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  • Hunting Leases and Rural Land

    Hunting Leases and Rural Land

    As fall approaches, so does hunting season.  As hunters are scouting for the best locations, landowners may be searching for opportunities to generate additional revenue from agricultural and forested property. Outdoor recreation such as hunting, fishing, camping, and hiking can provide additional opportunities for landowners, depending upon the property and the willingness of the landowner to go down this path. Not all landowners are willing to accept strangers walking around their property so recreational leases are not a perfect fit for everyone.  The leases can also be challenging as they differ significantly from traditional agricultural leases.

    When considering these leases, landowners must make decisions on what types of activities and limitations they are willing to allow.  Some of the issues to decide include: 

    • How do you price your recreational opportunities?
    • How many people have permission to enter the property? 
    • Can the lessees camp and build campfires on the property? 
    • What species are being hunted? 
    • Are there limits on the amount of game that can be taken?
    • How do you allow for recreational use while protecting growing crops and livestock?

    However, there are other issues that may be addressed through the lease as well as other means. For example, what about liability in case someone is injured on your property? Insurance is a readily available and cost-effective means to reduce liability. Based on my conversations with insurance underwriters over the years, many claims submitted for hunting accidents involve tree stands and ATVs. In addition to insurance, simple changes to a lease agreement such as forbidding ATVs and limiting tree stands to only ones that they personally install, may help to mitigate those and other risks.  

    To see a more in-depth list of factors to consider in a hunting lease, as well as a model lease form, you can read the Ranchers’ Agricultural Leasing Handbook: Grazing, Hunting and Livestock Leases handbook which discusses these issues and many more that landowners should consider. 

    Even with this information, I strongly recommend that an attorney draft your recreational lease, specific to your property, your boundaries and your situation.  For tips on finding an attorney, please visit this Southern Ag Today article.

    Rumley, Rusty. “Hunting Leases and Rural Land.” Southern Ag Today 4(36.5). September 6, 2024. Permalink

  • Shifting Winds: The Changing Landscape of Cotton Production and Exports in the U.S. and Brazil (Part 1)

    Shifting Winds: The Changing Landscape of Cotton Production and Exports in the U.S. and Brazil (Part 1)

    The United States has led world cotton exports since the 1980s. After the 1990s, the U.S. shipped most of its cotton production to foreign markets. As domestic processing capacity shrank,  U.S. cotton farmers became more dependent on international markets. Brazil expanded cotton production and exports in this context, challenging the U.S. leadership in cotton. We briefly contrast the U.S. and Brazilian cotton markets in two parts: the first highlights trade and the second production.  

    The importance of international markets for U.S. cotton farmers has grown in recent decades. In 1995, the World Trade Organization (WTO) implemented the Agreement on Textiles and Clothing (ATC). The ATC gradually phased out quotas on textile imports over ten years. Since the ATC’s implementation, U.S. exports jumped from 37% to 72% of total supply in 2023, underscoring the U.S.’s competitiveness overseas. Brazil exhibited a similar trajectory, reaching 66% of its total supply exported in 2023. Total supply includes beginning stocks, production, and imports. Figure 1 illustrates the upward trend of export relevance to cotton farmers. 

    Figure 1 – Cotton Exports as a Percentage of Total Supply. 

    Notes: Total supply is the sum of beginning stocks, production, and imports. ATC: Agreement on Textiles and Clothing. 2024 are estimated values. 
    Source: FAS/USDA/PSD. 

    Brazil surpassed U.S. cotton exports in 2023. The U.S. exported 11.75 M bales in the 2023 crop season, and Brazil shipped 12.1 M bales, leading cotton exports for the first time (USDA, 2024). Figure 2 shows the growth of Brazilian exports while U.S. exports stagnated. Factors such as Asian demand, favorable exchange rates, government support, and competitive prices fueled Brazilian exports. The U.S.-China trade war (2018-19) further shifted trade dynamics. 

    Figure 2 – U.S. and Brazil Cotton Exports. 

