World-class auctioneer and farmland specialist, Kristine Fladeboe-Duininck, joins Jamie to explain the significant impact that installed water management systems have on land values. Learn why a farm’s tilemaps are worth their weight in gold and are key to getting the highest dollar per acre when it’s time to sell.
Kristine Fladeboe-Duininck is a world-class auctioneer and farmland specialist. With 20+ years of broker experience, Kristine is owner of Fladeboe Land. Fladeboe Land is a second-generation family owned business specializing in farmland. Kristine and her brother, Glen Fladeboe, returned to the family business over 20 years ago.
Jamie Duininck (00:02):
This is the water table.
Kent (00:05):
The chance to hear the agricultural side of these issues
Jamie Duininck (00:09):
Place for people to go find information and education
Matt H. (00:13):
Water management, which is going to become even more critical into the future.
Jamie Duininck (00:18):
Oh, misunderstood. What we do is
Kent (00:22):
I would encourage people to open their minds and listen to this dialogue.
Jamie Duininck (00:31):
Welcome back to the Water Table Podcast. Today. I have a fun guest with me, for me anyway, a fun guest. I have my wife, Kristine Fladeboe-Duiminck. Kristine operates and manages a real estate auction business, she’s a professional auctioneer, called Fladeboe Land. She does that with her brother, Glen, and they concentrate a lot on what we’re going to talk about is farmland and selling farmland by public auction. So welcome Kristine.
Kristine Fladeboe-Duininck (01:03):
Thank you, Jamie and greetings to all it’s an honor and great joy for me to be on the podcast.
Jamie Duininck (01:08):
Yeah, so I’ve been thinking about this for a while. It’s fun to, I’ve interviewed a lot of colleagues and friends and experts in the water management area, and been thinking about getting you on the show and talking about your expertise a little bit around land and how farmland, when it’s selling, what are the impacts of water, water quality, water management on the farm, so why don’t you just tell us, just to start a little bit about what do you do? What is Flakeboard Land all about?
Kristine Fladeboe-Duininck (01:45):
Flakeboard Land is a 43 year old family business. We specialize in selling farmland by auction, both live and online, private sale negotiations. We list farms from time to time, but most of them are sold by live auction and online, and we also do a lot of consulting and appraisals, and simply we provide a lot of information to families in the passion of selling farmland.
Jamie Duininck (02:16):
And you currently own the business with your brother Glen and work with him every day, and then your father Dale started the business you say, was that 43 years ago?
Kristine Fladeboe-Duininck (02:27):
In 1978, our parents, Dale and Grace, Flakeboard founded Flakeboard Auctions and we now are called Flakeboard Land on that division, and it’s brought myself, and my brother Glenn, great joy to continue the family tradition. Our father Dale is still very involved in the business and it all goes back to serving clients and making a difference in the lives of others.
Jamie Duininck (02:52):
So in a day in the life of what you guys do, you’re doing a lot of advertising for farms that you currently have, so most of the time when you receive a lead, it’s somebody calling you and saying, “Hey, we may be looking to sell our land”. Talk a little bit about that, how that happens and what your initial conversations are about to secure a sale.
Kristine Fladeboe-Duininck (03:22):
That’s right. We get a lot of calls from people and sometimes they’ve made the decision as a family that they’re ready to turn the page, and sometimes they’re just merely in the thinking stages. And what’s very important for our company is to provide care and to treat a family as if they were part of our own family, because we want to allow them to make the best possible decision for them. Sometimes it’s a 10 year process before they actually sell that farm, and we’ve had a relationship that long. Sometimes it’s a decision they’re going to make in a day or a week to sell the family farm. And sometimes the decision is to keep the family farm and that’s right for them. As you can imagine, in selling farmland, it’s often very emotional for families, sometimes on a scale of 1 to 10, it’s a 1, sometimes it’s a 10, or everything in between. It’s not uncommon that we’ll work with the family that the farm has been in that family, no kidding, for 150 years, or oftentimes 50 or 75 years. And so it’s a big deal for us to care, number one, be service minded, and to put their best interests ahead of ours.
