update on iowa farmland market and china ag economy · update on iowa farmland market and china ag...
TRANSCRIPT
![Page 1: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/1.jpg)
Update on Iowa Farmland Market and
China Ag EconomyWendong Zhang
Assistant Professor of Economics and Extension [email protected]
515-294-2536Farmland Owners Workshop, Altoona, Iowa
Feb 16, 2018
![Page 2: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/2.jpg)
A Quick Introduction:Dr. Wendong Zhang
– Grown up in a rural county in NE China– Attended college in Shanghai and Hong Kong– Ph.D. in Ag Econ in 2015 from Ohio State– 2012 summer intern at USDA-ERS on farm economy
and farmland values– Research and extension interests: land value/ownership www.card.iastate.edu/farmland/agriculture and the environmentChina Ag center www.card.iastate.edu/china
![Page 3: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/3.jpg)
https://www.card.iastate.edu/china
![Page 4: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/4.jpg)
![Page 5: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/5.jpg)
China enters “New Era”• Chinese Dream• Belt and Road
Initiative• Xi Jinping 2030?• COE of China
![Page 6: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/6.jpg)
China’s Provinces
MyHometown
![Page 7: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/7.jpg)
Mainland China vs. US
![Page 8: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/8.jpg)
![Page 9: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/9.jpg)
Greenhouse – plastic film - Shandong Province
My hometown: Shenxian, Shandong Province
![Page 10: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/10.jpg)
China vs. US
Zhang 2015 Ag Policy Review
61.8 million
![Page 11: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/11.jpg)
Chinese land is owned by collectives (Contract Right Certificate)
With at least one 30-year renewal
China’s New Rural Land Transfer Reform
2016:77 million acres (35% of cropland) transferred;2007: 5%
Among them: 30% to co-ops or corps; 80% non-grain production
![Page 12: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/12.jpg)
Future of High-Speed Rail in China
![Page 13: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/13.jpg)
![Page 14: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/14.jpg)
![Page 15: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/15.jpg)
![Page 16: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/16.jpg)
China’s 2016 provincial GDP per capita as % of Iowa
![Page 17: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/17.jpg)
2016 Area planted (Yield, Bu/a):US: 88 mil. acres (154)Iowa: 14 mil. acres (188)China: 91 mil. acres (88)
China Corn
China Soybean
2016Area planted (Yield, Bu/acre)US: 90 mil. acres (48) Iowa: 10 mil. acres (56)China: 16 mil. acres (26)
![Page 18: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/18.jpg)
2016 Production
US: 25 Bil. lbsIowa: 9 Bil. lbsChina: 117 Bil. lbs
China Pork
China Beef
2016 Production
US: 26 Bil. lbsIowa: 1.2 Bil. lbsChina: 15 Bil. lbs
![Page 19: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/19.jpg)
China Corn Yield
China SoybeanYield
2015 Soybean Yield
US: 48 Bu/acreIowa: 56 Bu/acreChina: 26 Bu/acre
![Page 20: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/20.jpg)
![Page 21: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/21.jpg)
62%
Share of China in US Ag Exports
12-15%
0%
1%
16%15-18%
5%
2%
0%
75%
![Page 22: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/22.jpg)
Commodity (2016 value of China ag imports) USA Brazil Europe Australia Argentina
or Uruguay
Soybean ($34.4 Bil.) 38% 47% A-10%
Pork ($2.32 Bil.) 13% 50% Canada: 11%
Ethanol ($0.38 Bil.) 70% 11% Pakistan 15%
Beef ($2.42 Bil.) 0% 22% 28% U-21%
Poultry ($1.11 Bil.) 79% A-9%
Corn ($0.87 Bil.) 10% Ukraine: 79%
China’s Top Ag Imports Sources
![Page 23: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/23.jpg)
0 50 100 150 200 250
ArgentinaAustralia
BrazilBRICS countries
CanadaChinaEgypt
European UnionJapanKorea
MexicoOECD Countries
RussiaSub-Saharan Africa
United StatesVietnam
BEEFPORKPOULTRYSHEEP
lbs per capita Meat Consumption by Country 2016
Source: OECD
![Page 24: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/24.jpg)
Belt and Road Initiative
![Page 25: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/25.jpg)
Why Care About Farmland Market?
