Southwest (U.S.)

From Omaha to Georgia: Inside the Farm Machinery Reshoring Boom

Wed, 25 Jun 2025 19:38:03 GMT

After releasing our “Where Farm Equipment Is Made” 2025 update in February , we circled back with farm equipment manufacturers to get a read on how tariffs will affect where machines are made.

Many companies across a wide range of industries are considering or even moving forward with plans to reshore production from overseas back into the United States. We’ve learned this process involves long-term, strategic investments in new facilities and/or expanding factories already established here in the States.

Although each manufacturer shared differing visions for how, when and where it plans to build out additional manufacturing capabilities in the years ahead, a common theme did emerge: farm equipment builders are investing big dollars into reshoring, and many have been for quite some time now.

Let’s hear what the machinery companies are planning:

AGCO Corp.

(AGCO Corp.)

The Duluth, Ga.-based equipment manufacturer says its dedication to American farmers and its own strategic investment plans are “key drivers of our overall growth strategy,” according to an AGCO spokesperson.

The rest of the statement from AGCO, which builds the Fendt and Massey Ferguson equipment brands along with its own AGCO machines, regarding U.S. expansion plans can be found below:

Since 2020, we have invested just under $3 billion in the U.S. across new and expanded manufacturing facilities, product innovations and the largest ag tech deal in the history of the industry. Our commitment has extended across our various brands, locations and Research & Development (R&D) efforts, including the notable 2024 joint venture establishing Colorado-based PTx Trimble, the inauguration of Fendt Lodge – the North American headquarters of Fendt – in Minnesota, a new precision ag production facility in Illinois, modernization of systems and technologies in one of our Kansas plants, and U.S.-based R&D for new sprayer and planter technology.

These investments, AGCO says, will not only enhance production at its U.S. facilities for years to come, but also ensure AGCO remains at the forefront of ag innovation around the world.

Claas

(Matthew J. Grassi)

Claas is still a somewhat fresh face to the North American farm equipment market, but the company has deep roots in Europe. It was founded over 100 years ago in a small German farming town, and today the company has global headquarters in Harsewinkel, Germany.

But you may not be aware that Claas has also built a significant manufacturing operation in America’s heartland. The company opened its Lexion combine production campus, located just south of downtown Omaha, Neb., in 1997. This year marks 10,000 Lexion combines rolling off the main production line inside the 120,000 sq. ft. facility.

(Photos: John Deere, Matthew J. Grassi, AGCO, Kubota)

Claas has significant expansion plans in place for its Omaha campus, including doubling its overall production footprint for the main manufacturing building as well as adding a new training and apprenticeship building.

Here is the statement Matthias Ristow, president & managing director of business administration – Claas Omaha, shared regarding the company’s expansion plans:

Claas is investing significantly in its production hub in the United States, and not only recently. Over the last five years, we have added to our production facility to provide a better location for our rework and reconfiguration areas, as well as a dedicated work area for our quality control department for the pre-delivery inspections each machine must go through before being shipped. This is part of our comprehensive quality assurance program.

We also have built a new service academy where we train all the technicians from our U.S. dealer network (we have a similar location in Canada) so we can keep their skills up to date and make sure they have the proper certifications to work on our machines. Technology updates and changes are trained there as well.

Furthermore, our new service academy houses our apprenticeship program where we train the future assembly technicians in a three-year rigorous training program, managed by the German Chamber of Commerce. The program has several advantages. Technicians receive a regular paycheck (“earn while you learn”), receive an associate’s degree from a community college we partner with, receive a certificate from the German Chamber and have a job when they graduate from the program debt free.

Farm Journal recently had the opportunity to tour Claas’ Omaha operation, where we learned the manufacturer is also expanding its partnerships with domestic material and component manufacturers. For example, it recently began working with a finished parts supplier local to Nebraska to fabricate the grain spout for each Lexion combine.

CNH Industrial (Case IH and New Holland)

(CNH Industrial)

Although short on specifics, CNH Industrial (Racine, Wisc.) confirms it plans to “continue to expand our footprint through capital investments in our U.S. facilities, partnerships with local suppliers and programs that strengthen the communities where we live and work.”

CNH adds it currently employs more than 9,000 people across 17 U.S. states, with 14 manufacturing facilities and 22 R&D centers active throughout North America.

And approximately 70% of the components used in CNH Industrial’s U.S. plants are sourced from domestic suppliers while 95% its steel is purchased from U.S.-based mills. It says this approach to domestic material sourcing supports thousands of suppliers’ jobs and reinforces its investment in American-made quality.

John Deere

(John Deere)

The farm equipment manufacturer with global headquarters in Moline, Ill., was first to share its future investment plans with Farm Journal. Back in May, the company announced a 10-year, $20 billion outlay plan for its U.S. production base. This year alone, Deere says it will pour $100 million into its U.S. operations.

