Latest / The Vance Crowe Podcast / VCP: Farm Management and Rural Appraisal in our chaotic age

Transcript

VCP: Farm Management and Rural Appraisal in our chaotic age · The Vance Crowe Podcast

• 1:34
  Unknown: And we'll be swinging.
• 1:37
  Swinging.
• 1:39
  Unknown: Yes.
• 1:53
  Unknown: To swing
• 1:57
  it. And now, Charlotte
• 1:59
  and she's the apple of my eye.
• 2:02
  And when I'm on a swing with her, it makes me almost high. And Charlotte is my lover and she has been sent to spring. I just can't believe it started on her front porch and a swinger just a swingin'.
• 2:19
  Just a swingin'.
• 8:55
  Unknown: Good afternoon.
• 9:02
  Good afternoon. Can you guys hear me alright? Yeah. Yeah. That'll wake him up. Right, Rick?
• 9:08
  Alright. Why don't we go ahead and take our seats. We're gonna get this afternoon session,
• 9:12
  on its way. Alright? So, I am and, my name is Grant Fitzgerald.
• 9:17
  I'm a senior vice president of farm and ranch management at Farmers National Company.
• 9:21
  And I'm really happy to be with you guys today. And, Farmers National is very excited to sponsor,
• 9:27
  the session you guys are about to,
• 9:29
  sit through and engage with and,
• 9:32
  see. So, a couple cool things that I just wanna kinda talk through is number one,
• 9:38
  we're gonna be watching a podcast with Vance Crow and Dennis Raymond. Okay? So we're gonna, witness a live podcast right here on stage,
• 9:47
  in this nice setting. And, you know, I feel a little funny,
• 9:52
  Basically, talking through Vance's resume and stuff. I know you guys know him. I did want to tell you a story of how I met Vance first. So I was a brand new farm manager at Farmers National Company and, went down to Saint Louis as a part of one of the Monsanto new farm manager emerge trips.
• 10:08
  And, you know, got invited to go to, Ruth's Chris Steak House, which was one of the best filets I, you know, I can still say I've had.
• 10:16
  You know, we're overlooking the arch and the river and and something beautiful. And then of course, Ron Dunker was like, well, since we're buying you guys a $100 steaks, I gotta set you through, you know, a speaker. And it's like, oh, okay.
• 10:27
  And I'll tell you what, it was amazing.
• 10:30
  Vance did a phenomenal job. At that time, he was director of millennial engagement,
• 10:35
  talking to a bunch of 20,
• 10:37
  getting into the business. And at that time, he didn't know a lot about farm management and appraisal or real estate,
• 10:42
  but you couldn't sense that, you know. I could tell he's a learner. He's been through a lot. He's world renowned speaker.
• 10:49
  He's traveled the globe. In fact, he's, you know, as a part of the Peace Corps and and served in Kenya,
• 10:55
  which is a piece that doesn't get, announced very often. So, he's a steward to, you know, communication
• 11:00
  to generations,
• 11:02
  And, he's really impressive. So again, I'm really excited to have him here and, be in our master of ceremonies. And and we get to little learn a little bit more about him, upcoming.
• 11:13
  Why did Farmers National sponsor this event? We have a really young developing marketing
• 11:18
  team and we see the power in,
• 11:21
  letting people, you know, work with our story and how they integrate with us through the mediums that they like, which is turning into social media, podcasts, obviously like this and even just Instagram. Right? Like, how they get their data? How do I get my news? It's it's through the same way. So, that's why we really wanted to, sponsor this that Farmers National did and, lastly, when I was asked to do it, I said absolutely.
• 11:44
  Super excited
• 11:46
  but who's gonna be the speaker?
• 11:48
  Well then I found out it was Dennis Raymond and I thought how can I back out of this? I already sent him the check. I don't know if I wanna be a part of this anymore with Dennis. I'm I'm I'm totally joking. You guys know how great Dennis is
• 12:00
  pumped that he's on here. Dennis and I, I consider my friend.
• 12:04
  We served on the council together during COVID. So he was the president, actually.
• 12:09
  And, probably one of the first virtual
• 12:12
  ceremonies of becoming the president. And, you know, him and his wife are just gracious through the entire process and and, really took our our organization through a challenging time. And he did it, again, with resiliency and grace. So hopefully, some of that sneaks through in the podcast today. And, thank you guys very much. And I'll turn it over to Vance and Dennis, if we can get a round of applause for them.
• 12:46
  Unknown: Well, I don't I don't know if any of you, wear a Whoop strap or an Oura ring. I don't know if, any of you this attracts your heart rate. Mine's been totally flat calm until we go to record a live podcast in front of all of you because, normally,
• 13:00
  I record a podcast just me and the guest.
• 13:03
  But here, we're gonna try and have a conversation
• 13:06
  that maps both to what you need or want to hear about in here in this room, but also goes out to an audience that maybe has no connection at all
• 13:16
  with modern agriculture
• 13:18
  or, farm management or appraisals.
• 13:21
  So this is quite an adventure, and it's a very
• 13:24
  thin needle to thread.
• 13:25
  And that's why I was really glad when I met Dennis
• 13:28
  because he has a broad range of experience
• 13:31
  and, really an eye for both the past and the future, much like we were talking about this morning with doctor Cole. So why don't I start off? Dennis, would you just give a brief overview of your background in farm management and rural appraising?
• 13:44
  Unknown: Yeah. I am Dennis Raymond. I'm with Stalk Up Ag Service, which is in Northwest Iowa in Storm Lake, kinda right in the heart of Northwest Iowa, and that company has been there since 1942,
• 13:55
  started by mister H. E. Buck Stalcup, and he was an integral part of this organization for many years.
• 14:02
  So I started as an appraiser in 1993,
• 14:06
  and,
• 14:07
  my first
• 14:09
  course that I took in Kansas City was a week long. In those days, no online or anything like that. We went there. We were there for seven days.
• 14:17
  And so you got to know a few people, and I knew I was in the right place, the right organization,
• 14:23
  the right
• 14:25
  the right thing to be doing.