Jamie Duininck (04:45):
When you’re talking about how long people have owned a farm, what is the average in the state of Minnesota? So you work, you should have probably mentioned that Fladeboe Land working most of the state of Minnesota, other than probably far Southeast and the Red River Valley, but throughout central Minnesota. Yeah, you’re working all that farm ground. So you’ve got a pretty good handle on that area. And what is the average, or what do you see for how long people are owning farms before they come to market?
Kristine Fladeboe-Duininck (05:18):
That’s correct. We do work a large radius of the state. Right now, we have a farm for sale up in Fergus Falls, Minnesota, and all the way to working with the family, with the private sale negotiation in Carver County, just east of the twin cities. And for both of those farms, they have been in the family well over 50 years. And so on average, a farm comes for sale every 50 to 60 years. So as you can imagine, the neighbors in that area, when they see a farm coming for sale, it’s a big deal. And they’re going to set up and take notice.
Jamie Duininck (05:58):
Let’s talk about the current market, what’s happening in pricing of farmland. We’re going to talk just a little bit about what you see in the areas you serve and then want to branch out a little bit more, but what are you seeing in west central Minnesota for farmland prices in 2021?
Kristine Fladeboe-Duininck (06:15):
The current farm land sales market is very strong. Back in 2012, 2013 ,farms were selling exceptionally high. I never knew if I’d see that again in my lifetime, but we don’t take this for granted. We don’t feel entitled. It could all change tomorrow. Believe it or not, we are getting close to those numbers, and sometimes, exceeding the sale prices of 2012. So farms are selling exceptionally high at this time. Some of the factors that are driving those prices are high commodity prices. I’m so thankful as a farm girl that corn and beans are back up and these farmers are getting paid much better than they were, for many years, per bushel for their yields. I will also say that supply and demand is a really big deal right now. There is far greater demand for farm land than there is supply, and low interest rates is helping us greatly. I’ll also say that the investors are back in the game. The investors are now happy, often with the 3-3 and 1/2% return, versus they used to require a 4 to 4 and 1/2% return. And so farmers are very encouraged, investors are encouraged, and farms are selling exceptionally high. I would say, Jamie, that farms are up, depending on their quality, 10 to 30% from the last 18 months.
Jamie Duininck (07:52):
So let’s dig into that or drill down on that a little bit, the Water Table Podcast here, we have listeners from all over. And so what are we talking for numbers, because we have listeners in Iowa, and we have listeners in Ontario, and in Ohio. And those prices may be different, even though I know from talking to friends and colleagues in those areas that they’re seeing very high prices too, but what’s a high price in Minnesota for farmland? What are you seeing on the high end ?
Kristine Fladeboe-Duininck (08:24):
High price right now in Minnesota for farmland is 10 to be 13,000 per acre, but it’s very regional. It depends on where you are in the state. It depends on the quality. It depends on the drainage number one, we’re going to talk about that in a bit. For some areas, an $8,000 farm per tillable acre is considered very, very high, whereas maybe 16 or 18 months ago, it sold for 6,000 or 6,500. So depending on the location, depending on the quality, depending on the strength of the township of where that’s located, exceptional might mean 8,000. Exceptional might mean 10,000, 12,000, 14,000. But on the whole, my opinion is, again, farms are up 10 to 30% depending on location and factors from 18 months ago. And so the strength is incredible. Now, if you’re in Iowa, it’s a whole different story. Just a few weeks ago, a farm sold in Iowa for $19,000 an acre. I’m rounding that. And you and I just spoke together this morning about a recent, the strongest sale ever at 22,600 in Iowa. Now I will say that that farm had a wind turbine on it, They do make some money off of that as well.
Jamie Duininck (09:55):
The income stream changes when you have other factors like that, that was in Grundy County, Iowa, which is east of Waterloo. And yeah, it becomes you, I guess I’ll ask you the question around at what point do you think when you start talking about that kind of money, which probably is very unrealistic and in some areas like Minnesota, or, but when you start talking $20,000 an acre for farmland, at what point do farmers have to consider, maybe I need to become, do something different with my life, sell my farmland and invest that cash, because it is far greater than what I think any of us have dreamed of getting for black dirt. So, I mean, how do you feel about that?