John Deere says this initiative includes:

A 120,000 sq. ft. expansion of the company’s remanufacturing facility in Missouri.
Construction of a new excavator factory in Kernersville, N.C.
Expansion of its Greeneville, Tenn., turf equipment factory.
New assembly lines for 9RX high-horsepower tractor production in Waterloo, Iowa.

John Deere plans to invest a total of $22.5 billion into its U.S. manufacturing network once the 10-year project is complete.

Kubota North America

(Kubota North America)

Kubota Tractor Corporation (KTC) established its North America headquarters in Grapevine, TX., in 2017. The Japanese equipment manufacturer shared the following statement regarding U.S. expansion plans.

North America is critical for Kubota, and the U.S. is our largest market. We firmly believe in local production for local consumption and have made more than $1 billion in U.S. infrastructure investments in the last couple years to meet the growing needs of our dealers and customers. For example, we recently announced the opening of a new loader facility in Gainesville, Ga., (invested $190 million), a new Western Distribution Center in California (invested $72 million), and an R&D facility (invested $100 million) that’s also in Georgia. We have other network investment announcements in the works, and we plan to continue to invest over the next five to 10 years as we respond to market demands. Today, we are more than 7,000 American workers strong who market and sell, and fabricate, weld and assemble equipment with domestic and global parts.

Want to learn more about where your favorite farm machines are made? Check out “From the Factory to Your Fields: Where Farm Equipment Is Made”.

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Another Sign of Trouble in the Ag Economy: Farm Bankruptcies Are on the Rise

Tue, 22 Apr 2025 18:35:59 GMT

It’s no secret there’s trouble in the ag economy. As AgWeb reported in March , the Ag Economists’ Monthly Monitor found 62% of ag economists think the row crop side of agriculture is currently in a recession, and 85% think the situation will accelerate consolidation on farms and among agribusinesses. A new report from Bloomberg Law shows family farm bankruptcies are also on the rise.

Bloomberg Law’s Alex Wolf and Skye Witley recently reported that family farm bankruptcies had already increased by 55% last year compared to 2023. And there’s no sign of that slowing down, as Wolf and Witley report bankruptcies are trending even higher this year. That’s as farmers continue to grapple with depressed agricultural commodity prices and high input costs.

Farm bankruptcies are on the rise in the U.S.

(Bloomberg)

“And while much of the industrywide distress predates his second stint in the White House, (President Donald) Trump has quickly nudged more farmers closer to the brink of going under and created turbulence for producers trying to make ends meet,” Wolf and Witley reported in the Bloomberg Law story. “Unpredictable tariffs, immigration overhauls, federal program cuts and frozen Agriculture Department funding are now part of the discussions farmers are having as they seek financial help.”

The report shows the last time farm bankruptcy filings soared was in 2019, which was the height of the previous trade war with China. The previous Trump administration sent farmers more than $20 billion in Market Facilitation Program payments (MFP) to help cover export losses.

Following that financial aid to farmers, the report shows family farm bankruptcies, filed under Chapter 12 of the U.S. bankruptcy code, declined each year until 2024.

According to court records, the number of new cases in 2024 jumped to 216 from a near 20-year low of 139. The report also shows those filings have continued to speed up this year, with 82 cases filed over the first three months of 2025, which is nearly double the figure for the same period a year ago.

$10 Billion in ECAP Money to Farmers

More help is on the way, if not already on farm. That’s because the American Relief Act of 2025, which was passed by Congress late last year, authorized the $10 billion for ECAP payments to help offset losses growers incurred during the 2024 crop year. Those payments are being dispersed now, and farmers have until August to sign up.

According to Joe Glauber, former USDA chief economist and a current emeritus fellow with the International Food Policy Research Institute, direct payments have helped farmers. But the threat of farm bankruptcies, and the reality of financial pain if markets don’t improve, is still there

“Remember, we are getting a ton of money put into the sector this year from the bill that was passed by Congress in December,” Glauber told “AgriTalk’s” Chip Flory. “So that’s $31 billion coming in with $10 billion of that going out to farmers as direct income support to offset low margins. So, I don’t think we’ll see a lot of farms going out of business. But certainly, if these short, tight margins persist for a long time, then that’s going to affect people.”

Rural Bankers Show Concern

According to the Federal Reserve Bank of Chicago, the number of farm loans at risk of defaulting is the highest it’s been since 2020 as demand for non-real-estate farm loans has surged while repayment rates dropped. The Federal Reserve Bank of Chicago serves the Seventh Federal Reserve District , which includes Iowa, and most of Illinois, Indiana, Michigan and Wisconsin.

Ag lenders are also concerned. The most recent Rural Mainstreet Index (RMI) shows for the 19^th time in the past 20 months, the RMI sank below the 50.0 growth reading in April. This specific index surveys bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

While tariffs and Trump’s focus on trade are causing uncertainty, Ernie Goss, MacAllister chair in regional economics at Creighton University, says ag lenders are actually supportive of Trump’s tough stance on trade.

