• 24:46
  SPEAKER_02: Yeah, it's a snowball effect, isn't it?
• 24:48
  SPEAKER_00: It really is.
• 24:49
  SPEAKER_02: Yeah, yeah.
• 24:50
  SPEAKER_02: Well, I guess I would just climb up on my soapbox for a moment and and uh I wonder if you might agree.
• 24:57
  SPEAKER_02: Stop me if I'm if I'm all wet, Paul.
• 25:00
  SPEAKER_02: But even if you're if the next generation doesn't want to farm, you still have to have some sort of succession plan, some plan in place ahead of time, before tragedy strikes, before you're ready to move on and and leave the farm, because you don't want to leave leave it up to chance.
• 25:19
  SPEAKER_02: You don't want to, I mean, that could destroy a family with the emotions that are involved here.
• 25:24
  SPEAKER_02: If there's no plan in place, man, you got problems.
• 25:27
  SPEAKER_02: Whether you whether you know, you know, okay, I'm gonna hand it over to my son and start to bring him in gradually, or if you know for a fact that your next generation isn't going to be farming and has no interest in doing so, you got to have a plan either way.
• 25:40
  SPEAKER_00: Yeah, absolutely.
• 25:42
  SPEAKER_00: And and part of that plan, probably step, well, maybe step one is how do we minimize risk?
• 25:47
  SPEAKER_00: How do we minimize our tax obligation?
• 25:50
  SPEAKER_00: How do we minimize family disagreements and and make if there's going to be a transition, how do we make that that smooth?
• 25:59
  SPEAKER_00: And we've had we've had clients that said, you know, my my son had no interest, so I'm gonna leave this to my grandson because he does show interest.
• 26:08
  SPEAKER_00: And so it might be things like that.
• 26:09
  SPEAKER_00: It might be, as I indicated earlier, it might relate back to structure.
• 26:14
  SPEAKER_00: You know, you visit with your estate planning attorney, and he says, Well, let's move this to a trust, or maybe there's multiple families involved.
• 26:22
  SPEAKER_00: Maybe we should put it into an LLC and and make sure it's it's operationally, it'll work operationally that way.
• 26:29
  SPEAKER_00: So that that again is probably like I said, step one of having that plan is is how do we minimize risk?
• 26:36
  SPEAKER_00: I had share a story with you.
• 26:38
  SPEAKER_00: I had a a longtime connection family friend that was he was 80, I think he was 81 or 82 when he talked to me about it's time for me to sell my farm.
• 26:48
  SPEAKER_00: So we talked about values, and then I said, Well, you're gonna have a tax obligation.
• 26:54
  SPEAKER_00: What what was your basis in this?
• 26:56
  SPEAKER_00: And very low basis because he'd owned it his whole life.
• 26:59
  SPEAKER_00: And when he saw what the tax bill was gonna be, he says, you know what, I'm just gonna keep it.
• 27:04
  SPEAKER_00: There's no way I'm gonna pay that kind of tax.
• 27:06
  SPEAKER_00: And so now he's back to square one of how do I do this?
• 27:09
  SPEAKER_00: And so putting him in touch with a with a qualified estate planner, he was it took him a while.
• 27:15
  SPEAKER_00: It took him a while to get past that that thought of having to pay any tax, but they were able to put it into a structure and he was able to finally retire and make any and he felt comfortable, it's gonna pass on the way he wanted it to.
• 27:29
  SPEAKER_02: Well, that's that's vitally important.
• 27:31
  SPEAKER_02: Landowners, I just I want to preach at you.
• 27:33
  SPEAKER_02: Whether you're an operator or just an owner and someone else is operating your land, you've got to have a plan in place here.
• 27:39
  SPEAKER_02: Chaos is not your friend here.
• 27:41
  SPEAKER_02: Chaos is extremely destructive in these moments.
• 27:44
  SPEAKER_02: And you know, you could be leaving value on the table for for your kids, whether they want to farm the place or or not.
• 27:50
  SPEAKER_02: All right.
• 27:51
  SPEAKER_02: Moving on.
• 27:52
  SPEAKER_02: Somebody mentioned something kind of weird the other day.
