Landlords
Kastens Inc. Farms wishes to sincerely thank all of our landlords for your support and trust in us as caretakers of your property.
Kastens Inc. Farms remains a strong business largely due to the confidence and trust our landlords put in us to manage their assets wisely and profitably. As such, we are constantly seeking new methods for protecting soil from erosion, improving the productivity of soil and improving the overall quality of each parcel entrusted to us. We constantly evaluate the fairness of our existing leases (both to the current market as well as between different types of leases) to ensure that our landlords are treated fairly and equally. It is also our goal to see the "value" of our landlords ground increase (relative to other parcels in the area) and that is largely being accomplished through notill management, proper crop rotation and intensity, and a well-balanced fertility program.
We are always welcome to questions, inquiries, farm visits, and/or recommendations from any of our landlords because without you, our success would be significantly limited in agricultural production. Additionally, we are always happy to bring new landlords into the operation, and have the tools in place to help assess new land purchases, rent establishment, and other economic issues surrounding land investment. We are here to serve, so please don't hesitate to call upon us if the need arises.
Comments about current agricultural situation - February 2009
As the recent economic downturn has negatively affected many of the long-term investments folks rely on for living expenses, retirement and/or generational wealth transfer it is heartening to see land remain the strong, stable investment it has shown itself to be over the past 50 years. Even as input costs have increased at the farm level and the general economy has created some economic circumstances that impact rural America (like a tightening of credit) we see little evidence that land values will go significantly backwards as the nation works through this recession. Over the winter, we saw some areas of the Country where land sales prices contracted slightly (1-3%) while other areas remain stable. Our overall outlook for the agricultural sector still remains optimistic. Food is a commodity that can't be readily given up like other nonessential luxuries; and, with more mouths coming to the table every year and a fixed global land base we see a very bright picture for American agriculture. Add to that our desire to also produce renewable fuels, and a picture comes together where we must continue to increase production to satisfy all needs.
Investing in farm land is an excellent way to diversify one's investment portfolio. With strong and consistent returns over time, owning farm land has rarely looked bad as an investment over the past 50+ years. However, unlike owning other types of investments like mutual funds, stocks, bonds, etc., owning land requires more knowledge as there are many critical decisions to be made around land purchase and ownership. Often times land is inherited as it passes from one generation to another and it is just as important then to understand what kinds of rates of return to expect and how best to manage this asset.
Although more knowledge is required to properly manage a land asset, there are other rewards associated with land ownership beyond just simple dividend checks and value appreciation. You will be owning a living and breathing piece of America that is valuable for providing food and energy, important habitat for animals, an important mechanism for minimizing environmental pollution (from sequestering carbon, to preventing chemical contamination of our water systems), and a tangible asset that connects one to rural America where most folks' roots are from.
Owning land (either through new purchase or inheritance) demands some important issues to be understood so as to maximize one's experience with this type of investment.
- How do I know how much land is worth and how do I establish a bid price if I'm interested in purchasing new land?
- Who will operate this land and how can I be ensured that it will be managed in such a way that I can get optimal dividends (in the form of rent) and optimal appreciation rates?
- What type of lease works best for me (cash rent, share rent, bushel rent or a custom defined flexible rent)?
- What is important to me in owning this land (conservation, returns, ability to accomplish some tasks on it myself, hunting, etc.)?
- How will I choose an operator for this land? How will I evaluate potential operators?
We are fortunate to have two leading land specialists in the nation associated with our farm. Kansas State University agricultural economists Dr. Kevin Dhuyvetter and Dr. Terry Kastens spend considerable time each year gathering data, conducting analyses and then ultimately helping farmers, land owners, lenders and others assess land ownership and leasing questions. Below are a a couple of the talks they have been giving this past winter regarding land valuation and leasing.
At Kastens Inc. we rely heavily on KSU_Landbuy.xls and KSU_Lease.xls for making land purchase decisions, land valuations, assessing fair and equitable lease arrangements and in general to better understand our local land market.
If anyone has any questions regarding any of this please don't hesitate to ask. Even if you are a current or potential landowner with a tenant other than Kastens Inc. farms, please don't hesitate to contact us with any questions you might have. We would be glad to help folks think through any land decision, including who you might put on your list of potential operators. A primary driver in our operation is to see everyone succeed.
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