Kristine Fladeboe-Duininck (10:50):
It’s interesting. If you thought about it, you’d probably first think, “Well, gosh, if farms are selling that high”, again, Iowa being different than Minnesota, but in general in the area, farms are exceptionally strong. But you’d maybe first think, “Gosh, if we’re at an all time high”, the answer is for everyone to sell, but that isn’t the answer. The answer is what feels good to the seller? What fits their heart? What fits their emotion? What can they live with? Do they want to sell the family farm or keep it? Our company answer is if you want to keep the family farm, keep it as long as you want to keep it, no matter what the price is. But for some folks, the time has come, and the time has come to turn the page. And of course, we want to do an incredible job and care deeply, but again, you would think that the answer is prices, but I believe after being in this business 26 years and learning every day, the real answer is for families to follow their heart and do what makes sense as to what feels best, whether it’s keeping or selling the farm.
Jamie Duininck (12:08):
That’s a good answer. And I didn’t expect anything different then that. The, you know, at the Water Table, we talk about water and we talk about how the rural landscape, how we deal with water and managing water. And you talked a little bit ago about the factors in which come into pricing. One of them is taxes. People will pay more for a farm that’s in a county where taxes are a little less than another county. But I keep hearing as through conversations with you about more and more you’re hearing about what, how has the water been managed? What does the drainage look like? Is there an outlet? Has it been tiled, the farm? and how people think about that when they are selling and buying land? Can you talk about that a little bit?
Kristine Fladeboe-Duininck (13:02):
I’d love to and Jamie, I get excited about this stuff. Not because I’m married to you, but because it’s so fascinating in our business, what has happened with water management and drainage. Again, my opinion, but I will say with great confidence., 3 to 5 years ago, the first question that we were asked when we brought a farm to market is “What is the soil quality? What is the crop production index number?”. The second question we were asked is “Does the farm have tile? Can it be tiled? And does it have a good outlet?”. Now, that is completely flip-flopped. By far and away, when we market these farms, the very first call I’m going to get, or Glenn’s going to get, or Dale’s going to get, is, “Does the farm have tile? Does the family have tile maps? If the farm doesn’t have tile, can it be tiled and does it have a good outlet?”. People are most excited about tile and the ability to tile a farm with a good outlet, thereby increasing their yields.
Kristine Fladeboe-Duininck (14:15):
The second question we get often by a long shot is “What is the soil quality?”. People will now buy a farm with a decreased soil quality, but with a great outlet over and above a farm that has better soils with no outlet or the ability to not be drained well. And so it’s so interesting how water management and the ability to tile and the yields it will produce and our business. It has been glaring as to the last 3 to 5 years, how important that is to farmers and investors. And we can tell before an auction, how well most of the time that farm is going to sell because of the amount of tile or even bigger, can it be tiled with a good outlet? And they’ll get very excited about that find.
Jamie Duininck (15:11):
Yeah. And what you’re talking about when it’s a good outlet is, does it have the opportunity to, is the outlet easy? Is it close by? Is it not going to cost a lot of money too? You can always find an outlet one way or another, but you might have to go through neighbors, you might have to get a lot of neighbor buy and those kinds of things, lift station, whatever it might be, but is the outlet easy to get to and cost-effective? So, the burning question becomes if you’re selling land and you do have something that is pattern tiled, is been done well has a good outlet compared to a land that doesn’t have tile, what are you seeing from a pricing standpoint on that? From the standpoint of if you’re going to sell the land are you getting more for tile land than non tile land?
Kristine Fladeboe-Duininck (16:06):
Absolutely. And I wrestle a little bit with this answer because it’s just an opinion, but I would say a farm that is tiled, well tiled, is going to bring an additional 800 to $2,000 an acre in this current environment that we’re at. Now in some farms, maybe that’s less, some farms maybe that’s more, but I can say with great confidence, you’re probably between an additional 800 to $2,000 an acre If that farm is well tiled.