• 14:27
  And,
• 14:28
  so,
• 14:30
  I did that, and then I started managing farms. And, they told me if you're in Northwest Iowa, you should manage farms. And so so that became part of my daily,
• 14:41
  routine was, juggling between appraisal and farm management. And then also, you know, real estate sales fits in with that, so you do that as well. So
• 14:49
  it's, giving me a broad view
• 14:51
  of real estate, farm real estate activity.
• 14:55
  Unknown: So you're in a regular conversation with a normie out in the world,
• 15:00
  and they you tell them you're a farm manager, and then they look at you with raised eyebrows.
• 15:04
  What's your response? How do you describe what it is that you do? It's a good question.
• 15:09
  Unknown: And I I think there's a lot of,
• 15:12
  a lot of perception, a lot of misperception about what a farm manager is and does. So I always I always say I'm a professional farm manager.
• 15:19
  And so at least I and maybe I should say I'm an accredited farm manager, but I think that the word professional probably sets the base,
• 15:28
  more quickly.
• 15:29
  And, so I describe, you know, we're we're business agents. We're property managers,
• 15:35
  for people who own farmland,
• 15:38
  no different than a than a business,
• 15:41
  property manager for some other, you know, commercial or what have you.
• 15:46
  And so we're their business agent in all transactions.
• 15:48
  And in in their planning, in their in their, reporting or accounting reports,
• 15:54
  you know, we are we do everything except drive the tractor as far as that goes, from the landowner's perspective.
• 16:02
  Unknown: Well, you mentioned landowners.
• 16:03
  The big national news,
• 16:06
  last night and this morning
• 16:07
  is that in the Iowa governor's race, there are some candidates both on the right and on the left that are saying, you know what we should do to control rents is we should charge higher taxes
• 16:19
  on people that own the land that don't live in Iowa.
• 16:24
  You know, on its face, a lot of people might say, yeah. That's great. We we don't wanna have absentee landlords. We don't wanna have people that are not connected with the land. But as a farm manager,
• 16:33
  what holes do you see in that?
• 16:35
  Unknown: Well, that might sound good until you think about it.
• 16:40
  You know,
• 16:41
  why would raising,
• 16:43
  property taxes on an absentee landowner hold down rent? They're probably gonna try to charge more rent to offset that.
• 16:50
  So that's a that's one issue, but, you know, how are you going to identify who should be taxed and who shouldn't be? And really, is that even legal? How do you how do you tax this person,
• 17:02
  at a different rate based on their address?
• 17:04
  That seems ridiculous to me.
• 17:07
  We need land, we need absentee landowners,
• 17:12
  to absorb the ownership basically
• 17:14
  of all of the I don't know, I think there's like 30,000,000
• 17:18
  crop acres in Iowa
• 17:20
  and it's like $1,112,000
• 17:22
  is the Iowa State average.
• 17:25
  That's a lot of money. Who's going to absorb all that ownership?
• 17:28
  Farmers can't do it by themselves, so we've gotta have that outside money.
• 17:33
  And a lot of that outside money grew up in Iowa.
• 17:36
  Unknown: Well, surely, it's it's possible to do. You can just say maybe something like if you're paying,
• 17:42
  property tax in Iowa or you're a Florida resident. But
• 17:45
  when you think about that, you think rents would go up, not down.
• 17:50
  Unknown: Oh, yes. I I know they would. I mean, at least that'd be the pressure. There would be absolutely no
• 17:56
  no reason for rents to soften,
• 17:59
  given that increase in costs.
• 18:02
  Unknown: Do you think people would sell if they thought they were having to pay higher property taxes?
• 18:07
  Unknown: It'd have to be a pretty,
• 18:09
  exorbitant increase.
• 18:10
  I also manage a few farms over in Nebraska,
• 18:13
  and, their their property taxes are at least double what Iowa's is.
• 18:18
  In some cases, closer to three times.
• 18:21
  And so,
• 18:23
  I don't know how they do it, but they do. But, I think in Iowa where you're used to paying a certain rate and then they're gonna single out certain people and say you're gonna pay x amount more.
• 18:34
  I just I I think there'd be such an uproar.
• 18:37
  I don't think it'd be politically, if they thought they were gaining on on that front, I I think they would soon
• 18:44
  quickly find out that they're not gaining.
• 18:48
  Unknown: You also worked on the appraisal side.
• 18:50
  The cost of everything is going up. Is it going up forever?
• 18:56
  Unknown: Well, it always has gone up.
• 18:58
  It,
• 19:00
  you know, I I started farming on my own in 1979.
• 19:04
  Seed fertilizer herbicide cost me a $100 an acre for a corn crop.
• 19:09
  And my gross income back on that,
• 19:11
  I also had to pay cash rent and the other machinery and etcetera, but my I figured I was gonna gross about $250
• 19:18
  an acre.
• 19:20
  So,
• 19:20
  you know, it just, but if you if you figure that over time, so we're talking back, you know, forty five years ago, and if you factor that over time, it it progresses at a a rate that's
• 19:31
  you'd say, yeah. That's probably about right.
• 19:34
  Unknown: The challenge, I think, with,
• 19:36
  rapidly changing prices
• 19:38
  is nobody really knows what something's worth. Am I paying a lot? Am I paying a little?
• 19:44
  It seems to me that this,
• 19:46
  amount of
• 19:47
  confusion
• 19:49
  is really intense right now. But you look back on your career, is this more intense than other parts of history? It's pretty intense. Yes. It is.
• 19:57
  Unknown: The way I look at it, and I I didn't figure this out my own, I I was taught this by somebody on the phone. He said, you ever look at at the ratio
• 20:05
  of the cost per
• 20:07
  compared to gross income?
• 20:09
  I said, jeez, I should be doing that. And so therefore, ever since I have done that, and I know that, you know, fertilizer is gonna run you. I'm talking n, p, and k
• 20:18
  is gonna cost you,
• 20:20
  nitrogen,
• 20:21
  phosphorus, and potash is gonna cost you between
• 20:24
  15 to 20% of expected gross revenue. Now
• 20:28
  I put in
• 20:29
  sulfur and zinc and maybe some other things, And if I can get that all done under 20%, I'm
• 20:36
  pretty happy.