“The economic outlook for 2025 farm income remains weak, according to bank CEOs. Despite the negative fallout from tariffs, 75% of bankers support the tariffs on China, and 79.2% back the 90-day pause on other tariffs,” Goss told “AgriTalk’s” Chip Flory. “I’m an economist and we economists, we’re not very keen on tariffs and trade restrictions. Nonetheless, the bankers, three out of the four bankers are supportive of what the president’s doing there, and I would argue that the farmers are on the president’s side as well.”

The RMI also found rural bankers remain pessimistic about economic growth for their area over the next six months. The April confidence index increased to a weak 36.0 from March’s 30.4.

“Weak grain prices and negative farm cash flows, combined with downturns in farm equipment sales over the past several months, pushed banker confidence lower,” Goss said.

Cotton Hit Especially Hard

Cotton farmers are especially feeling the pain with younger farmers already having difficulty getting financed for this year. Cheap cotton prices and dwindling demand are just part of the problem. Input costs have climbed, and there’s no safety net to be found from a new farm bill. One Georgia farmer told Farm Journal that the current farm bill is irrelevant and worthless, and if a new one doesn’t get passed this year, the cotton industry is doomed.

“We’re going to plant cotton and don’t even have a clue if we’re going to get our money back,” says Franz Rowland, who grows cotton in Boston, Ga. “There’s no farm bill to support us, and the reference price is so low that it’s not anything that we can depend on. So, we’re going to put several million dollars in the ground and don’t even know if we’re going to get it back.”

As president and CEO of National Cotton Council (NCC), Gary Adams sees and hears the somber situation for U.S. cotton farmers from coast to coast. Adams says the outlook for 2025 is even worse than 2024.

“We’ve gone beyond just losing money now that we’re to the point of losing the farm,” he says. “Unfortunately, where the industry is, that’s what it looks like as we’re going into 2025.”

Darren Hudson is the Larry Combest endowed chair for agricultural competitiveness and director of the International Center for Agricultural Competitiveness at Texas Tech University. Hudson focuses on cotton, and on “AgriTalk” this week, he described why cotton farmers, and the entire cotton industry, is feeling the pinch.

“Cotton is fairly input intensive anyway, and so urea, nitrogen costs, all these chemical costs, they’re facing those just like every other farmer out there, but we’ve had three consecutive really bad moisture years,” Hudson told “AgriTalk.” “So, we have a long way to go to get back to what you think of as normal growing conditions.”

Hudson says three consecutive years of declining production due to drought isn’t just a problem for producers, it’s also the cotton infrastructure that relies on that crop.

“We’ve had three years, you know, that processing infrastructure all that stuff is strained and disappearing, and it’s getting harder and harder to farm as a cotton farmer out here,” says Hudson, who’s based in Lubock, Texas. “We’re not unusual compared to everybody else. We don’t want to sing a sad story, but I think all of ag is in a squeeze at this moment with [commodity] prices versus inputs.”

Is the Ag Industry Ripe for Consolidation?

Another reality for U.S. agriculture, while the majority of farms in the U.S. are small family farms, that sector doesn’t represent the majority of farm production today.

USDA ERS data shows while 88% of U.S. farms are considered “small family farms,” those farms only represent18.7% of the total U.S. value of farm production.

(Ben Brown, University of Missouri )

USDA ERS data shows while 88% of U.S. farms are considered “small family farms,” those farms only represent 18.7% of the total U.S. value of farm production.

On the other hand, while 3.4% of U.S. farms are “large-scale family farms,” that sector represents 51.8% of the total value of U.S. farm production.

Goodbye, La Niña? Eric Snodgrass Dissects What the Shift Means for Weather This Spring and Summer

Fri, 14 Mar 2025 21:12:49 GMT

La Niña is weakening, and the National Oceanic and Atmospheric Association (NOAA) expects neutral conditions to develop in the next month . But even with La Niña fading, meteorologists are still concerned about drought this spring and summer.

NOAA this week said forecasters expect ENSO-neutral conditions to develop in the next month and persist through the Northern Hemisphere’s summer. According to NOAA, La Niña’s signature is cooler-than-average surface water in the east-central tropical Pacific, stronger-than-average trade winds, and drier conditions over the central Pacific.

ENSO-neutral means conditions could be close to average, but Eric Snodgrass, Nutrien’s principal atmospheric scientist, says that doesn’t mean the weather will be normal this spring and summer.