    Notes: ATC: Agreement on Textiles and Clothing. 2024 are estimated values. 
    Source: FAS/USDA/PSD. 

    Before the U.S.-China trade war, China ranked third among the largest importers; today, it tops the list. China now serves as the primary destination for U.S. and Brazilian cotton. According to U.N. Comtrade (2024), Brazil’s share of the Chinese market surged from 9% in 2014 to 37% in 2023, matching the U.S.[1] From 2022 to 2023, Brazilian cotton shipped to China jumped 49%, while U.S. exports dropped 33%. However, in the first half of 2024, the U.S. increased its exports to the Asian country by 79% compared to the same period last year. 

    The continued growth of Brazil’s cotton exports will likely challenge U.S. dominance further. Understanding the surge in Brazilian supply is particularly relevant for Southern growers, which are facing prices below $0.70 per pound, less than half of the May 2022 peak. Also, modest economic growth and high interest rates have constrained consumer spending worldwide, depressing the global demand for cotton. In part 2, we will review yield and production trends and how they may shape the export outlook. 

    References. 

    FAS/USDA/PSD. PSD Data Sets. Retrieved from: https://apps.fas.usda.gov/psdonline/app/index.html#/app/home[Accessed August 22, 2024].

    U.N. Comtrade. Trade Data. Retrieved from: https://comtradeplus.un.org/ [Accessed August 29, 2024].

    [1]. Market share is calculated from cotton quantity. The analysis with the U.S. Comtrade Database used HS 5201 cotton (not carded or combed). 

    Cali, Yuri, and Rachel Judd. “Shifting Winds: The Changing Landscape of Cotton Production and Exports in the U.S. and Brazil (Part 1).” Southern Ag Today 4(36.4). September 5, 2024. Permalink

  • Irrigation Water Pumping Costs in the Mid-South

    Irrigation Water Pumping Costs in the Mid-South

    Irrigation water is a significant resource for row crop agriculture in the Mid-South (Eastern Arkansas, Northeastern Louisiana, Northwestern Mississippi, and Southeastern Missouri). The primary crops grown in the region are rice, soybeans, cotton, and corn. All rice acres and most soybean, corn, and cotton acres in the region are irrigated. The region’s primary irrigation source is groundwater pumped from the Mississippi River Valley alluvial aquifer (MRVAA) (Massey et al., 2017). Pumping costs vary greatly throughout the region depending on the crop grown, the mode of power used to pump the water, and the pumping depth of water. This article looks more closely at the range of pumping costs for the Mid-South.

    Table 1 presents the estimated costs per acre of pumping irrigation water for the four major crops grown in the Mid-South by energy source (diesel, electric) and by total dynamic head (TDH) (depth to water plus drawdown and discharge pressure). Crop irrigation amounts (acre-inches) represent average amounts reported for each crop in enterprise budgets from both the University of Arkansas and Mississippi State University. A diesel price of $3.54/gallon is used to calculate diesel pumping costs, while an electric price of $0.138/kWh is used to calculate electric pumping costs. The amount of diesel and electric energy used to pump irrigation water for a given TDH is based on irrigation energy consumption data for alluvial wells from McDougal (2015). 

    Diesel power is currently more expensive than electric power. Farmers in the region have switched many of their diesel irrigation motors to electric motors because of the lower cost of electricity, but diesel is still prevalent due to the expense of running electricity to fields located far from electric utility lines. The proportion of diesel to electric pumps can vary greatly by farm in the region.

    Pumping costs can vary greatly depending on geographic location and groundwater availability. To demonstrate this, Figures 1 and 2 present estimated average pumping costs per acre for rice and soybeans by county in Eastern Arkansas. Estimated average pumping costs in these figures assume half diesel and half electric power and are calculated using depth-to-water data from the Arkansas Groundwater Protection and Management Report for 2023 (Arkansas Department of Agriculture, NRD, 2024). Average depth-to-water values for each county are adjusted upward to TDH by adding 28 feet to account for drawdown and discharge pressure (Chris Henry, University of Arkansas Water Management Engineer, personal communication). Counties with a darker shade of red in both figures have the highest average pumping costs. Groundwater is more limiting for these counties relative to counties where water is more plentiful (counties with a lighter shade of red). Less groundwater translates into deeper pumping depths, making irrigation water more expensive in locations where water is more limiting.