• 20:37
  And maybe gross revenue
• 20:39
  improves or maybe it declines.
• 20:42
  So that but you that's where I try to shoot. And back a few years ago when we kinda went through that trough from 2015 to 2020,
• 20:50
  and fertilizer prices did soften, and they softened to the point where I could get a really good job done of NP and K for under 15%,
• 20:58
  down around 13 or 14%.
• 21:01
  So I put a little extra on
• 21:03
  even though the, you know, kind of a build proposition and for the fertility,
• 21:08
  just because it it kinda looked right like a good buy.
• 21:13
  And what is it now? What's the ratio right now? That's over 20%. It's in fact, it's well over 20%,
• 21:19
  which just
• 21:21
  really tightens things.
• 21:23
  Unknown: So
• 21:24
  if you're an appraiser in this market,
• 21:27
  there has to be a wild difference between what people are expecting and what the appraisal comes in at or at least a lot of ambiguity.
• 21:37
  How are appraisers,
• 21:39
  to manage this kind of fluctuation in what people think things are worth? Yeah. That's an interesting question, Vance, because,
• 21:46
  Unknown: you know, farmland is not purchased on today's income expectations.
• 21:51
  You know, the anticipation of future benefits
• 21:53
  is a big driver of value,
• 21:55
  and the anticipation is, first of all, if I'm gonna buy that farm, I can do a better job with it than the guy that was farming it. So that's part of what goes into the mentality.
• 22:06
  Another part is, you know,
• 22:08
  if it's next to you, by golly, I wanna own that if I can. So I'm gonna pay what it takes, what I'm capable of
• 22:15
  to to own that.
• 22:17
  And so as an appraiser, you have to sort that out.
• 22:20
  But, you know, it it's really the, the daily fluctuations
• 22:24
  of of, income and expenses
• 22:27
  doesn't affect our land values. Now maybe it does in other parts of the country. I'm speaking for Iowa,
• 22:32
  but I don't see it rise and fall. Now it's gonna take somebody mentioned some lag time on land values earlier.
• 22:38
  And that's what happens is there's a lag time. It takes
• 22:42
  interest rates go up. It takes a little lag time for that to really soak into the market. Now I will say back in September 2020,
• 22:51
  we had remember back, we had a real drop in interest rates. In fact,
• 22:56
  one of the main lenders got under 3% for the month of September 2020.
• 23:01
  That was an immediate $500
• 23:03
  bump in the land. We could just see it. It was there. And then, of course, then, prices improved, crop prices. We went to $7 corn and so forth.
• 23:13
  And then you saw this happen.
• 23:15
  So very rapid rise. But that interest rate, that was the one time where I really saw an immediate response to a cost.
• 23:22
  Well,
• 23:23
  Unknown: lately, we've seen a lot of transfer payments happen from the government. It seems to me that there are a lot of farmers that are saying, hey. We don't want this. Right? We don't this is not helping us. It's making everything
• 23:36
  more expensive.
• 23:38
  When you're a farm manager, how are you thinking about
• 23:41
  the transfer payments and the bottom line of,
• 23:44
  of a piece of property for for a for a landowner?
• 23:47
  Unknown: Yeah. And the bottom line of, the value of the farm is,
• 23:51
  you know, it's it's gonna help stabilize it, but you have to you have to stay on top of what your market's doing.
• 23:57
  And, you know, we have a lot of, a lot of public auction activity, especially this time of the year.
• 24:04
  And so we can, we can see what the trend is doing. We look at the overall trend.
• 24:08
  We also look for an appraisal. We look at
• 24:11
  comparable sales. So you're gonna pick out, I usually try to pick out five or six
• 24:16
  that would be really as comparable as I can get within a reasonably
• 24:21
  close timeframe.
• 24:23
  And, you know, then you go through a series of adjustments for soil quality, drainage issues,
• 24:29
  maybe field configuration,
• 24:31
  lay of the land,
• 24:33
  maybe the neighborhood.
• 24:35
  So all these things get factored in, But,
• 24:39
  yeah. It's it's gonna take time, and,
• 24:42
  you just you have to stay on top of it pretty much daily.
• 24:47
  Daily? Pretty much. Yeah.
• 24:50
  Unknown: So,
• 24:51
  before this kicked off, I had a chance to talk to Grant from Farmers National, and,
• 24:57
  he mentioned that one of the challenges that a new appraiser has to handle
• 25:03
  is when you go to a person
• 25:05
  and you are appraising the value of their property,
• 25:08
  they have some heartstring,
• 25:10
  to it. You know, they called it a heartstring asset.
• 25:13
  So there,
• 25:14
  I grew up in that house. I climbed in that tree. I I rode horses over there.
• 25:19
  Factors into the price.
• 25:21
  What guidance do you have for a new appraiser
• 25:24
  when they're engaging with somebody that's got that they view it as a heartstring asset than just an asset. Yeah. I I call that sentimental value,
• 25:31
  Unknown: and it's it's a real issue to people, to to some people.
• 25:35
  That doesn't mean it's got a dollar value, but it's got a a value.
• 25:40
  And and so the way I recognize that, you know, you're when you're doing an appraisal and especially when you're managing a farm, it's not a transactional
• 25:48
  activity. No. I mean, to me to some people it is.
• 25:52
  But to me and I think to most people in this room, it's a relationship
• 25:55
  issue.
• 25:56
  Even if it's just a one time appraisal,
• 25:58
  you're building a relationship with that person and you want them to trust you and you want them to if they trust you, they'll trust your report.
• 26:12
  House there and,
• 26:14
  or whatever it is, an old barn that, you know, maybe you ask a question that, you know,
• 26:19
  tell me about that barn or, you know, just some
• 26:22
  boy of that barn could tell a story.
• 26:25
  Then they'll tell you a story.
• 26:27
  And and maybe you just need to do a little bit better job on your write up, your description.
• 26:33
  Just treat that
• 26:35
  item with respect.