“I do expect changes,” Snodgrass says. “Think about it like this: The previous winter was an El Niño winter, and it was very mild and very wet. So, we got into spring ’24 with tons of moisture. I mean, Iowa, Minnesota and South Dakota flooded out. Then we had this incredibly dry fall as the La Niña began, and it reached a peak twice. It actually hit a peak in December, and then a secondary peak about a month later at the end of January. It’s been fading ever since. The big question is, as we go into neutral conditions for this upcoming growing season, is it going to be one that paints a picture of precipitation extremes? Did it leave us with any sort of kind of problems from winter that are carrying over?”

Snodgrass says the severe weather outbreaks on Friday, that brought high winds, dust storms and wildfire warnings across the Plains, is a reminder how dry it is in the Southwest.

“We’ve got major pockets of the country that are still dealing with some pretty big drought conditions. It is fading, and that is a signal we have to pay attention to,” Snodgrass says.

USDA meteorologist Brad Rippey is also concerned about what impact the shifting pattern will have on farmers this spring. But it’s not just the dryness. It’s also the fact areas are getting inundated with rains that could pose problems.

“With this stormy weather pattern in place, that is going to create some difficulty for spring field work in some areas. It looks like the primary storm track may be through parts of the middle of the country extending into the lower Midwest and eventually the interior northeast. That is one area where we already have fairly wet conditions,” Rippey says.

How sea surface temperatures in the Niño-3.4 region of the tropical Pacific changed over the course of all La Niña events since 1950 (gray lines) and 2024-25 (black line). This shows the traditional calculation for Niño-3.4, the monthly temperature compared to the most recent 30-year average (1991–2020 for the 2024 line). By this measure, the La Niña threshold was crossed in December 2024, but La Niña remains weak.

(NOAA)

La Niñas and El Niños Are Strongest in the Winter
Snodgrass points out La Niñas and El Niños are always strongest in Northern Hemisphere’s winter, which means they fade in spring and summer.

While La Niña-like conditions were a trademark in late fall, we didn’t reach the official definition of La Niña until January.

“The atmosphere way back in November was already treating our winter timeframe like a La Niña,” Snodgrass says. So, we were getting the influences of it as it comes in and goes out. And now the question is, what’s it going to do?”

February 2025 sea surface temperature compared to the 1985-1993 average. The surface of the east-central tropical Pacific is slightly below average temperature, but much of the global ocean remains warmer than average.

(NOAA )

“This is a great map to look at,” Snodgrass says, referencing the map above. “If you focus right in the middle, you see the large area of the cooler colors. Our line is now shifting to the central and West Pacific and behind it over by South America. All of the warmer water is beginning to emerge. And that’s what’s killing it because there’s a trade wind across that area from the east to the west. We’re going to watch this fade carefully during the spring. But the question is: Do we get winter’s leftovers?”

What Fueled the Dryness This Winter?
During the winter, Snodgrass points out there was no subtropical jet. That’s what fueled drought in the Southwest and Northwest.

“I’m actually kind of worried about the beginning of April having another shot at cold air after what we’ve been experiencing in March, which has been so very, very mild. Then you say, well, we’ve had so much dry air in place. Are we still worried about more dry air coming back? To be honest, these big storm systems coming through the central U.S., if we could get four, maybe five more of those by early April, we’re going to hate it. It’s nasty weather. It’s not fun, and it’s dangerous, but it returns moisture. That could be part of the mix of things, including the fading of La Niña that could help bring us away from these major early season drought risk scenarios.”

55% of corn production, 46% of soybean production, 33% of the cotton growing area and 27% of the winter wheat production are currently experiencing drought.

(U.S. Drought Monitor )

Growing Drought Concerns
What if it doesn’t? What if we don’t see more of this severe weather hit the Southwest and Plains, and moisture remains absent as we get into the height of spring? Well, the area will enter into the height of the growing season dry and reduce their chances of seeing moisture this summer.

“That’s a box we check every spring,” Snodgrass says. “If the drought monitor saw a reduction in drought over winter, then that gives us a different look for spring. But what we see here is two-thirds of the country in some stage of drought, including the abnormally dry category. But it’s the epicenters of drought that are so concerning. Look at the Western Corn Belt. Look at the Southwest. We just wonder if that funnels into the Mississippi Valley as we go forward.”

At the same time some areas are seeing drought, Kentucky, southern Indiana, southern Illinois, Tennessee, Arkansas and the boot heel of Missouri are all experiencing heavy rains and flooding.

“By May 11, I want to know what the drought monitor map looks like. If it looks no different, then I’m going to be sounding alarms going into summer with concerns this will start to creep and move because as soon as we get into the summer weather, all we get is convective storms pop off. And what do they do? They just locally deliver rain - not big broad swaths of it,” Snodgrass says.

Tale of Two Weather Scenarios
He says the forecast leading up to May 11 is a tale of two weather patterns, with the Mississippi River being the dividing line for moisture.

“If you are along it and east of it, I think we’re going to have tight windows to plant. You could include a little bit more of Missouri, Iowa and Minnesota in that as well,” Snodgrass says. “I think we’re going to see repeated storm systems. The best moisture is east. It keeps avoiding that southern plains area.”