    References and Resources

    Arkansas Department of Agriculture, Natural Resources Division (2024). Arkansas Groundwater Protection and Management Report 2023. https://www.agriculture.arkansas.gov/wp-content/uploads/2023-Groundwater-Report-Final.pdf

    McDougall, W. M. (2015). A Pump Monitoring Approach to Irrigation Pumping Plant Performance Testing. Graduate Theses and Dissertations Retrieved from https://scholarworks.uark.edu/etd/1146

    Massey, J.H., C.M. Stiles, J.W. Epting, R.S. Powers, D.B. Kelley, T.H. Bowling, C.L. Janes, and D.A. Pennington (2017). Long-Term Measurements of Agronomic Crop Irrigation Made in the Mississippi Delta Portion of the Lower Mississippi River Valley. Irrigation Science. 35:297-313. 

    Watkins, Brad. “Irrigation Water Pumping Costs in the Mid-South.” Southern Ag Today 4(36.3). September 4, 2024. Permalink

  • Feeder Heifer Imports from Mexico and U.S. Herd Rebuilding

    Feeder Heifer Imports from Mexico and U.S. Herd Rebuilding

    Whether or not herd rebuilding has started is among the most frequently asked questions.  For the most part, the answer is there is not much evidence of rebuilding yet.  The number of heifers held for herd replacement in the January 1 inventory report was the smallest on record.  The quarterly cattle on feed reports indicated more heifers on feed than a year ago which implies more heifers placed in feedlots rather than kept in producers’ herds to produce a calf next year.  However, there is a different set of data that might shed some more light on heifer retention.

    Monthly cattle imports from Mexico have been greater than a year ago during every month of 2024.  We import both feeder steers and spayed feeder heifers which eventually go to feedlots.  The quarterly cattle on feed reports, which indicate the number of heifers on feed, would include those heifers that came from Mexico. If the number of feeder heifers imported from Mexico is large enough, it could suggest fewer U.S.-born heifers have been placed on feed in 2024. This could be an indication of fewer U.S. heifers available or that more heifers were held back for replacement.  

    We have the weekly data for feeder steers and feeder heifers imported from Mexico beginning in January 2012.  Through the week of August 24, there were 347,401 feeder heifers imported during 2024.  That is 176,644 more than the same period last year.  It is also the most feeder heifers imported for this time period going back to at least 2012 when 303,290 head were imported.  Feeder heifers make up 37 percent of total feeder cattle imports, the highest since at least 2012. Over the same number of weeks, total feeder cattle imports (including steers) are the second largest behind only 2012.  

    What does this mean for U.S. herd rebuilding?  If we take the total number of heifers on feed on July 1 and then subtract the number of feeder heifers imported from Mexico during January-June, it would indicate 126,784 fewer domestic heifers on feed than last year.  It is probably too big of an assumption to think all of those imports have already been placed in feedlots since many imported feeder cattle go to pasture before heading to feedlots.  Still, this result might indicate that a few more domestic heifers have been held back, although some of this decline could simply be due to fewer heifers born in the U.S. We certainly aren’t convinced of any widespread expansion yet.  However, larger heifer imports from Mexico are propping up the percentage of U.S. heifers on feed and need to be carefully considered when making comparisons to previous years.  

    Anderson, David, and Josh Maples. “Feeder Heifer Imports from Mexico and U.S. Herd Rebuilding.” Southern Ag Today 4(36.2). September 3, 2024. Permalink

  • Land Ownership and the Preservation of Family Farm Legacies 

    Land Ownership and the Preservation of Family Farm Legacies 

    The preservation of land for future generations and the creation of family legacies is an important part of the U.S. agricultural heritage.  Unfortunately, many families are left vulnerable to losing their land or face complicated management decisions.  This occurs because the land is passed down from one generation to the next without an appropriate transition plan or without a properly probated will.  