• 26:37
  And if you do that, even if you put next to no value or no value,
• 26:41
  you explain why you put no value on it.
• 26:44
  They'll accept that
• 26:46
  nine times out of 10. I think they'll accept that, But treat that item with respect because it's a big deal to your client.
• 26:53
  Unknown: You know, that's something I I've learned through doing legacy interviews is that
• 26:58
  there's a lot of people out there that,
• 27:01
  they've had all these experiences,
• 27:03
  but as soon as they got through whatever that crisis was or whatever that challenge was,
• 27:08
  another one came up. And so they never took the time to go back and reflect on it. But when people do get a chance to tell the stories about things, it's like they're setting it down and they can move on. It seems like that's that's exactly what you're talking about. Yeah. I think that's a good point. They'll,
• 27:24
  Unknown: you know, in a way, say, you know, a lot of ours,
• 27:27
  appraisal work is for a state settlement.
• 27:29
  So
• 27:30
  the parent passed away and and,
• 27:33
  whichever child is the executor is, you're dealing with them, maybe looking at the property or at least talking about the property. And and you need to be aware. You need to pick up. You need to pay attention to these things and give them a moment or two to to express, to, like you say, to unload that type of thing, and that'll go a long ways.
• 27:52
  Unknown: Doctor Cole this morning said a few things that were jarring to me, but one in particular he said was that, you know, most of the land that's going up for sale right now is people that were married
• 28:02
  for thirty years and getting a divorce.
• 28:05
  Unknown: Well, you gotta remember he's from Virginia.
• 28:10
  Unknown: Fair Point. Moving on.
• 28:12
  Unknown: We
• 28:14
  we don't see that in Iowa, or I I'm not seeing I'm not picking up on that. Most of the appraise or the, estates, the farms that sell are estates.
• 28:23
  There's, you know, there's always that transition going on.
• 28:27
  A lot of it in the last especially, I'd say in the last decade has been what I'd say a generational transition where the the siblings inherited that farm and did hang on to it for a while.
• 28:38
  Now they've gotten to the point in their life, maybe their
• 28:41
  seventies,
• 28:42
  maybe maybe the oldest one's in his eighties.
• 28:46
  Hey, they say it's time to sell this, divide the money, make it easy on our estate planning, make it easy on our heirs,
• 28:53
  and, you know, sell the farm and and move on. And so we see that a lot of I call that estate.
• 29:01
  I think that falls under estate planning in a way.
• 29:04
  So we see a lot of that. But as far as divorce appraisals,
• 29:07
  not much or divorce sales.
• 29:11
  Unknown: If you talk to,
• 29:12
  wealth managers,
• 29:14
  they will tell you that the biggest threat to their business is when the business gets passed down from managing the parents' money
• 29:20
  to managing the children's money. And they'll all tell you within a month of mom and dad passing on, those kids take that money
• 29:27
  and they move it to their financial planner. Is that the same issue in farm management?
• 29:33
  Unknown: Well, it's either gonna be,
• 29:35
  I guess, in our experience,
• 29:37
  and I can only speak for our experience,
• 29:41
  you know, it's either gonna be sold,
• 29:43
  fairly soon.
• 29:45
  It may be held for an indetermined, you know, at the time that they decide to hold it, it's an indetermined length of ownership
• 29:51
  that they're gonna sit with it.
• 29:56
  Or they may have I've got clients who
• 29:59
  say, we will never sell that farm. My kids are instructed to never sell that farm.
• 30:05
  My dad worked so hard to accumulate that land.
• 30:08
  We are here to honor his memory. And so you have that. And you need to know that as a farm manager or as an appraiser.
• 30:16
  As an appraiser, why? I just think it's important to know the history
• 30:20
  of of the ownership and who they are.
• 30:24
  Unknown: You know, if you talk to some of the older guys in the room, they'll talk you to you about how it used to be that the impression of a farm manager was he was a rent cop. He came around and picked up the rent. It was always his job to try and, you know, keep ratcheting that up.
• 30:41
  The guys that I was speaking to didn't think that that was the the mentality now.
• 30:46
  Do you agree with that? And if you do, what's changed?
• 30:49
  Unknown: Well, yeah. I think that there was a perception of that maybe at one time. I tell people that we spend, and I tell my tenants as we spend a lot of time,
• 30:59
  educating our clients
• 31:00
  or educating
• 31:02
  people who may or may not become a client, but they've got questions.
• 31:05
  So,
• 31:07
  we just education is a huge part of what we do.
• 31:10
  And and I a lot of times, you know, a client will hear, well, jeez. This farm I heard a farm rented for $500 an acre. I why can't I get that? Well, here's why.
• 31:20
  And, so you go through and explain that. And, you know, we're trying to be fair. The farmer has to have a reasonable chance of making some money. I mean, otherwise, why would he wanna do that?
• 31:30
  So, you know, we try to be we try to represent
• 31:33
  our owner. We also try to represent fairness.
• 31:39
  Unknown: When you think about the people out in the world that might want to become farm managers,
• 31:45
  maybe they don't didn't grow up on a farm, they don't have any experience there.
• 31:49
  What is the skill set that would make somebody primed to become a farm manager, but they maybe wouldn't even think of it?
• 31:56
  Unknown: Well, they've got to be interested in people.
• 31:59
  I tell I tell when I have the chance to talk to students, and and it's a great opportunity when you can, I tell them psychology
• 32:06
  is just as important in this job as agronomy?
• 32:10
  You gotta be a good agronomist to some extent,
• 32:13
  but you gotta understand psychology and you gotta understand the different people. You gotta figure out what motivates them, what their goal is. Our job is to meet their goals,
• 32:21
  assuming it's legal and ethical.
• 32:25
  So yeah, they,
• 32:26
  if, if they're interested in people and if they find economics interesting, accounting, numbers, if they like numbers,
• 32:33
  I think they have a good chance of becoming a a good farm manager.