What to Watch: Where the Storm Chasers End Up
Snodgrass says if storm chasers are busying chasing severe weather across the Ohio Valley, the mid-south and the southeast, but not in Kansas and the Plains, that’s a key indicator there’s a problem with the moisture getting back into the plains.

“If it’s not there by the time we start June, it’s very difficult to rely on the atmosphere to return it once you get into the summer months if you live in the central plains, which is where they could build from,” he adds.

To watch the complete discussion with Snodgrass, visit Farm Journal TV and take advantage of the free trial.

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No Dryland Crop to Harvest: West Texas Cotton Farmers Open Up About the Harsh Realities of 2023

Mon, 11 Dec 2023 21:19:40 GMT

No matter where you travel in west Texas this year, the story is the same. Drought and heat created an endless battle for area cotton farmers.

“It was a devastating year,” says Casey Jones, a farmer in Lubbock, Texas.

“This is my 49th crop, and it’s been the toughest one to make,” says Bobby Rackler, a farmer in Hockley County, Texas.

Harsh Realities of 2023

The combination of heat and drought dried up hopes of growing a crop this year. Casey Jones’ farm ground is right on the edge of Lubbock, and he says if you ask any area farmer, they’ll tell you the 2023 cotton crop is one those farmers would like to forget.

“I’ve talked to a lot of my farmer friends about that, and it’s one of those years where you tell yourself, ‘Let’s get this one behind us, get it out of the books and let’s get on to a better one,’” says Jones.

Rackler says the challenges continued to mount for the West Texas cotton crop.

“Just everything went against it,” says Rackler. “We had 46 days of over 100 degrees and no humidity.”

Dryland Crop is Nonexistent

Farmers in West Texas didn’t have much of a crop to harvest this year. If a farmer only had dryland acres, they didn’t even have a crop to harvest this year.

“Everyone I’ve talked to is disappointed,” says Racker. “Their yields are way down, some of them lost all of their crop, and they’re not even harvesting.”

Fields that have no irrigation took the brunt of the heat and dryness, as those fields didn’t survive the harsh realities of 2023.

“The dryland is a total failure,” says Rackler. “The irrigated cotton is making a half of what it usually makes. A normal year, our cotton on drip irrigation, will make three bales, but this year it’s only making about a bale and a half.”

Cotton harvest can drag on some years, but not this year. Jones says harvest only lasted eight days. And it’s all because the dismal crop meant farmers had less to harvest.

“I’ve heard farmers across the board say the irrigated ground is about two bales to two and a quarter bales [per acre] on drip. I’ve got some pivots that’ll probably go anywhere between a bale and a half [per acre],” he adds.

Tough Start

The growing season started out extremely dry. When Farm Journal visited with farmers in March , they were still debating whether to plant. Consecutive years of little to no moisture meant subsoil moisture was nonexistent. Add to that severe winds in the late winter and early spring, and any winter cover crop and winter wheat didn’t survive the winter.

“We started off really dry and windy from all the way from February, March and April,” says Jones. “We had heavy sustaining winds of 82 mile-per-hour straight line winds.”

After winds and drought demolished cover crops and winter wheat area farmers planted late last year, they finally saw some rain that ended up delaying planting.

“We had 13 inches rain in May, and we really thought that was going to be it. The rain changed our outlook a little bit to go into a summer that was actually wet,” says Jones.

That relief, however, was extremely short-lived. The weather turned dry and hot, quickly zapping the moisture that came in May.

“We sustained 100-degrees-plus for 60-days-plus,” says Jones. “You have to understand that people don’t do good in 100 degrees, so you can imagine what plants do with limited water. It’s really tough.”

Largest Cotton Patch in the U.S.

The West Texas area is critical for cotton production. USDA shows Texas growers produce 42% of the country’s cotton . The area surrounding Lubbock, Texas, is known as the largest cotton patch in the U.S. And the majority of the cotton crop currently seeing extreme drought conditions is in that key cotton production area.

As cotton prices dropped this year, it’s been puzzling to farmers who are experiencing their worst production year on record. Farmers in West Texas know profits will be slim, but in this area of the country, they’ve learned they still have to protect one of the most precious resources they have.

“We started the first drip in 2008 here because it was a better usage of the water. It has no evaporation. I was skeptical at first, but I found out it does work. And it is stretched our water a lot more,” says Rackler.

Rackler adds that one of his farms had three pivots at one time, pumping 1,200 gallons a minute.

“Now I’m down to 500 gallons on the same well. And it’s just stretching your water further and utilizing it the best way you can,” he says.

The downfall is drip irrigation comes with a hefty cost. It’s double the cost of pivot irrigation systems, yet it’s those investments these farmers hope will pay off longer-term.