Jamie Duininck (16:43):
Yeah. Which is a pretty amazing statistic because you can tile that farm, you can manage your water on that farm for less than $2,000 an acre, somewhere between 800 and $1,200 an acre on most farms. It depends on the, I’m not the contractor, I’m not the guy that installs, but when I go around and talk to people, that’s usually what it is. If it’s like I say, if there’s a good outlet, good place to outlet the water. So you’re paying for, you’re getting the increase in value of what it costs to tile the land in what the farm is worth. And we’re not even talking about the yield increase that you’re getting every year, which is 20, 30 bushels an acre. So it, right there what you’re telling us is how important it is from the standpoint of being a great investment for the family farm.
Jamie Duininck (17:39):
Like I always like to say is what we do here when we manage water at Prinsco is we’re not manufacturing a toy that we sell at Christmas. I’ve said this many times, but that the child gets bored with by February or it breaks by March. But what we’re doing is we’re making plastic pipe that is sold to a contractor that is sold to a farmer, installed in his field and it generates wealth for generations to come. It generates wealth for that. On that wealth, we’re paying taxes to local governments. We’re building schools with it. We’re building hospitals in these rural communities. And then at the end of all that, what you’re telling us is you’re getting your investment back out of it when you’re selling the land. So that’s pretty cool. That’s a neat testimony, what you’re saying there and makes me excited.
Kristine Fladeboe-Duininck (18:32):
Well, and something I’ll add to that, probably what brings us the greatest joy in the business is providing education, whether we sell a farm for a family or not. But to look ourselves in the mirror at the end of the day and say that we helped that family, we made a difference in providing education and value to them. And we often educate families that if they have a farm and they plan, they’re not going to sell the farm, but they have enough money to pattern tile it, by all means pattern tile that farm. Or if resources are limited and there’s some wet spots, take care of those wet spots, do what needs to be done to improve that farm. And for some families there isn’t resources to improve it at all, which is fine as well. But I do encourage families to keep their tile maps.
Kristine Fladeboe-Duininck (19:29):
They’re like liquid gold. If you can find your tile maps or have a farm tiled, do everything you can to keep those maps or to meet with your tenant and have them mark the tile in intakes to the best of their ability. And I’ll just add something to that, Jamie, what’s fun for you and I is to talk about our passions for our work and what I’ve really seen in you, and I align with this, is it goes far the greater than tiling farms. It goes all back to making a difference and feeding the world. And so the increased yields, not only does that benefit people with greater income, but bottom line, those increased yields are a far benefit to our world as we’re all working together to feed the world. And I know with you leading Prinsco, that’s a passion of yours and that’s a passion of mine. And so it’s far and deep, water management, and what it does to feed our world and make a difference in the lives of others.
Jamie Duininck (20:37):
Yeah. And then I want to ask you about tile maps, but before we leave this piece here, when you talk about good soil and versus soil that a high CPI compared to something that doesn’t, if you’re, used to be that people would just buy the best ground they could. And now it’s showing the importance of proper water management really. It’s not tile, it’s that you’re managing the water on that landscape, which crop can grow just as good, if not better, when you have proper water management in a lower CPI than in a higher CPI, I’ve heard you talk about that. And you mentioned it earlier in the podcast too. I just wanted to bring that up again.
Kristine Fladeboe-Duininck (21:29):
That is correct. For an example, if we have a farm that has a crop production index of an 85, 100 being the best, but it is well tiled, or if it’s not well tiled it has an excellent outlet, it will sell better or exceptionally better than a farm with the crop production index of a 90, 91, 92, 93, that is a wet farm that cannot be tiled and does not have a good outlet. And so, again, it’s been so interesting for Glen and I and Dale working in this business, how that has changed dramatically in the last 3 to 5 years. And I compliment Prinsco and organizations alike that have educated the public. It is so obvious to me how the public is educated as to water management and how that is making such a difference in the farms that they farm. And so just this week, we have a number of farmland auctions coming up, and it’s the biggest conversations I have with the farmers and investors is the tile, the lack of tile, the ability to be tiled the outlets, and they’re expecting us, as professionals, to know that inside and out when they make a buying decision.