• 32:39
  Unknown: I, I have some chance to be around banking, the ag banking world. And, a few months ago, I was talking with a group of people, with a bank and said, you know,
• 32:49
  if we have another downturn
• 32:51
  like we did in the eighties,
• 32:53
  we don't actually have any loan officers. We maybe have one or two people in the workout crew that ever even saw
• 33:00
  what what this would be like.
• 33:04
  When you think about the change, the transition, people not being able to be financially
• 33:09
  solvent,
• 33:10
  do you have fears that we have a people with enough experience when the times get really rough to to be able to weather that? Yeah. I that's that's a wonderful,
• 33:20
  Unknown: question to ponder.
• 33:21
  And I know there's a lot of,
• 33:23
  a lot of people in the loan industry worried about that. There's a lot of people in the legal profession in in the rural areas worried about that.
• 33:31
  If you go to our town, Storm Lake is 10 or 12,000 people.
• 33:35
  The attorneys are all pretty gray haired.
• 33:38
  And,
• 33:39
  you know, the question is, well, what does it take to bring a young guy in? Well, if they didn't grow up here or close by,
• 33:46
  they are not interested in moving here. And if they do, they want Des Moines money,
• 33:51
  and they want Des Moines lifestyle.
• 33:53
  So they may be in Des Moines on the weekend.
• 33:56
  Well, it so it's tough. It it's tough.
• 34:01
  Unknown: Yeah. As far no. I think I got off track. Well, we were just talking about, like, things could get rough. Yeah. There's a new crop of people in banking
• 34:09
  that that don't have the experience of what do you do
• 34:12
  Unknown: when things get real bad. Yeah. And I I, I always remind people,
• 34:18
  that maybe haven't been through those tough times, really tough times,
• 34:22
  that, tight margins
• 34:24
  and tough times are not exactly the same thing.
• 34:28
  So
• 34:29
  tough times is when the banks are going down.
• 34:32
  And so in the eighties, you know, we had a lot of small town banks, one one location, small town banks
• 34:39
  in about '84, '85.
• 34:41
  It was kind of like bing, bing, bing, bing around us over about a six or eight month period.
• 34:47
  Well, when a town loses their bank,
• 34:50
  man, think of the shock waves.
• 34:53
  And
• 34:54
  even if it was 50 miles away, it's a shock wave.
• 34:57
  So those types of things are what we experienced in the eighties.
• 35:00
  And that was, the, what I can't get across to people,
• 35:05
  to, to young people or maybe people that haven't experienced it. I can't get, I can't really I don't feel like I get across the emotional impact
• 35:13
  because a lot of these small towns were just decimated.
• 35:17
  And some have recovered, some haven't.
• 35:19
  So that's
• 35:20
  that's what tough times are.
• 35:24
  Unknown: This organization,
• 35:25
  ASF MRA,
• 35:27
  talks more about generational
• 35:29
  transition than probably any other organization
• 35:33
  I've ever heard.
• 35:34
  And
• 35:35
  when you think about the when you were first starting in ASF MRA,
• 35:39
  what was the big transition that you were making back then that was generational?
• 35:45
  Unknown: Well, it was, you know, the similar thing with the older generation
• 35:48
  dying and and, the land coming to the younger generation. But I think, you know, and I started in '93. I started managing farms in '95,
• 35:58
  and there was a lot more crop share,
• 36:00
  a lot more, you know, the old fifty fifty type of crop share even, or maybe some other blends of crop share,
• 36:07
  which still exist.
• 36:09
  But,
• 36:11
  you saw that transition to usually either a custom farming operation where the owner owns the crop and pays for the work,
• 36:19
  or it's just a straight cash rent.
• 36:22
  And so we've moved away from I think we've gone from,
• 36:27
  the assumption that we're gonna participate in a crop to the assumption that either we're all in or we're all out.
• 36:34
  Unknown: What's the transition been like for appraisers?
• 36:39
  Unknown: Yeah. That's a good one. I you know, more technology for sure. That's been huge. When I started in this business, we had one
• 36:46
  one computer in the office.
• 36:49
  Then they decided they needed two computers. So I, as the appraiser, got the the old computer. So I had a computer all to myself.
• 36:57
  So, yeah, that that was in, you know, the appraisal software, I I wrote it all myself on on Excel.
• 37:04
  And, so those types of things and, you know, you learn how to transition that stuff forward as technology presents itself.
• 37:11
  Now am I the most efficient appraiser?
• 37:13
  Maybe not.
• 37:14
  But,
• 37:16
  my reports don't get questioned, so I'm happy about that.
• 37:20
  But,
• 37:22
  yeah. I guess, you know, it's just and, you know, the the other thing is,
• 37:26
  on the appraisal side,
• 37:28
  it used to be that we would go to the courthouse, we'd look up all the sales, we'd dig out all the in Iowa, it's declarations of value that show the sale price.
• 37:36
  We'd write it all down on a piece of paper and take that back to the office and and hopefully get that recorded into a a good sales database.
• 37:45
  You know, nowadays, it's all online.
• 37:48
  We've got guys that,
• 37:50
  or companies that record every sale in the state of Iowa or in other states, and, put out a nice report at the end of the month.
• 37:58
  So there's that as well. But people and and we've got online auctions, so people can sit there, watch that farm sell, watch those bids roll in. So it's real time.
• 38:09
  And people are,
• 38:12
  so it's easy to become an expert.
• 38:15
  So,
• 38:17
  you know, so the, the value of an ARA,
• 38:21
  you have to sell it because it's, it's a hard thing to accomplish.
• 38:24
  And it's a real achievement to become an ARA or an AFM,
• 38:28
  or, you know, we've got two other designations as well.
• 38:32
  And,
• 38:33
  you know, but it's
• 38:35
  the appreciation
• 38:36
  of hard work and accomplishment and dedication like that. You really have to sell it, I think, more than you used to.
• 38:44
  Unknown: When I hear
• 38:45
  what an appraiser has to go through to become an appraiser,
• 38:49
  it's shocking. It's it's a lot. It is a lot.
• 38:53
  If you're talking to a person at the beginning of that journey,
• 38:56
  what are you telling them about why it's worth it to make it all the way through that?