“It’s kind of the rule of 10,” says Jones. “You’re going to get several good years in there, you’re going to get a lot of bad years, and you’ve got to make sure to manage those bad years with the good years.”

As farmers reflect back on 2023, they’re surviving the harsh reality of such a trying year. Jones says there’s only one way to summarize the year West Texas farmers just endured.

“Let’s wait for next year,” says Jones with a smile on his face.

U.S. Farm Report and AgDay are hitting the fields to check on cotton harvest progress and yields with the 2023 Cotton Harvest Tour this year, which is sponsored by Deltapine® . The tour is visiting farmers in east-central Texas, Georgia, Tennessee and wrapped up in West Texas.

2024 Land Value Influencers in Your Region

Mon, 04 Dec 2023 21:41:34 GMT

Using a combination of data with boots on the ground experience, Peoples Company has released its fourth annual land values report.

The report shows a three-year period of remarkable land appreciation across the country – something Bruce Sherrick, professor and director of the TIAA Center for Farmland Research at the University of Illinois, says has not been surprising.

“We kind of have a rolling narrative around this and quite often people will remark it’s shocking that farmland almost anticipated inflation or that it’s shocking how well that’s done through time. And I don’t think I’m surprised by that,” he says. “I’m surprised by the accuracy or the degree or the strength of that relationship if anything.”

Annual rates of return have been in the double digits for many regions. In the Northern Plains region specifically, the rate of change in the past year has been especially high.

“In the last year, what we’ve seen is really quite remarkable in the middle of the country,” Sherrick says. “That area has kind of caught up to previous years in the Midwest and Lake states.”

As far as what’s affecting land values in the rest of the country, Peoples Company breaks the data into eight regions.

Pacific West

Annual performance on permanent cropland in the Pacific West and California has suffered in recent years due to a period of low nut prices, tariffs, water challenges and high operating capital.

3 Unique Characteristics of The Permanent Crop Industry

Steve Bruere, president of Peoples Company, anticipates a lot of land transactions in the California market in 2024.

“The amount of irrigated, plantable acreage is shrinking,” he adds. “The acreage left standing will be more valuable over time because of the optionality of what you can grow on it.”

Pacific Northwest

Similar to the Pacific West, the Pacific Northwest has had a period of good returns and offers a lot of optionality of what can be grown on the land. The land values in comparison to its western neighbors, however, are much lower to produce a similar product. That factor – alongside increased access to water resources – allows the region to absorb displaced production from other areas.

“We’re seeing at least that phase of exploration on some of those fresh market crops that may have some compressed acreage and higher water costs to deal with in California looking at the Pacific Northwest, the Columbia River Basin area in particular, as a transition point,” says Dave Muth, Peoples Company’s capital markets managing director.

Southern Plains

The Southern Plains region – Texas and Oklahoma – is experiencing good land value returns despite water issues and labor complications. As these challenges continue, renewable energy projects are becoming key to the region’s profitability.

“Think about it: 20,30, or 40 years ago, when someone was looking to buy a ranch, if transmission lines ran across it, that might take it off the list. Now those same transmission lines are seen as a huge asset,” says Eric O’Keefe, editor of The Land Report. “This emphasis on energy, whether it be in terms of oil and gas or renewables including direct carbon capture, is going to be a complete game changer. I think it’s going to be driving land values in Texas for decades to come.”

Northern Plains

Total returns per year in the Northern Plains over the past three years are averaged at 18.5% - the highest in the country.

“The increase in values have been rather dramatic compared to other parts of the country in the last three-year period. Part of that’s driven by relative yield gains, but it’s also the genetics and the attention to doing genetics for this part of the country by the major seed corn and other seed producers,” Sherrick says. “It has made this a possible competitor for the rest of the country.”

The focus on foreign and corporate ownership in this area also makes it unique in comparison to other regions.

“You see a difference in these types of markets where the farmers aren’t driving values,” Bruere says. “If you take that institutional investor out of the market, it definitely impacts land values and we saw that real time this summer and Kansas and Colorado.”

Delta Market

The Delta Market – Mississippi, Louisiana and Arkansas – has seen the most stable returns over time when compared to other regions across the country, which makes it attractive to outside investors.

“You don’t get necessarily the same swings that we get in the Midwest in this market. And I’m really bullish – you’ve got plenty of water and you’ve got large fields,” Bruere says. “One of the issues we do struggle with in this market is the tenant pool. You don’t have that same competitive nature for tenants that you’ve gotten Midwest.”

Southeast Market

The Southeast – Florida, Alabama, Georgia and South Carolina – has seen moderate returns in comparison to the other regions. The increase in severe weather as well as development in the area leads Sherrick to expect quite a bit of transition in the future.

“I’m actually not worried about land values, hardly at all in this region, for traditional agricultural things,” he says. “Land that gets displaced for a retirement community, a park, golf course or major league baseball facility aren’t reductions in value. They’re just a reduction in the use of it for agriculture.”

