What Does Farmers National Company Do?

What is Farmers National Company?  Well, that's a hard thing to say.  Basically, if it has anything to do with land or minerals, Farmers National Company can help you out.  Want more info?  Just watch this video.



To find out even more go to Farmers National Company.

Identifying Good Cropland

How To Identify Good Cropland

You've seen me write about how we are so good at identifying good cropland.  As always the most important and trustworthy identifier is the local farmer.  Without local knowledge we really would be just guessing.  But how does this all get started?  We have ways of our own to identify what is good cropland and bad.  We use a database that allows us to see exactly what type of soil is located on a property.  For example.

First we identify the land boundaries and fields.  This is example is pretty basic land.  Nothing much to it.  Ideal farmland.  Our next step is identifying the soils.

From here we can tell if this is worth passing off to have a farmer check it out.  Things that would make this look good is that it's 100% tillable based of the soil classes.  The class we see here are type 2 and 3.  The rating system goes from 1 being the best to 7 being the worst.  This also tells us what type of soil it is, how many acres are each field and percentage each field takes up of the total.  Let's see another example.  This time one that has recreation land on it.

This is an excellent example of good recreation land and farmland.  We often refer to this as mixed.  In the upper left hand corner you see nothing but timber and there's no reason to change it.  That is a poor soil class and not conducive to growing crops.  But the land that is tilled or tillable is an excellent soil class.  This property should bring in wonderful revenue.  Now the next one deals with cropland that could become development land.

What would make this one interesting is that it's surrounded by homes thus making it a prime residential development ground.  Development ground goes for much more than cropland or recreation land does.  The beauty of this one is the soil classes are excellent so while you wait for someone to offer you development prices you should be able to make an excellent income off of this.  

Finally, we take a look at what's called bottom ground.  Bottom ground is considered land on or next to a river or creek.  This is generally the holy grail of farmland.  The reason is it usually has deep soil and almost never runs dry even during a drought.  So let's take a look at one.

What we see here is close to as perfect as you will get outside Iowa, Illinois and Indiana.  All the soil classes are type 2 soils.  This should bring a high revenue of crops.  Now look at the map showing the boundaries.  See the red shaded areas?  That signifies a flood zone.  This is something to consider.  For the last three or four of years the United States Midwest has been in a drought.  So wet land like this along a creek are very attractive.  However, should a wet summer come along those areas shaded in red may flood.

Bottom land is fantastic but it's something you shouldn't only focus in on.  You need this on top of regular, dry farmland so to speak.  Consider this diversifying you cropland portfolio.  That way you should be cover irregardless of what mother nature throws our way.

These are just some of the hundreds of properties we at Rural KC keep our eye on.  We do have a new letter that would keep you up to date on all the new land that comes on to the market as well as an updated sheet on the farmland we believe is the best available.  If you are interested in receiving this new letter let us know by emailing info@ruralkc.com.

How to Make Money Off Cropland

There are many ways people get revenue off of cropland.  The most traditional way is through the annual income, such as cash rent or share crop, and land appreciation.  

Annual income can come in various different ways.  One way is cash rent.  This is usually gain by receiving bids from farmers and they tend to be competitive.  This is the way most first time investors go.  It's the simplest way and has the least amount of risk to the investor.  The second way is share crop.  This tends to be done by more experienced investors.  They are typically 1/3 2/3 shares.  The positive is the investor usually makes more money this route.  However, they are usually more involved in the day to day decision making and if the crop fails or comes in poorly they take a hit along with the farmer.  And the final way to make income is through land appreciation.  I've gone over this a lot but to summarize it, cropland averages a 6% increase in appreciation annually over the last 40 years.  And we saw a massive jump in the last two years averaging 10% to 30%.

Now for the additional streams of revenue most people don't think of.

One additional source would be mineral rights.  This pertains to everything below ground of the property.  Things such as oil and gas leases and coal are the most common.  Another one is hunting leases.  The price of a hunting lease varies from property to property and how it's decided.  For example, you can decide the lease per acre, per hunter or, if it's a wetland, it could be a wetland lease.  Sub surface water rights is also another issue to think of.  Not too big of a deal in wet areas but places like western Kansas it can be an issue.  There are also government programs in place.  There is the conservation preserve program or CRP.  That is when the government pays the land owner a yearly amount to allow the land to grow naturally.  The is wildlife habitat incentive programs or WHIP.  It's similar to CRP but instead of just leaving it alone the government creates a habitat to promote wildlife growth.  There is also wetland reserve program or WRP.  Similar to CRP.  Allows a wetland to remain untouched and promote wildlife growth.  And finally there are wind leases.

Wind leases are becoming more and more common.  The issue is you have to have your land adjacent to other turbines to tap into a wind lease.  You have to think of it like an electric grid.  And it's expensive to put in so they will only add on to wind farms and rarely put up new ones.