Dear Management Client

By Halderman

03 /17 /16

March 16, 2016

Dear Management Client:

The warm weather the past few days indicates spring is around the corner.  We plan to take advantage of coming weather opportunities to complete our Chris Peacock Client Letterwinter and spring projects prior to planting season.  Some of you are aware that I attended the National Land Conference last weekend.  This newsletter will concentrate on sharing information from this very informative land conference.

Overview:  The National Land Conference is in my opinion, the premier land conference in the nation.  This year’s conference was held in Dallas, Texas.  2016 presenters included two well-respected economists, the Texas Secretary of Agriculture, presentations on the latest agricultural technology, latest agricultural trends, and several small-group meetings.  One always leaves this conference excited about agriculture and how we can help our clients.  I also formally received the Accredited Land Consultant designation, which requires significant experience in our profession, many hours of in-depth agricultural education courses, and compiling a lengthy and detailed portfolio.  Those who attend this land conference are at the top of our profession and strive to continue to learn and improve for our clients.  It is humbling to be among such a distinguished group.

Economist Updates:  Dr. Mark Dotzour from Texas A&M as always gave a very detailed presentation that I unfortunately must briefly summarize.  His topic was entitled “Playing Ball in the Later Innings”.  Dotzour feels that we are in the later innings of the current U.S. economic cycle.  Dotzour explained his opinion that with the current investor leverage in the U.S. stock market, increased interest rates could create a 20% reduction in the stock market almost instantaneously.  As with many economists, Dotzour has seen that the agricultural economy tends to follow the oil economy and that the agricultural economy is likely to see a further pullback.  Some plusses leading into the potential agricultural downturn include:  low interest rates, the strength of the U.S. economy vs. nearly every other economy in the world, the current U.S. monetary policy, and the low leverage of many farmers today.  Dotzour expressed that in all, there is no better place in the world to invest than U.S. real estate.  He further emphasized that opportunities await for those that are ready.

The other economist that spoke was K.C. Conway, Sr. V.P. Credit Risk and Sr. Valuation Officer for Sun Trust, whose topic was “Never a Dull Vision”.  Mr. Conway emphasized that monitoring the U.S. monetary policy is key to our economy; the direction interest rates are moving, the direction we are shifting the value of the U.S. dollar, lending regulations, etc.  He further shared that dredging the Panama Canal is creating a shift in intermodal transportation, which will result in new real estate opportunities in various geographic regions.  NLC attendees from certain parts of the country have begun seeing a real estate shift due to intermodal transportation.

 Summary:  Although both economists expressed economic concerns from different perspectives, both economists relayed that there will be opportunities to “thrive and survive”.   You have read very similar viewpoints in my previous newsletters.   We may need to tighten our belts and maximize efficiencies in preparation for the future.  Staying at the top of our profession and implementing latest trends and technologies will help our clients through the economic valleys.  To add to Dr. Dotzour’s statement that there is no better investment than U.S. real estate, historical data indicates that U.S. farmland investments out-perform all other investment classes.  Opportunities await.  Please let me know if you have any questions or thoughts.  Thank you.

Christopher C. Peacock, ALC

Halderman Farm Management Services, Inc.