Lake States

The Great Lakes region is one Sherrick describes as “still trying to figure out who they’re going to be”.

“There’s great optionality, reasonable acquisition prices and massive increases in land values that have kind of kept the returns high, very correlated with inflation as well,” he says.

Though the yields in the region may not be as high as in the corn belt, the area’s total returns per year over the past three years have averaged 14%.

Corn Belt

Sherrick refers to Illinois and Indiana as indicators and predictors of what’s happening in the agriculture industry.

The region continues to have high appreciation values and above average farm incomes, though transactions have slowed in 2023. The corn belt is anticipated to have continued interest from non-operating investors.

Looking at 2024
Overall, Peoples Company reports the driving factors behind land values are income, interest rates and inflation. As we move into 2024, they expect this will begin to normalize.

Buyer demand is also expected to remain a key player.

“There’s more money that wants to own farmland in there as farmland for sale. That dynamic is not going to change in 2024,” says Bruere. “Right now it feels like interest rates are pulling back a little bit and I think the landmark is going to remain pretty stable in 2024.”

Southwest Cotton Needs a Rebound

Fri, 03 Nov 2023 21:10:57 GMT

While a few Southwest cotton fields flourished with yields to brag about at the gin, the majority of the region’s production suffered, from one weather extreme to another.

From drought to start the year to cold, wet conditions at planting time and a blast furnace to follow, most dryland fields were dreadful and the irrigated crops struggled to hit normal yields.

Texas is expected to harvest nearly 3.6 million acres, according to USDA’s Oct. 1 production report. But the number of abandoned acres keeps rising and harvested acres could dip to 3.4 million or less, says Kody Bessent, CEO of Plains Cotton Growers, Inc. (PCG) in Lubbock, Texas.

Texas growers planted about 6.25 million cotton acres, down from 7.8 million in 2022. Continued drought remaining from 2022, coupled with stronger grain prices in early 2023, were the lead reasons behind a shift from cotton. Oklahoma cotton planting was estimated at 530,000, off from 670,000 in 2022. Of those, only about 310,000 were pegged for harvest.

USDA indicates Kansas will harvest only 88,000 acres from 115,000 planted, which was down from 165,000 planted in 2022. Arizona planted about 116,000 acres, up from about 103,000 in 2022. Only about 91,000 are being harvested. New Mexico growers planted about 80,000 acres, similar to 2022. There were expected to harvest only about 38,000.

PCG represents growers in the Texas Panhandle and South Plains, where more than half of the Texas crop is produced.

“Unfortunately, the vast majority of our region’s cotton acres were abandoned early due to drought conditions,” Bessent says. “That continued throughout much of June, July and August.

“Growers were excited early on after May and June rain. We had good planting conditions. But it didn’t rain again for many areas, while observing well over 100-degree temperatures consecutively until September. That was too late,” he adds.

Other than a few spots in the Panhandle, West Texas had little dryland cotton that made it to harvest. Irrigated production also stalled due to a dry soil profile to start the season following the 2022 drought. Irrigation wells saw groundwater dwindle.

“Irrigators used the best agronomic practices they could to get the most out of their water,” Bessent says. “Many using center pivots devoted their water to half or one-third of the circle, or used different row spacing to help conserve water. But in the end, you still must need Mother Nature’s help to make a crop.”

Central Texas also saw lower yields, as did most growers in the Upper Gulf Coast and Coastal Bend. Justin Chopelas, independent consultant near Corpus Christi, can’t get over the more than 96 days of 100 degrees or higher weather. A promising crop seared under the sun in a region where yields often top 3 bales per acre.

“That heat just killed the crop,” Chopelas moans. “It was bone dry in March and many dry-planted their cotton. There was hope after good rains in April, but there was little rain afterward. Much of the Coastal Bend area will average only about 1 bale. The east side of the area saw 1,200 pounds in some pockets. A few hit 1,400. Those crops had better potential.”

Hot weather pushed the limit on irrigation systems in the southeastern New Mexico and Southwestern Texas region, says Gary Beverage, consultant with Nutrien Ag Solutions in Artesia, N.M.

“Yields are variable. If fields had plenty of water, it’s a good cotton crop of 3 bales or better,” he says. “Some growers are hoping for 3.5 bales per acre. But where wells were tested by heat and excessive drought, yields will be lower.”

Overall, Texas yields are expected to barely surpass 500 pounds per acre; barely a bale, compared with about 735 pounds in 2022. In Oklahoma, USDA forecasts yields at about 418 pounds per acre, down from 634 in 2022. Mike Schultz, superintendent, Oklahoma State University Research Center in Altus, notes a large chunk of Oklahoma’s failed cotton acres are in the Altus region.

The regional irrigation district’s Lake Altus depends on rain to provide water for growers. But little rain fell.