![Page 26: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/26.jpg)
Guiding Framework
Land Value = localized net income /
universal interest rate
![Page 27: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/27.jpg)
Market Value of Land –Capitalization Formula
• For simplicity, you could think of land value as the present value of all future annual land rental payments a landowner could charge
• PV = R/i
∑= +
=n
tti
RPV0 )1(
![Page 28: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/28.jpg)
AVERAGE Iowa Land Valuesall farmland 1941−2017
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
Nominal land values Inflation adjusted land values
$7,326As of Nov 17
+2.0%
![Page 29: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/29.jpg)
% Change in Nominal Iowa Farmland Values 1942-2017
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
Annu
al P
erce
ntag
e Ch
ange
(%)
![Page 30: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/30.jpg)
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
0
20
40
60
80
100
120
140
160
1989 1993 1997 2001 2005 2009 2013 2017
Percent_Change Index
Sale Activity Index = % Reported More Sales - % Reported Less Sales + 100
The “temporary break” in continued declines results from limited land supply
![Page 31: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/31.jpg)
Federal Reserve Bank of Chicago, July 2017 Ag LetterRealtor Land Institute
Iowa
![Page 32: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/32.jpg)
USDA June Area Survey, August 2017
USDA NASS June Area SurveyNovember 2016 to November 2017
Ag Real Estate Values: + 2.3%Cropland Values: No changePasture Values: +1.5%
![Page 33: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/33.jpg)
However, don’t rush to conclude a turn of the farmland market
Federal Reserve Bank of Kansas CitykcFED Ag Credit Survey
![Page 34: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/34.jpg)
% Change in Inflation-adjusted Iowa Farmland Values 1942-2017 (decrease 0.2%)
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
![Page 35: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/35.jpg)
Indiana and Illinois both show declines
Purdue UniversityIllinois Chapter of American Society of Farm Managers and Rural Appraisers
![Page 36: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/36.jpg)
US Farm Income 1990-2026
Source: USDA OCE 2016
![Page 37: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/37.jpg)
![Page 38: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/38.jpg)
Long-term interest rate expectationsWhat the Fed Reserve thinks the interest rate should be
December 2017
![Page 39: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/39.jpg)
District AverageValue % Change High
Quality % Change Medium Quality % Change Low
Quality % Change
Northwest $9,388 1.6% $10,829 1.7% $8,555 1.0% $6,216 3.3%
North Central $7,802 3.2% $8,730 3.4% $7,218 3.2% $5,265 2.0%
Northeast $7,543 3.1% $9,151 2.9% $7,236 3.5% $4,965 2.4%
West Central $7,377 0.3% $8,881 0.1% $6,824 -0.7% $4,684 2.3%
Central $8,097 3.3% $9,568 2.9% $7,426 3.3% $4,993 -3.2%
East Central $8,218 3.8% $9,900 4.2% $7,674 3.8% $5,305 3.0%
Southwest $6,058 0.0% $7,571 0.6% $5,756 1.3% $3,935 -6.1%
South Central $4,172 -1.6% $5,908 -1.2% $4,079 -1.2% $2,824 -2.3%
Southeast $6,864 2.2% $9,471 2.2% $6,548 4.2% $3,768 -0.4%
Iowa Avg. $7,326 2.0% $8,933 2.0% $6,849 2.2% $4,689 0.5%
Land Values by District and Quality, Nov 2017
![Page 40: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/40.jpg)
District
Livestock Inventory - 2012 Acres 2012 Harvested Acres 2017
Chickens, Layers Hogs Milk Cows Cattle Pasture Timber Corn Soybean