• 27:54
  SPEAKER_02: Thank you, by the way, for your candor on that.
• 27:57
  SPEAKER_02: These can be difficult things for for some people to hear, and I understand that because of the level of emotion that's in involved in this whole thing.
• 28:04
  SPEAKER_02: So I I appreciate you, Paul, for going down that road with me.
• 28:09
  SPEAKER_02: Let's let's go to Crazy Town just a little bit.
• 28:11
  SPEAKER_02: I heard something that I don't I don't know how I feel about it, but how much impact are data centers having on the land market?
• 28:24
  SPEAKER_02: Are are is land being purchased for development, excuse me, for development into a data center to the degree that it that it uh can potentially shake markets, at least maybe locally.
• 28:39
  SPEAKER_02: Is it a is enough land being bought for data centers that you're noticing a blip?
• 28:44
  SPEAKER_00: We're we're not noticing a blip yet, but we and and part of that is because you're getting in some of those local communities, you're getting a lot of pushback all of a sudden.
• 28:54
  SPEAKER_00: Yeah because when you start talking about water and noise and heat and things like that, that that really made locals stand up and take notice.
• 29:04
  SPEAKER_00: And they're like, hey, wait a second.
• 29:05
  SPEAKER_00: I I really love Googling things and and love what AI can do, but I don't think I want that out here.
• 29:14
  SPEAKER_00: And I think that that's one reason why they are targeting some of those more rural areas because they probably are not going to be successful outside of a metro area.
• 29:24
  SPEAKER_00: But the the potential for increasing the land market could be substantial in in those in those very local markets, because as you as you've seen in some cases, they are willing to pay way over market to get these things built.
• 29:40
  SPEAKER_00: They have a lot of economic incentive to get them up and rolling.
• 29:44
  SPEAKER_00: They can typically get them built fairly quick when you compare to other construction projects.
• 29:49
  SPEAKER_00: So definitely we have, like I said, we haven't really seen a blip because a lot of that's been slowed, slowed down now.
• 29:56
  SPEAKER_00: But but overall, I think we're gonna see in local markets there could be substantial increases.
• 30:02
  SPEAKER_02: Here's another one that comes completely out of left field, Paul.
• 30:05
  SPEAKER_02: I appreciate you being willing to hang with me here.
• 30:07
  SPEAKER_02: I saw a thing on YouTube, and you you know, you got to be careful because usually you can believe everything you see on the internet, but sometimes, just sometimes it gets a little nutty.
• 30:17
  SPEAKER_02: Are are some of the early wind turbines beginning to age out and they're going along and taking them back?
• 30:23
  SPEAKER_02: I mean, I know that that was a big thing for landowners and a big decision to make.
• 30:27
  SPEAKER_02: Do I want to bring a wind turbine onto my property here?
• 30:29
  SPEAKER_02: Are and my question has always been well, what happens when they get old, when they don't work anymore?
• 30:34
  SPEAKER_02: Maybe when they fall out of fashion?
• 30:37
  SPEAKER_02: What happens with them?
• 30:38
  SPEAKER_02: And I I was watching a video the other day of guys who are going along and taking out these huge wind turbines.
• 30:45
  SPEAKER_02: There's something kind of cathartic about seeing those suckers come down.
• 30:49
  SPEAKER_02: It's like, you know, major timber kind of a moment there.
• 30:53
  SPEAKER_02: Have you noticed are some of the wind turbines beginning to age out?
• 30:57
  SPEAKER_02: Is that a thing?
• 30:58
  SPEAKER_00: Yeah, definitely a thing.
• 31:00
  SPEAKER_00: It's just it's just beginning.
• 31:02
  SPEAKER_00: Some of those the earliest uh wind farms, yeah, some have been decommissioned.
• 31:08
  SPEAKER_00: Where I grew up in Kimball, Nebraska, far western Nebraska.
• 31:12
  SPEAKER_00: We were one of the first regions to have a wind farm, and it was only six towers.
• 31:18
  SPEAKER_00: Those have since been decommissioned, and a broader farm has been installed across more acres.