“That’s why everything in the irrigation district is being harvested with a shredder for insurance purposes,” Schultz says. “Most dryland cotton was zeroed out. Areas farther north received better rainfall and are seeing better crop conditions. Yields are near normal or higher in the Caddo County area around Carnegie.”

Not All Yields Were Terrible

Although Kansas’s cotton acres were also down, yields are higher than expected, says Rex Friesen, manager, Southern Kansas Cotton Growers Co-op in Winfield. “Preliminary calculations indicate our average yield is 860 pounds per acre,” he says. “That’s much better than we were thinking after a slow start. All things considered, that’s terrific.”

Arizona, which depends almost entirely on irrigation, is forecast to yield about 1,260 pounds on average, according to USDA, down from nearly 1,500 pounds in 2022. With summer temperatures typically in the 100s, last summer was particularly hot. Cotton suffered.

“In July and August, we had 30 days of uninterrupted heat stress in the central part of the state,” says Randy Norton, University of Arizona Extension Cotton specialist.

“It was 115 to 120 (during that period). Cotton likes heat, but it needs lower nighttime temperatures to cool down. It needs to rest. Also, there were reduced irrigation supplies due to the heat. Yields that average about 3 bales are closer to 2.5 bales this year.”

PCG’s Bessent says the weak overall Texas yield of 500 pounds per acre illustrates the troubles growers had in making a crop on acres they didn’t abandon.

Crop insurance claims will help offset part of the losses, but nothing near what a crop will return to growers or infrastructure.

“Crop insurance is the keystone of farm policy,” Bessent says. “Growers rely on that from a cash flow standpoint. When you have a year like this, they can bank on insurance programs to help keep them in business. It doesn’t keep them whole, but can keep them from going bankrupt. It helps them move forward.”

Bessent points out that infrastructure segments such as gins, warehouses and merchants do not have the same access to risk management tools: “Once a gin shuts down, it doesn’t reopen — and the last two years of drought and loss of production have hurt.

“Lately, infrastructure is an ever-growing concern, as the cotton industry uniquely depends on volume to keep doors open. When we do have another good crop year — and we will — there may not be enough infrastructure to support the volume. Producers may experience delays in selling their crop,” Bessent says.

As for the fate of the 2023 crop, he notes: “Most farmers are trying to get off this crop and pivot into the new calendar year. When we see the discovery price for insurance, it will help dictate what they will plant in 2024.

“Most are set up on a rotation, with say cotton on a half circle and corn or sorghum on the other portion. The discovery price will help them determine how that rotation changes,” Bessent adds.

Bessent will be among other commodity group leaders who will continue to make periodic trips to Washington to promote a sound farm bill. But all would rather have the ability to manage Mother Nature and prevent drought and other weather disasters.

Unfortunately, that’s not a lobbying skill anyone possesses.

Devastating Drought: Texas Farmers Say 2021 Drought Already Rivals 2011

Fri, 16 Apr 2021 14:01:26 GMT

The latest U.S. Drought Monitor shows from North Dakota to Texas, all the way west to California, the most severe levels of drought didn’t ease across the U.S. this past week.

While 62% of the country is seeing some level of dryness, a 2-point improvement in a week, the most extreme level of drought grew, now covering more than 9% of the country.

Texas Extremes

All levels of drought are painted across the Texas U.S. Drought monitor. Only 8% of the state is drought-free, with 8.5% in the exceptional drought category. Around one-quarter of the state is seeing extreme drought conditions.

West Texas farmers are preparing themselves for a possible devastating impact to the 2021 crop.

“We’re extremely dry,” says Blake Fennell, a farmer in Earth, Texas. “I would say we’re giving 2011 a run for its money, but we’re probably drier than 2011 at this point.”

2011 is a year that sticks in many farmers minds in the West Texas and Texas Panhandle area. That’s when consecutive days of 100-degree temperatures, with no rainfall, meant pivots couldn’t even make it a full circle without crops shriveling up. And the dryland crop was nil.

Too Dry to Plant

The West Texas farmer says his area hasn’t’ seen significant rain fall in nearly two years.

“We’ve still got to give that crop every chance we think we can get, but at the same time, we also can’t waste a lot of money on a crop that we don’t think we’re going to have going into it,” he says.

Cotton Crop Worries

From monitoring inputs closely, to parked planters just waiting on Mother Nature to possibly produce moisture to even get the crop out of the ground, it’s a battle that farmers in the area say will be fought all year.

“If we don’t get any significant rainfall within the next two, three or four weeks, it’s going to have a very significant impact on the cotton crop in West Texas,” Fennell says . “A 1"or 1.5" rainfall event is not going to cure the problems we’re facing today.”

Fennell says the expectations for the West Texas cotton crop are also grim.

“Abandonment looks like it’s going to be pretty high this year, just for the simple fact that there is no ground moisture to get this crop emerged,” he says.