Jamie Duininck (22:55):
Like any good marriage, there’s disagreements, and I just have to disagree with you on something you said earlier, and that is, you talked about if you can’t pattern tile the whole farm or manage the water on the whole farm, let’s get the wet spots, let’s do that kind of thing, and I would just challenge our listeners to really look at this and what you’ve said and how important it is from the standpoint of resale, how important it is from the standpoint of yields, that you find a way to actually manage the water on your whole farm and pattern tile the whole farm, because you wouldn’t do that with fertilizer. You wouldn’t go and say, let’s skimp on fertilizer this year. Let’s skimp on seed cause we can’t afford it. That sounds pretty crazy. And the reality of it is you can’t afford not to do these things in the long-term and be viable.
Jamie Duininck (23:52):
So we have to just like any other conversation, we have to challenge each other a little bit, so I had to do that. Going back to tile maps, that’s one thing I have, just in conversations I’ve overheard you talking to potential sellers or sellers, and you mentioned that’s important, but I just wanted to reiterate that because I’ve heard conversations where they can’t find their tile maps, or they know that Grandpa did some tiling in the 1970s, 1980s, and have no idea where the tile is. It’s not pattern tiled, but there is random tile out there, don’t have the maps, and that it’s really important that you do have those that you keep them. If you have work done on your farm, manage water on your farm, but what do you see in cases like that? Where maybe, there’s random tile in the field, but you don’t have the maps, does that impact the price of the farm negative?
Kristine Fladeboe-Duininck (25:00):
So again, you said it, but we try really hard for the sellers and encourage them to find their maps. So if they have tile maps on the farm and they can be found, we do everything we can to help them find out, where are those maps? And if they have them, often times sellers will reach long and hard and find them or not find them. And we don’t want sellers to feel bad. 50% of the time, they haven’t kept them. And it’s something that we often hear that they don’t have the maps. Then what we like to do is work around the edges and have the sellers meet with the tenant and have them draw in the tile and the intakes to the very best of their ability. And most tenants realize that if the shoe is on the other foot, they would want someone to do that for them too.
Kristine Fladeboe-Duininck (25:59):
And so we find most of the tenants to be very graceful and helpful in that situation to a family. So if you have maps by all means, keep them, try to find them, meet with your tenant, try to get help finding out where that tile is. But back to your question Jamie, if you can’t locate the tile and we’re not able to tell the public where it is, we just have to be candid with the public and honest, there may or may not be tile and we never mislead the public. And so it is important. If tile can be said, it is a definite benefit in selling that farm, I’ll also quickly speak to county tile on every farm, we will look up with the county ditch inspector, where are the county ditches, and sometimes people will be surprised and there’ll be county tile providing an excellent outlet for their farm that they didn’t even know about. And so as land professionals, we have to go the extra mile, whether it’s talking about private tile, county, tile, or county ditches,
Jamie Duininck (27:12):
Well, I’m glad you just brought that up because you gave me another idea for a future podcast because the county ditch system is something very different in each state. And especially as you go west and to the Dakotas, they might not know what you’re talking about, but in Minnesota we have a county ditch system that’s taxed and the land owners pay for that system. And I’m not going to go into all that right now, but I’ll get a guest on one of these times and we’ll talk that through.
Jamie Duininck (27:42):
So, been really a great conversation. Thank you for joining me today, Kristine, and at the Water Table, we really started this podcast to educate people. And this last half hour here sounded a little bit more like a sales pitch and that’s because we are passionate about what we do, but the reality of it is should be more around education on how important managing your water is to the land, because it’s good. It makes it more valuable, but also to the tax base of our rural economy and our rural landscape. It’s important that we have a great tax base out here so we can do the things we want to do. We can live the lifestyles we want to live in rural America and managing your water is right up there as important as anything in our infrastructure. So appreciate what you do. Keep up the good work and thanks for joining us on the Water Table Podcast.
Kristine Fladeboe-Duininck (28:45):
Thank you, Jamie. I appreciate the opportunity to share today. I thought of one conversation for the future, and that is easements. I’ve been studying easements for the last two days, that oftentimes with water management comes easements and having those properly in place. It was a fun for me to share and I get to see your heart day in and day out for the work you do, and you’re making a difference in the lives of others. And it’s fun for me to be a part of this today.
Jamie Duininck (29:19):
Thank you so much for joining us. If you enjoy what you’re listening to, you can find us on your favorite podcast platform. You can find us on Twitter or Facebook and you can also find us at watertablepodcast.com. Thanks for listening.