• 31:25
  SPEAKER_00: Those six were all in one central location, but they reached end of life.
• 31:28
  SPEAKER_00: The generators were obsolete.
• 31:30
  SPEAKER_00: You know, the blades are gonna have to be replaced, and they were being replaced with much more efficient models.
• 31:36
  SPEAKER_00: The the positive thing about that transition is it it went from a functional wind farm to being dismantled and the land returned to what it was for for as much as it could be.
• 31:49
  SPEAKER_00: And what I have seen, we had a farm that we we managed or we we brought into management, had an existing wind farm with six towers on it, and they had not been operational for many years.
• 32:02
  SPEAKER_00: One they they they were re they were becoming obsolete.
• 32:06
  SPEAKER_00: One tower, the generator had a fire and it kind of shut everything down, and they just left it set.
• 32:11
  SPEAKER_00: The important part of that one was there was no exit clause.
• 32:14
  SPEAKER_00: So there were no parameters about okay, when we reach end of life, what happens to these towers?
• 32:20
  SPEAKER_01: Yeah.
• 32:20
  SPEAKER_00: So the the buyer the landowner at that point, he was pretty aggressive and he went after the the company that had acquired that farm, and they said, I'll give you two choices.
• 32:32
  SPEAKER_00: I realize there's no exit clause.
• 32:34
  SPEAKER_00: However, either you make it operational or you have to come in and tear it down.
• 32:38
  SPEAKER_00: And he got some teeth from the the state to come in and force that, and they ended up coming back in and retrofitting those towers and making it operational again.
• 32:47
  SPEAKER_02: Is that right?
• 32:48
  SPEAKER_02: And then I hope that that if he renewed his contract, maybe at that point, he got an exit clause written in there for next time down the road for the next generation to worry about.
• 32:58
  SPEAKER_02: That's right.
• 32:59
  SPEAKER_02: That's right.
• 33:01
  SPEAKER_02: Well, Paul, I'll I won't keep you much longer here, but you know, I love to ask this question of recreational land.
• 33:08
  SPEAKER_02: I feel like it's an indicator of sentiments, maybe, and just how much I don't know if you would call it disposable income or not.
• 33:16
  SPEAKER_02: A an avid hunter or fisher person or you know, outdoorsman would certainly not call it call it disposable income for sure, but how much recreational land is is selling in this economy?
• 33:29
  SPEAKER_00: Yeah, it's good recreational land is we're seeing it sell quite well.
• 33:34
  SPEAKER_00: Sometimes we'll have a a property that is part recreational and and part uh agricultural, and those sometimes get pushed to a premium if they're in the in the right place, you know, if if there's any kind of potential for um recreational hunting for sure.
• 33:51
  SPEAKER_00: We're also seeing a lot of individuals that want to have just an open piece of ground to recreate on.
• 33:59
  SPEAKER_00: And I would say they're selling better than what they did over the last 10 years.
• 34:04
  SPEAKER_00: We went through a period of time when that same question would be asked, and you'd say the recreational land is not bringing any more than grazing land, it's not bringing any more than farmland.
• 34:16
  SPEAKER_00: There's sometimes zero advantage, sometimes it's a detriment to the farm to have these grass or treed acres.
• 34:23
  SPEAKER_00: And we're seeing a little bit of shift there where there's there's a certain amount of demand, whether it's more disposable income or just post-COVID, we want an open place to go.
• 34:35
  SPEAKER_00: We want to be able to go get out in the open.
• 34:37
  SPEAKER_01: Yeah.
• 34:38
  SPEAKER_02: Interesting.
• 34:38
  SPEAKER_02: Interesting.
• 34:39
  SPEAKER_02: All right.
• 34:40
  SPEAKER_02: Are you in the Farmers National is based in Omaha, as I recall?
• 34:44
  SPEAKER_02: Are you in Omaha now?
• 34:45
  SPEAKER_02: Where are you where are you looking?
• 34:46
  SPEAKER_02: Yeah.
• 34:47
  SPEAKER_00: Yeah, I I can open my blinds and and show you Omaha right out my window.
• 34:51
  SPEAKER_02: Well, I was gonna mention the blinds there.