Northwest 30% 26% 29% 22% 7% 2% 15% 16%North Central 64% 16% 4% 6% 4% 4% 14% 13%
Northeast 1% 12% 51% 16% 11% 23% 12% 8%West Central 0% 13% 1% 13% 10% 7% 15% 16%
Central 3% 13% 1% 7% 8% 8% 15% 14%East Central 1% 5% 10% 11% 11% 14% 11% 10%
Southwest 0% 2% 0% 9% 12% 5% 8% 10%South Central 0% 2% 1% 9% 25% 19% 4% 6%
Southeast 1% 11% 3% 6% 12% 19% 7% 8%
Iowa Total 52.2 million20.4
million 0.17 million 3.8 million 2.5 million 1.2 million12.9
million 10.0 million
Livestock and Crop Inventory by Crop Reporting District
USDA NASS, Ag Census
![Page 41: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/41.jpg)
Stronger than expected crop yields
USDA NASS QuickStats
Corn Yield: November 1, 2017Bushels per Acre
State Average: 197.0 bu/acre
Soybean Yield: November 1, 2017Bushels per Acre
State Average: 56.0 bu/acre
![Page 42: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/42.jpg)
Source: USDA NRCS; USDA FSA
Below: % Reduction in CRP Rental Rate 2017 vs. 2016
Above: Acres enrolled in CRP, 2017
![Page 43: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/43.jpg)
Land Values by County, Nov 2017
![Page 44: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/44.jpg)
CSR2 – Corn Suitability Rating
Source: ISU Agronomy
![Page 45: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/45.jpg)
Iowa Major Soil Association
Source: USDA NRCS
![Page 46: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/46.jpg)
PercentChangesin Land Values from Nov 2016
![Page 47: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/47.jpg)
Iowa Farmland Purchases by Buyer Types 1989-2017
0
10
20
30
40
50
60
70
80
90
1989 1993 1997 2001 2005 2009 2013 2017
Perc
ent
Existing Farmers Investors New Farmers Other
![Page 48: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/48.jpg)
Active Farmers Retired Farmers
Estate Sales Investors Other
PERCENTNorthwest 12 17 64 5 2North Central 12 19 56 10 3Northeast 14 34 43 6 5West Central 12 23 57 6 2Central 14 20 55 9 3East Central 11 23 55 9 2Southwest 16 23 48 11 2South Central 16 30 33 19 2Southeast 9 30 51 7 3
STATE 13 23 54 8 2
Iowa Farmland Purchases by Seller Types, 2017
![Page 49: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/49.jpg)
Cash Crop Price Predictions for Nov 2017, 2018, 2020 as of May 2017
Soil Management Land Valuation ConferenceMay 16, 2018 Wednesday, Scheman Bldg
Cash Corn Prices Cash Soybean Prices
2017 2018 2020 2017 2018 2020
Northwest $ 3.34 $ 3.65 $ 3.98 $ 9.25 $ 9.61 $ 10.32
North Central $ 3.42 $ 3.59 $ 3.93 $ 9.16 $ 9.46 $ 10.01
Northeast $ 3.41 $ 3.59 $ 3.95 $ 9.19 $ 9.28 $ 9.76
West Central $ 3.34 $ 3.59 $ 4.02 $ 9.12 $ 9.33 $ 10.06
Central $ 3.36 $ 3.50 $ 3.77 $ 9.17 $ 9.40 $ 9.86
East Central $ 3.42 $ 3.58 $ 3.89 $ 9.26 $ 9.51 $ 10.00
Southwest $ 3.31 $ 3.56 $ 3.94 $ 9.15 $ 9.42 $ 10.09
South Central $ 3.36 $ 3.59 $ 3.90 $ 9.51 $ 9.76 $ 10.35
Southeast $ 3.50 $ 3.83 $ 4.17 $ 9.49 $ 9.59 $ 10.08
STATE $ 3.38 $ 3.60 $ 3.94 $ 9.24 $ 9.48 $ 10.06
![Page 51: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/51.jpg)
Source: USDA-NASS;Ag Census, Iowa Farmland Value Portal
Inflation-adjusted Iowa Ag Real Estate Values 1850-2017
Farm Crises and this downturn
![Page 52: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/52.jpg)
Positive 1: Real Income Accumulation 2003-2013
Source: Zhang and Tidgren 2017
![Page 53: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/53.jpg)
Iowa Landowners tend to hold the farmland; and many don’t have debt
Years Owned % of Iowa Farmland
<10 years 24%10-20 Years 21%20-30 Years 19%30-40 Years 15%> 40 Years 20%
Source: Ag DM PM1980, 2012 Iowa Farmland Ownership and Tenure Survey
![Page 54: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/54.jpg)