    Two recent Southern Ag Today articles (referenced below) focused on estate and transition planning, both illustrating the importance of the process of organizing and arranging the transfer of one’s assets, including real estate, to heirs in a structured and legally recognized manner. It typically involves creating a will or trust, designating beneficiaries, and addressing issues like taxes and debts. It is a crucial aspect of risk management that can keep land in the family.  Land ownership where property is passed down without clear legal documentation and is shared among all the heirs is known as heirs property.  

    Heirs property can limit land management and complicate access to some federal programs. Each heir has an equal right to full use and possession and is legally responsible for taxes and other property-related expenses and activities.  As land is passed down to future generations, and the number of heirs increases, it becomes more fractionated with each person’s percentage interest in the land decreasing.  Furthermore, heirs property becomes vulnerable to loss through issues such as partition sales, tax sales, or adverse possession.  Maintenance of the land and the ability to manage the use of the lands resources is also limited and can result in conflict and disputes amongst the heirs.  

    While heirs property is a significant issue, there are means to resolution and preventing the future creation of heirs property.  This starts with a will or appropriate estate or transition plan.  According to a Gallup Poll in 2020, only 46% of U.S. adults have a will.  Almost a quarter of adults 65 years and older are also without a will.  While we do not have these data for agricultural producers, the USDA Census of Agriculture does report the number of producers who are engaged in some form of estate and transition planning.  Table 1 reports the percentage of producers in the 13-state southern region that reported being engaged in estate or transition planning in the 2017 and 2022 Census of Agriculture.  In 2017, this percentage ranged from a low of 49% in Louisiana to a high of 62% in Oklahoma.  These numbers fell in 2022 in all states, with Louisiana remaining the smallest percentage at 44% and Oklahoma, while still the highest, dropped to 56%.  This illustrates the significant gap that exists in agricultural estate planning, leading to increased risk of creating heirs property for future generations. 

     There are various reasons why individuals do not engage in proper estate planning.  Sometimes they feel they do not have enough assets, the process is too expensive, or the process is too complicated.  Another reason is that some people are simply holding off because the conversation is uncomfortable and morbid. However, the best prevention for heirs property is education, choosing the right attorney, and formalizing a transition plan. A well-crafted estate plan can prevent a property from becoming heirs property by ensuring that a clear title is passed down to future generations.  More information on the resolution and prevention of heirs property can be found in the Heirs Property in Alabama publication. 

    Table 1: Percentage of Agricultural Producers Engaged in Estate or Transition Planning 

    State20172022Percentage 
    Change
    OK62%56%-6%
    AR57%53%-4%
    TX58%53%-5%
    VA56%53%-3%
    AL56%52%-4%
    GA55%52%-3%
    MS55%51%-4%
    SC56%51%-4%
    TN55%51%-4%
    KY55%50%-5%
    NC54%50%-4%
    FL51%48%-3%
    LA49%44%-5%
    Source: Author Calculations based on 2022 USDA Census of Agriculture 

    References:

    Gallup. “How Many Americans Have a Will?” The Short Answer. June 23, 2021.

    Graff, Natalie. “Government Incentives for Agricultural Generational Transfer?” Southern Ag Today 4(25.4). June 20, 2024.

    Johnson, Portia, Ryan Thomson, Adam Rabinowitz, and Katie Keown. “Heirs Property in Alabama.” Alabama Cooperative Extension System HE-0852. Revised July 2024.

    Martinez, Charley, and Kevin Ferguson. “Estate Transition Planning.” Southern Ag Today 4(27.3). July 3, 2024.

    Rabinowitz, Adam, Justin Anderson, and Jamie Mardis. “Land Ownership and the Preservation of Family Farm Legacies.” Southern Ag Today 4(35.5). August 30, 2024. Permalink