• 39:01
  Unknown: Yeah. I I would start out with a question of of why do you wanna do this?
• 39:05
  You know, what what is your interest here?
• 39:07
  And, so if they give me an,
• 39:11
  inappropriate answer that shows that they do truly have the desire to do this and get into this profession,
• 39:16
  you know, then you start walking through and here's here's what you're this is truly
• 39:21
  a great economic study that you're going to be doing every day,
• 39:25
  specific properties, but it's also going to build into a whole understanding
• 39:28
  of your market area that you're working in. And,
• 39:32
  you know, it's just a you have a real,
• 39:35
  knowledge database. And if that's valuable to you,
• 39:39
  it's it's it's a great thing. It's a great field to get into.
• 39:43
  Unknown: You mentioned that, when you first started, there was one computer and then two.
• 39:48
  Now you fast forward to what we are today. Right? You have a supercomputer in your pocket right now. Yep. You can send a message anywhere in the world. Couldn't do that with those early computers.
• 39:58
  When you imagine the distance that you went from the beginning to now,
• 40:03
  what do you think the future will look like? Will you go that same distance or will it go further even?
• 40:09
  Unknown: Yeah. And that gets into the whole question of AI. How far is AI gonna take this? How much is that gonna take over?
• 40:15
  Been some interesting comments on AI this morning, as far as,
• 40:19
  is there gonna be disillusionment?
• 40:22
  Is it going to,
• 40:24
  is it gonna replace a lot of white collar jobs? I guess I consider appraisal to be pretty much of a white collar job.
• 40:32
  How many appraisers will get displaced? Some will.
• 40:35
  Can you go appraise a
• 40:38
  subdivision,
• 40:39
  with AI? Yeah. You probably do a fairly decent job. I don't know. I don't know enough about that, but can you appraise a,
• 40:47
  500,000
• 40:48
  bushel grain storage setup with AI?
• 40:52
  You need a human involved.
• 40:54
  Maybe AI is gonna help you, but you need a human involved in that.
• 40:59
  So,
• 40:59
  yeah, I don't know. There's a
• 41:02
  as far as, as far as comparing the progress, I it'll probably go faster. I just can't quite envision, you know, twenty years down the road with AI.
• 41:11
  Unknown: AI is is one of those things that right now,
• 41:14
  I think it is vastly overhyped. I think Amazon, for example, I think when they were like, oh, we're you were professionalizing with AI because it's a lot better to go to the market and say that than it is, hey. We're not meeting expectations and we gotta shed overhead.
• 41:29
  You guys see that too. Right? It's the easy thing. You know? Now all of a sudden, it's not your fault. Right? It's the AI, and we're we're streamlining.
• 41:37
  But I to your point,
• 41:38
  I do think it's going to have a major role. First of all, just if you can put the raw input that an appraiser is seeing,
• 41:46
  Unknown: you're no longer sitting there typing up reports. That AI will write it largely for you. Yeah. And that that's right. And so, I guess, you know, the way I use AI and I'm I am almost illiterate when it comes to AI knowledge,
• 41:58
  but, I use it kind of as a super Google.
• 42:02
  Mhmm. And so that's my extent of AI. I have not put any data into AI and said, crunch this for me, because then I'm giving it to the world.
• 42:12
  Why do I wanna do that? It's my data. Why do I wanna give it to the world? I mean, that's that's my viewpoint of that. Well, I think that's probably the best case that
• 42:21
  Unknown: homes
• 42:22
  and businesses
• 42:23
  are going to be bringing servers in
• 42:26
  where you ask the AI a query, but it does not get your data and you have a different way of structuring it. I heard Elon Musk talking the other day about how AI will actually,
• 42:37
  overtake everything. It will you won't have email. You won't have,
• 42:41
  text messages in the same way. What you will do is you will interface with your AI and it will tell you, hey. Dennis wanted to get a message to you. But it won't be relevant or even material that you sent that in a text message or an email.
• 42:54
  As you think about these wild futures,
• 42:57
  does it scare you?
• 42:59
  Unknown: Makes me glad I'm 67 years old.
• 43:04
  Well, but I hope to be engaged for a long time.
• 43:08
  You know, yeah, it is scary. Like I say, you gotta stay on top of it daily, whatever it is. And so we've got some great sessions here today, and I
• 43:18
  at this conference, and I'm glad that we do.
• 43:21
  That's the value of being a part of an organization like this. But,
• 43:25
  certainly
• 43:27
  some of us will be slower than others to move along into this, but we have to reckon that we have to always remember that this is a relationship
• 43:34
  business.
• 43:35
  And I fear something like AI taking it more transactional.
• 43:41
  Unknown: Tell me about a time when the relationships
• 43:44
  that you had mattered in your work.
• 43:46
  Unknown: Well, they're pretty much every day, but,
• 43:49
  I'll tell you on the appraisal side,
• 43:51
  I don't know how many times it's happened,
• 43:54
  that, you know, you do that appraisal. And as as ARAs,
• 43:59
  we're pretty proud of the work we put out
• 44:01
  and we're pretty proud of the thoroughness.
• 44:03
  And
• 44:04
  so when that report goes out and they read it and they, okay, this that's,
• 44:09
  they accept the value, hopefully.
• 44:12
  But then there's, there is a perception
• 44:15
  that, well, that guy sells farms too. Maybe he's just doing that appraisal to get a listing. And I say, well, that doesn't work.
• 44:22
  You know, if you appraise it too high to get a listing, how are you going to sell it for that? You're above the market. So and ethically, I mean,
• 44:29
  I hope nobody in this organization would do that and I don't think they would. But, there, you know, there's a lot of appraisers who are not part of professional organizations.
• 44:39
  But
• 44:40
  down the road,
• 44:42
  that person might come back to you and say, we really liked the job you did with that appraisal, and now we want to sell the farm. Would you sell the farm for us?
• 44:50
  Yeah, I would. And that is because of that relationship.
• 44:53
  You took the time
• 44:55
  and it, maybe it was just a few minutes
• 44:58
  to develop a little bit of a relationship.