Source: http://www.multpl.com/10-year-treasury-rate
Positive 2: Historically low interest rates
![Page 55: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/55.jpg)
Positive 3: Prudence in Ag Lenders/Regulators
• Banking Regulations– More stringent, frequent stress-test– BASEL III, liquidity requirements for banks– (Ron Hansen – Iowa Division of Banking
Superintendent) walk into this “with eyes wide open”• Cash-Flow Based Loan Practice
– Before 1987: loan to value ratio is 85%– 1987-2008: loan to value ratio is 65%– After 2008: use cash-flow method for collateral ($4
corn, $10 bean) and 50% of cash flow value
Source: Zhang and Tidgren2017
![Page 56: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/56.jpg)
050
100150200250300350400450
Cash
Ren
t or M
ortg
age
Paym
ents
($/a
cre)
Annual Mortgage Payments vs. Cash Rents for Iowa Farmland Loan
Cash Rent 20-yr PMT 30-yr PMT 15-yr PMT
Source: Zhang and Tidgren 2017
![Page 57: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/57.jpg)
GMO in China: Controversy/Divide
![Page 58: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/58.jpg)
GMO in China: Controversy/Divide
YongyuanCui
Larry King in China;Key opponentvoice of GMO
GMO corn illegal
![Page 59: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/59.jpg)
![Page 60: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/60.jpg)
![Page 61: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/61.jpg)
![Page 62: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/62.jpg)
January 2017
![Page 63: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/63.jpg)
![Page 64: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/64.jpg)
Farmland Acres Owned by Chinese Owners as of 2016
![Page 65: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/65.jpg)
https://www.card.iastate.edu/china
![Page 66: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/66.jpg)
• First land ownership survey in the nation: 1949
• Only one conducted at frequent intervals: – 1949, 1958, 1970, 1976, 1982, 1992, 1997,
2002, 2007, and 2012.
Next one in 2017Results released spring 2018
2017 Iowa Farmland Ownership and Tenure Survey
![Page 67: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/67.jpg)
Documentaries about China• China: Time of Xi - https://www.youtube.com/watch?v=NEGp6y3uGlA• One Belt One Road https://www.youtube.com/watch?v=_NtprkECCiU• A Bite of China – Chinese cuisine/culturehttps://www.youtube.com/watch?v=Awj4u-_Ntgs&list=PLYOTfstAG_IPjyEeT472GEJzafYmBiA3w• Bird’s Eye China – aerial China by provincehttps://www.youtube.com/watch?v=LVjnASDa6Pw• The world’s future MegaProjects (2017-2040)https://www.youtube.com/watch?v=CiQ874ZuIno• Wild China – BBC (2008)
http://www.bbc.co.uk/programmes/b00bv6lk/episodes/guide• Chinese New Year: The Biggest Celebration on Earth (2016) – BBC
http://www.bbc.co.uk/programmes/b071c3mh/episodes/guide• China’s MegaProjects – available in Chinese only
![Page 68: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/68.jpg)
#ISUlandvalue2% increase since Nov 2016
https://www.card.iastate.edu/farmland
Iowa Farmland Value Portal
http://bit.ly/LandResults2017
![Page 69: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/69.jpg)
![Page 70: Update on Iowa Farmland Market and China Ag Economy · Update on Iowa Farmland Market and China Ag Economy Wendong Zhang Assistant Professor of Economics and Extension Economist](https://reader035.vdocument.in/reader035/viewer/2022062602/5ece906f81e3dd585a66588c/html5/thumbnails/70.jpg)
Thank You!Wendong Zhang
Assistant Professor and Extension Economist478C Heady Hall
Iowa State University515-294-2536
[email protected]://www2.econ.iastate.edu/faculty/zhang