Beyond The Buzz: Land Values, Fundamentals and New Services
Clayton Becker, President, shares his outlook for the company, the role of farm managers, and the future of land values.
Clayton Becker has taken on a new role in a new segment of the ag industry as president at Farmers National Company (FNC) since October 2021. In this one-on-one interview with The Daily Scoop, he shares his outlook for the company, the role of farm managers, and the future of land values. https://www.thedailyscoop.com/news/retail-industry/beyond-buzz-land-values-fundamentals-and-new-services
What drew you to the role?
I had a great career at Syngenta–21 years–I learned a lot about agriculture, and really enjoyed seeds and crop protection. I’ve always had a passion for land and land ownership, and I’ve been familiar with farm management most of my career. When I went through the interview process last summer, I quickly recognized there were a lot of really good people at FNC who knew the industry very well. I also gained an appreciation for the breadth and diversity of FNC’s services for non-operating landowners. When I did a bit more research on the future of land ownership in America, I realized there are trends in agriculture and land ownership that favor a growing need for professional land owner services.
What do you see as the near-future for professional farm management?
Farm managers work with non-operating landowners by providing professional services to help them maintain and improve the value of their land. Right now, Agriculture is doing very well with strong commodity prices and farm income. But we are looking at some changing tides in the coming years with the impacts of inflation and rising interest rates. There’s also a lot of buzz around sustainability, regenerative ag, and ESG. These topics, and many others, can be difficult for landowners to navigate on their own. Our job is to help navigate these issues by looking across the entire industry to provide solutions that add value to their land.
What’s the biggest thing you’ve learned since joining FNC?
The value of good people. In a more of a general management mindset, having good people on your team makes a world of difference. FNC is the largest landowner services company in the industry, but in many ways, we still operate as a small business. There are often times when we all have to pick up a shovel and do the work that is needed. We are 100% employee owned, which creates a great culture of commitment, team work, and collaboration to deliver the best results for our clients.
What is the outlook for farmland values?
I joined last summer at a time when post-pandemic recovery and demand for commodities were driving prices and farm income to record levels. Farmland was higher in 2021 based on these supply and demand fundamentals, and then the Russian invasion of Ukraine in the spring of 2022 sent prices even higher. For the 2023 season, we also expect to see moderately higher rents, but going forward, that’s likely going to be a challenge to sustain. Commodity prices are cyclical, and inflation and raising interest rates are creating a changing landscape in land values as production costs go up for farmers.
What about the supply side of the land market?
Last year was a record year for FNC with real estate sales totaling $766 million in about 850 transactions. That set new records in volume and overall sales for our company. Over the past couple of years, we have seen an increase in landowners who want to sell land because of the increase in prices. In their opportunity to capitalize on that, it’s also been met with strong demand.
However, higher interest rates are starting to impact the number of buyers at auction. We’re still seeing record prices on one hand, but we are starting to see some bifurcation in prices at auction. There are signs that the market may be slowing in 2023 based on the number of sellers, as well as, the number of buyers who are actively bidding at auctions.
Most of our recent land sales have been through public auction. In areas with rising prices, auctions are the best method to expose that land to the market—both in person and online. As the market changes or slows—there may be a few more sales that will shift to online bids or listings where the seller has more control.
What kind of technology is changing your business?
Something we use today we didn’t a few years ago are digital tools for communication, reporting and lease agreements. And its other communication tools—digital mapping tools, photographs, and Zoom calls to communicate with clients. We are also exploring new apps and technologies that put crop scouting and reporting processes in the hands of the farm managers out in the field. During COVID, we also learned the value of using online tools to offer live and online simulcasts for our real estate auctions.
Specific to farm data—how is that aspect of technology changing FNC?
It’s a big deal. And farmers have access to different tools and sophisticated data for both crop production and accounting. We are doing what we can to continue to update our systems and the data we collect from tenants as we recognize ag data is driving a lot of decisions. More farmland owners want real-time access to their data as well.
We just signed a partnership with Climate this spring to map all the fields we manage, and provide more robust crop and weather data to the landowner. This partnership will help us provide a long-standing service to provide in-depth, real-time reporting to the landowner.
What is the role of farm managers in carbon and other ecosystem market opportunities?
Our mission is to “provide solutions for landowners that add value to their assets”. We get asked a lot of questions about sustainability and regenerative ag. We try to navigate this complex landscape by working with all the different players who are either creating products and services that improve soil health, sequester carbon, reduce tillage, or introduce a more efficient use of fertilizer. There’s no simple one size fits all solution. Every landowner, and every farmer’s goals are unique.
What’s on your watchlist for 2023?
Interest rates and inflation are the two biggest drivers impacting the ag industry and the economy overall. Depending on whether the fed is successful in slowing inflation without causing a recession will be the biggest topic throughout 2023. That will have a huge impact on the economy and agriculture overall.
Where are there growth areas for your business?
We currently manage farms in 30 states with about 6,500 landowners as clients. As we continue to work with new institutional clients like trusts, non-profits, and investors, that geography is expanding into additional states on the west coast, pacific northwest, and southeast.
We are also seeing an increased demand for services like hunting leases. We have over 200,000 registered users for our Hunting Lease Network, and demand for land with recreational purposes has seen a spike, certainty after COVID. We expect that to continue, and it’s a great opportunity for landowners to create additional revenue streams.
We are also an industry leader in oil and gas management, which is a rapidly growing area for us as well.
Is there any area that isn’t “red hot” with land values?
Well, certainly, the heart of the corn belt has been red hot. We have seen some softening in the high plains where it’s been very dry in parts of western Nebraska, Kansas and Colorado. Investors have been eyeing certain areas of the Pacific Northwest and finding some opportunities for good returns in the Mississippi Delta and Southeast.