• 45:00
  You back that up with a good solid report
• 45:03
  and they remembered you and they came back to you
• 45:07
  years down the road to sell that farm for them.
• 45:10
  So that's that's a great example for, you know, appraisers and and not all appraisers are are in the business of selling farms as well. But, you know, for those of us who do, that that's one example.
• 45:23
  Unknown: So we were talking before about,
• 45:25
  generational change,
• 45:27
  you know, in farmland,
• 45:28
  the past for ASF MRA.
• 45:30
  What do you think ASF MRA has to do to adapt
• 45:34
  to be ready for the next generation of young people that wanna be in this field?
• 45:40
  Unknown: You know, it's
• 45:42
  I think that
• 45:43
  what I've seen in the last five to ten years is the
• 45:47
  immediacy
• 45:48
  of
• 45:50
  wanting information
• 45:52
  and communications.
• 45:53
  And we've got the ability to put communication out so quickly.
• 45:58
  And I mean, they want it now. They don't want to wait for maybe some people are happy to wait for a quarterly report. Some people want a monthly report. Some people want to look at it no today.
• 46:09
  I think we can meet that need. I don't know how the American society
• 46:13
  does that
• 46:14
  specifically.
• 46:15
  Certainly individual companies can respond to that.
• 46:18
  But, I think, I think being aware of the immediacy of communication
• 46:23
  is, is important. And David Cole made a good,
• 46:27
  comment on that about how, you know, you need to make sure that you've got those interpersonal communications
• 46:34
  at the forefront of what you're doing.
• 46:38
  Unknown: One of my favorite things to ask certain guests
• 46:41
  is a question that's put you on the spot,
• 46:44
  and I call it the Peter Thiel paradox.
• 46:47
  This is where I ask people, what is one thing that you believe
• 46:52
  that almost no one you know agrees with you on? And the reason this is an interesting question is because
• 46:58
  you have to first say something that nobody here in this room is going to agree with. And if you succeed, now you have a new problem because now you've got to convince them of it. Yeah. Do you have a Peter Thiel paradox?
• 47:10
  Unknown: I don't know if it'd be a 100% Peter Thiel paradox, but one thing that really,
• 47:15
  I I try to I try to really harp on, I guess, is in Iowa, we've got a rating called the corn suitability rating.
• 47:24
  Every soil in the state's got a
• 47:26
  CSR for short CSR rating. It's a weighted average for each field or each farm.
• 47:32
  And so it, and it's a scale of up to a 100.
• 47:35
  So let's say you've got a a farm with a CSR of 90.
• 47:39
  Good farm.
• 47:41
  Well, but how good is it? I and and and of course, people take the sale price, divide it by the CSR. Well, it's worth so much a CSR point.
• 47:50
  Well, it takes a lot more than that to know what the value of a farm is. And that's where I differ from a whole lot of people
• 47:56
  because people wanna lean on that.
• 47:58
  Yeah. What's the going rate per CSR?
• 48:02
  It varies so much that it's almost impossible
• 48:05
  to truly answer.
• 48:07
  Yeah. I could say, well, let's say 175
• 48:10
  and that that's going to fit for some farms, of course. But when I run all my
• 48:16
  sales
• 48:17
  every year, it shows this
• 48:18
  just looking at sales that are highly tellable, at least 85%
• 48:22
  tellable,
• 48:23
  at least 40 acres in size
• 48:25
  and no considerable building
• 48:27
  value added to it, just straight cropland value.
• 48:32
  The dollars per CSR ratio
• 48:34
  is a 100% range from high to low,
• 48:38
  and that's just in Northwest Iowa.
• 48:40
  So,
• 48:42
  how do you explain that? Well, the market's got too much variability
• 48:45
  to just rely on one
• 48:48
  one number
• 48:49
  that was developed by not by appraisers, not by any valuation specialist. It was developed by soil scientists.
• 48:56
  You know, not for the purpose of valuation, but,
• 48:59
  just a comparative.
• 49:00
  And
• 49:02
  not all CSR
• 49:04
  values
• 49:06
  the market will agree with. There are some soils that are
• 49:10
  better than rated,
• 49:11
  less,
• 49:12
  really less productive than rated.
• 49:14
  And the market pretty much knows that.
• 49:17
  And that's where you get some of that variation. Cause the, if that farm is overrated,
• 49:22
  the market will probably not bid up to what you think,
• 49:25
  you know, on a dollars per CSR, it'll be at the lower end because the farmers know the local neighborhood knows how that farm is. Well, I don't have any way to know if that was a controversial statement or not. Was that Iowans, is that controversial? You You think it is, Terry?
• 49:45
  Unknown: If we
• 49:46
  don't
• 49:47
  Unknown: We don't know how to handle CSR too.
• 49:51
  Yeah. It is. From a from just a surface standpoint, it would be controversial.
• 49:56
  From a true appraiser,
• 49:57
  they would know that.
• 49:59
  Yeah.
• 50:01
  Unknown: So this last year
• 50:02
  was pretty rough.
• 50:04
  It's it's shaping up to be pretty rough. Harvest even come in big bumper crop, and prices weren't for a lot of grain farmers.
• 50:11
  What's your estimation? What do you think next year is gonna be like?
• 50:15
  Unknown: I see opportunity,
• 50:17
  possibly, in the grain markets. Corn and soybeans,
• 50:21
  is all I really can speak about. But,
• 50:23
  you know, I, I see possibility
• 50:25
  for higher prices.
• 50:28
  Some things have to happen of course, for that to develop,
• 50:31
  but people absolutely need to know their numbers and no one is profitable to sell. They need to be ROI
• 50:39
  focused. They need to know if putting that corn in the bin or beans in the bin, what's the cost of that storage? What's the cost of the drying charge? If you're going to take it to town, dry it, store it. What's the true cost of that and how much price increase do you need to recover that and and become profitable?
• 50:57
  And if you do become profitable, what was the ROI on that? I I like to annualize the ROI and then, you know, if a client says, oh, gosh, We spent a lot on storage and drying. Yeah. But it made you, you know, 22%
• 51:09
  ROI.