• 34:53
  SPEAKER_02: I'm just sort of curious.
• 34:55
  SPEAKER_02: Here in KC, we're at 94 degrees with an extreme heat warning.
• 34:59
  SPEAKER_02: It is rough out there.
• 35:00
  SPEAKER_02: I need to mow my lawn, and I'm not gonna do it.
• 35:03
  SPEAKER_02: I'm just not gonna do it until we get a little cooler weather.
• 35:06
  SPEAKER_02: What's uh what's the temperature like outside in Omaha today?
• 35:09
  SPEAKER_02: What have conditions have been like?
• 35:10
  SPEAKER_00: I walked in from outside just before you and I started to talk, and it is it was it was really tough yesterday.
• 35:19
  SPEAKER_00: I don't know what the humidity was, but I'm sure it was higher than the temperature.
• 35:23
  SPEAKER_00: And it was it was just really muggy, and then it rained last night.
• 35:28
  SPEAKER_00: So today it's not quite as uh hot, but it is muggy muggy.
• 35:34
  SPEAKER_00: And I'm pretty sure the corn's loving it.
• 35:36
  SPEAKER_00: That's that's good.
• 35:37
  SPEAKER_00: So yeah, very good.
• 35:38
  SPEAKER_02: A lot of crop tours are gonna get started here in the next couple of weeks.
• 35:42
  SPEAKER_02: How does the uh how does the corn and the beans look out there?
• 35:44
  SPEAKER_02: How are they how are the crops faring in your area?
• 35:47
  SPEAKER_00: Yeah, uh, and I've had some of the some of my different farm managers in different parts of the country asking me what I'm seeing because I've made I've made a lot of trips through to landowner workshops across the country.
• 35:59
  SPEAKER_00: And there are very few spots that I see that are stressed.
• 36:03
  SPEAKER_00: There's there's a few here and there, but overall in the in the corn belt, until you get you get out west, there's definitely some stress out there.
• 36:11
  SPEAKER_00: But in this corn belt and what I call the I-29 corridor, I burn up I-29 a lot.
• 36:16
  SPEAKER_00: Yeah, things look tremendous along that corridor.
• 36:19
  SPEAKER_00: It was over into western Iowa, things looked great there, eastern Nebraska, eastern South Dakota, things looked great there.
• 36:25
  SPEAKER_00: I did make a trip early July up to Canada, and I got to see a little of everything from you know lush green crops through the drought regions and then getting up into Canada, into you know the the eastern or the western plains, I guess, before you get into around Calgary.
• 36:46
  SPEAKER_00: And they and they evidently are in a spot where they're getting a lot of moisture.
• 36:49
  SPEAKER_00: Things look the crops up there looked really good.
• 36:51
  SPEAKER_00: So yeah, overall, pretty good.
• 36:54
  SPEAKER_02: Excellent, excellent.
• 36:56
  SPEAKER_02: I had the opportunity to drive from KC up to Sioux Falls about two weeks ago.
• 37:02
  SPEAKER_02: And most of the way I got just south of Omaha on 29 there.
• 37:07
  SPEAKER_02: But other than that, it had rained from Sioux Falls all the way down that whole stretch.
• 37:12
  SPEAKER_02: And I agree with you, they do look pretty good.
• 37:15
  SPEAKER_02: It it seemed like we got it got a lot more even the further north up 29 that I went, headed towards South Dakota.
• 37:23
  SPEAKER_02: But uh, yeah, there's there's gonna be some rain out east, and in fact, let's turn to the National Weather Service.
• 37:29
  SPEAKER_02: A stationary front will be the focus for daily showers and thunderstorms, capable of widely scattered flash flooding and severe weather from the high plains to the Ohio Valley.
• 37:38
  SPEAKER_02: Monsoonal thunderstorms could cause local flash flooding across the southwest and the Great Basin.
• 37:43
  SPEAKER_02: Dangerous heat continues across the Central Plains and Southeast, and many areas we'll see their hottest temperatures of the year.
• 37:51
  SPEAKER_02: Paul, I'm gonna cut you loose, but first I've got some items of mild interest.