• 51:11
  Unknown: So you you see a guy like Grant up here.
• 51:15
  One day, he will be your age.
• 51:18
  What do you think farming will be like
• 51:20
  when that time comes?
• 51:24
  Unknown: I think it'll become,
• 51:26
  as far as farmers go, I think it'll become fractionalized
• 51:30
  more between the real big guys
• 51:33
  and more smaller guys. I, I think that,
• 51:37
  you'll see guys like, you know, I don't know if Grant has any farming on his own or but I think you'll see guys like him that have farming operations
• 51:46
  of whatever, you know, probably not of a large size,
• 51:49
  but,
• 51:50
  certainly of a viable size.
• 51:53
  And I I think that, and they'll be hiring that work done by large operators.
• 51:58
  You know, you can hire a guy to come in and and combine your crop.
• 52:04
  He can bring in more than a million dollars worth of equipment.
• 52:08
  The labor
• 52:09
  that knows how to operate that machinery,
• 52:12
  the diesel fuel,
• 52:15
  the, the, the upkeep,
• 52:17
  the insurance, all that's covered,
• 52:19
  and you're going to pay him according to the Iowa State customer rates, you're going to pay him 50 or $60 an acre
• 52:25
  for all that contribution.
• 52:28
  Now I think there's going to be more people taking advantage of that.
• 52:31
  There's going to be more people willing to do custom acres because they got to offset the cost of that machinery
• 52:37
  and they can maybe run through a 100 acres in a day with a combine and a couple of grain carts.
• 52:45
  So I I think you'll see more of that.
• 52:48
  I think that,
• 52:49
  the idea of a guy running,
• 52:52
  you know, machinery on his own, just his own moderate sized operation, I think that'll be reduced.
• 52:59
  Unknown: Well, maybe as a wrap up, you guys just installed
• 53:03
  a new president.
• 53:04
  Brian was here for twenty years. Yeah. Now you have Amanda.
• 53:10
  I've seen her speak a couple of times, very eloquent,
• 53:13
  very poised,
• 53:14
  but she's now in charge of an organization where
• 53:17
  you guys are kinda
• 53:20
  you do you know how to do things right, and so you wanna keep doing it, but you know you have to change.
• 53:25
  Any guidance for her as she's trying to step in and continue to modernize this organization?
• 53:31
  Unknown: Well, first of all, she's got big shoes to fill with Brian Stockman, and I'm sure she's aware of that. But,
• 53:37
  so we we wish Brian the very best in in his with his future endeavors. But Amanda
• 53:43
  I I had met Amanda. We we we've had a wonderful program for about thirty years called Leadership Institute, and it's now called Leadership Excellence.
• 53:51
  And, so it's it's a program that you end up in Washington DC for, several days.
• 53:56
  We used to go for about four days
• 53:59
  and I met Amanda on Capitol Hill a number of times,
• 54:03
  and I was just
• 54:04
  impressed with her and very,
• 54:07
  very intelligent, very personable, very,
• 54:10
  you know, just engaging
• 54:12
  and,
• 54:13
  obviously very capable.
• 54:15
  And so when I heard that she was gonna take this job, I was pretty happy.
• 54:20
  And I know she'll do well.
• 54:22
  I think she'll bring,
• 54:25
  new outlook,
• 54:26
  new new insights, and I I think we're gonna move forward in great shape. So my advice is just to engage with this entire membership
• 54:34
  as I I just can't stress enough. We're, we are a relationship
• 54:39
  outfit. Our jobs are
• 54:41
  building relationships and maintaining, and and that's what she'll do.
• 54:45
  That's where it's at.
• 54:47
  Unknown: Well then, maybe to wrap up,
• 54:50
  if somebody is listening to this and they think,
• 54:53
  I'd be interested in checking that out. Where where should they go to to look into becoming
• 54:58
  farm manager or rural appraiser?
• 55:00
  Unknown: Asfmra.org
• 55:03
  would be a good place to start. That's our national website for this organization.
• 55:08
  Also,
• 55:10
  every company here would have a good website themselves.
• 55:14
  And I think if you would Google or, you know, AI search
• 55:18
  a farm manager or professional farm manager or professional
• 55:22
  farmland appraiser, however you want to word that, I think you're going to find somebody in this organization pretty quickly. And that's, you know, here's what, here's the great thing about this organization. When I was starting and just taking my classes and so forth, and I would call somebody,
• 55:36
  I would think, well, maybe this guy knows something.
• 55:39
  And I would say, I'm Dennis Raymond with Stalk Up Ag Service. Oh, yeah. And the door was wide open. They'd tell me whatever I wanted to know
• 55:47
  because of the relationships in this organization.
• 55:50
  And it's and that continues to be the case, and I hope it always will.
• 55:55
  Unknown: Well, Dennis, I'm very glad they selected you as my podcast guest. Thank you so much for coming on. Been a true pleasure.
• 56:02
  Let's all give Dennis a round of applause.
• 56:11
  Thank you. I I think that was my first live,
• 56:14
  podcast audience. So thank you for joining me on that adventure, and thank you to Farmers National Company
• 56:19
  for, for sponsoring this. It's kind of a fun little adventure to do.
• 56:23
  We're gonna wrap up, and you guys are gonna go into your membership meeting right away.
• 56:29
  And,
• 56:29
  I,
• 56:31
  afterwards, there are a few sessions going, so I thought I would, let you know about those.
• 56:38
  So,
• 56:39
  session three starting at 01:40,
• 56:41
  there's gonna be from quick wins to full workflows, operationalizing
• 56:46
  AI, so that's gonna be great. There's also chasing water, wind, and the science of weather prediction. That's gonna be in the Heron Room. And then I will actually be,
• 56:55
  conducting
• 56:56
  a session on Bitcoin.
• 56:58
  And my Peter Thiel paradox, if you wanna hear about this, is that I believe that Bitcoin
• 57:03
  will completely demonetize
• 57:05
  Ag Land. And I'm guessing there's nobody in the room here that agrees with me on that, so I've succeeded on the first part. We'll see you guys later. Thank you.