• 37:56
  SPEAKER_02: This is something that I really enjoy kind of throwing in at the end of my programs here.
• 38:00
  SPEAKER_02: Can I can I uh can I interest you mildly in some items of mild interest for just a moment?
• 38:06
  SPEAKER_02: Absolutely.
• 38:07
  SPEAKER_02: All right, well, in 1658, on this date, August 12, 1658, the first American police force formed in New Amsterdam.
• 38:19
  SPEAKER_02: I'm a supporter of the blue.
• 38:21
  SPEAKER_02: We appreciate you out there.
• 38:23
  SPEAKER_02: Uh 1658, I didn't realize it went that far back.
• 38:26
  SPEAKER_02: 1908, the Ford Motor Company built its first Model T car, which Henry Ford himself tested on a hunting trip to Wisconsin and northern Michigan.
• 38:38
  SPEAKER_02: And finally, for you country music fans out there in 1927, it's the birthday of Porter Wagner, American singer, songwriter, and guitarist, farmersnational.com, farmersnational.com.
• 38:53
  SPEAKER_02: And check out Paul's uh Paul's, I don't know if we we call it a blog.
• 38:57
  SPEAKER_02: It's under the news drop down there.
• 38:59
  SPEAKER_02: So go to farmersnational.com, hit the news drop down.
• 39:02
  SPEAKER_02: Paul, anything else that you want us to know before I cut you loose?
• 39:06
  SPEAKER_00: You know, the last comment I'll make, Davis, is is just around this the the come this this farmland transfer that we've been talking about is that it certainly presents some challenges, but it also presents some great opportunity for individuals.
• 39:22
  SPEAKER_00: So we we certainly want uh everyone to look at both sides of the equation and and most importantly, develop a plan.
• 39:29
  SPEAKER_02: Yeah.
• 39:30
  SPEAKER_02: Outstanding.
• 39:30
  SPEAKER_02: That's terrific advice.
• 39:32
  SPEAKER_02: I was hoping that we would get there.
• 39:34
  SPEAKER_02: And I'd uh this is what I was hoping that you that you viewers would would take with you from today's program.
• 39:41
  SPEAKER_02: Think about these things.
• 39:42
  SPEAKER_02: If you haven't got a plan, you've got to start developing something, you've got to get some ideas going, and you've got to bring in a professional to codify this and to make it real so so that it when the day comes that it sticks.
• 39:55
  SPEAKER_02: We can catch you up with the markets and all the things you need to know on that side today.
• 39:59
  SPEAKER_02: And every day at AgBull.com.
• 40:01
  SPEAKER_02: Take your marketing by the horns with AgBull Intel.
• 40:04
  SPEAKER_02: Visit Agbull.com or give us a call at 855-737 Farm.
• 40:09
  SPEAKER_02: And thanks to Trade the News for keeping my whole squad on top of what's moving the markets.
• 40:14
  SPEAKER_02: News you can trust.
• 40:15
  SPEAKER_02: Actual news, you can actually news, trade the news, trade the news.
• 40:19
  SPEAKER_02: Paul Shadeg, President, Farmers National Company.
• 40:22
  SPEAKER_02: Brother, it's great to see you.
• 40:24
  SPEAKER_02: Thank you so much for your candor and for spending so much time and for just just following me down some of these rabbit trails, these shiny things in my head.
• 40:31
  SPEAKER_02: I can't, I can't I can't shake them.
• 40:33
  SPEAKER_02: So thank you for coming along today.
• 40:35
  SPEAKER_02: I appreciate you.
• 40:36
  SPEAKER_02: You bet, Davis.
• 40:37
  SPEAKER_02: Always enjoy it.
• 40:38
  SPEAKER_02: Well, thank you for viewing everybody, Ag Squawk, in the afternoon.
• 40:41
  SPEAKER_02: Jed Sidwell back first thing in the morning to get you on the right foot for your day.
• 40:46
  SPEAKER_02: And then later I'll talk with Bill Bullard from Arcalf tomorrow afternoon.
• 40:51
  SPEAKER_02: Come on back for more Ag Squawk.