Jamie talks with Al Giese, a farmer in O’Brien County, Iowa, where record-setting land prices are the talk of the area. A dry summer means corn yields are taking a hit, but prices remain high because of extreme demand due to ethanol and feed lots in Iowa.
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Jamie (00:39):
Welcome to The Water Table podcast. Continuing on with our harvest updates, the harvest of 2022. Today I have Al Geese on the phone. Al is farming right now in Southland, Iowa and O’Brien County, Iowa, and has a long history in the agri business sector. I wanted to just visit with Al today about what he’s seeing for yields down there and how Harvest is going. Welcome, Al.
Al Giese (01:04):
Oh, thank you, Jamie. Yeah, harvest is well underway. Soybeans are pretty… There’s hardly any soybeans left. I’d say the corn harvest is two thirds complete, moving right along the last couple days with the terrible winds have kept everybody out of the field pretty much. But yields typically in Northwest Iowa are running 15 to 20% behind the last few years due to lack of moisture. You get on that Western edge of Northwest Iowa Lion, Sue, Plymouth and Woodbury County, they got really shorted on water. Here in O’Brien County, it was hit and miss, a lot of scattered rains. Where they picked up a few extra rains it’s pretty good. Where they didn’t, it falls off pretty fast. I’d say Jamie, we’re off 15 to 20% pretty much across the board.
Jamie (02:13):
You’re seeing that on both-
Al Giese (02:14):
On both corn and beans. Yeah.
Jamie (02:16):
Yeah. Okay. That’s kind of consistent up… I’ve done a couple of harvest check-ins in Minnesota, both far Western Minnesota, and then kind of South central and kind of consistent to what you’re talking about. Our corn harvest is probably a little bit better and some of the soybeans were really good, but it was only where they caught those timely moistures. Then there was some stuff that just wasn’t as good. So it’s pretty consistent for that whole area. Probably from where your farm is, it’s probably 200 miles to that Western Minnesota farm. So Interesting.
Al Giese (02:56):
Yeah, yields are varying on corn, I’d say from 175 to 210 would be typical. On beans 55 to 65, again off 15 to 20% from normal. Corn on corn took a real hit around here this year. As you know, we have a lot of livestock and a lot of ethanol plants, so we’ve got really good corn demand, and there’s a fair amount of corn on corn and it… Droughty weather is hard on corn on corn, in addition to some of the diseases that have shown up
Jamie (03:30):
On corn on corn, where you be seeing less than 175 bushel consistently then?
Al Giese (03:37):
Especially where they missed a rain or two because we were so marginal on moisture. This Northwest Iowa was just a huge corn demand area. [inaudible 00:03:50] the ethanol industry and the intense livestock we have here, both cattle and hogs. So it’s just one of those years, the revenue per acre, because the prices, still looks pretty good. But we are going into next season really short of sub soil moisture as well as surface moisture. That has to change to pull a decent crop out of it going into 2023. Just application of fall ammonia is a real question mark around here, just because it’s so dry and getting ammonia to seal and avoiding losing it is a real concern.
Jamie (04:42):
Yeah. What happened last spring in your area was… Were you in the field really late and finished planting really late, or did you catch some windows?
Al Giese (04:55):
No, we were in good shape. We had a pretty much normal spring. A lot of corn went in late April, and we had really good emergence. We had the potential for probably the best crop ever into June with the start we got. But we lacked moisture and what we got was so scattered that farms that maybe missed one or two showers, just within a few miles of one another, it really took a toll on the yield.
Jamie (05:37):
You just mentioned you’re really dry now and concerns for next year. What else are you…? Just as you finish up harvest here, and for sure, unless something goes terribly wrong, most of the stuff is going to be done by November one. What are you thinking about as you enter 2023? And what’s on your mind, both from some exciting things and some concerns around agriculture? You’re a guy that gets pretty involved and has a long career and agri business, so might be thinking about this differently than some of the rest of us. So I’d be curious to hear what you’re thinking about.
Al Giese (06:23):
Well, of course, available moisture is the first concern in Western Iowa. But overall, eastern Iowa is in good shape on moisture. As we look down the road prices, you can forward price pretty favorably on corn and soybeans on the other side of that, input costs have gone up dramatically. As we all know, fertilizer has fallen back some, but it’s still a lot higher than it was and that’s due to the inflationary pressures and supply chain issues on everything.
(07:04):
Export demand, as everyone in agriculture knows is lagging behind the Mississippi River is low difficult, they can’t float completely loaded barges at this point. The high value of the dollar is hurting our exports. We’ve got great livestock populations here in Western Iowa that presents good corn demand should keep our basis really positive for the next year.
(07:39):
The ethanol industry is that three-legged stool in agriculture, exports, livestock and biofuels, ethanol. From a corn perspective, the ethanol industry is… Their margins are challenged with this high price of corn, but the high price of gasoline has offset a fair amount of that. We continue to move forward with going E15 nationwide, which will be very beneficial to the ethanol industry in terms of demand and good margins. That’s… High gasoline prices do help the ethanol industry as much as they hurt across the board. I would say, Jamie, those are some of the positives and negatives that we’re looking at going forward. But the biggest concern by far right now is getting some sub soil moisture built back up.
Jamie (08:44):
Yep. Something that in the business we’re in here, we watch pretty closely and we certainly are in agreement with that. Talk to me a little bit about what’s happened the last couple of years and where you see it going with land prices. You’re in a part of Iowa there that has some of the highest land prices in the state, and due to all the things you just mentioned with the livestock, high demand, high demand for corn. Where do you think land prices, do you think they’ve peaked out? Have you seen that and where do you think they’re going?
Al Giese (09:19):
That’s a great question, Jamie, because there was a sale just this week in Plymouth County over by Le Mars set a new record for Western Iowa land prices, $26,000 an acre and some change, I think. But land prices in this part of the country are extremely aggressive and they show no indication of subsiding. Now, in some other areas, I have some involvement in some cattle feed lots out West of Yankton in South Dakota, and that land’s more marginal of course, and they’ve been droughty for two years. We’ve seen those land values drop off some, drop back some back there. But Western Iowa, it’s just going the other way. Land prices are incredibly high and demand is incredibly high. Farmers are going to have pretty good income this year, and the big operators and the big livestock operations had the demand for land has not been satisfied at this point from what we’re seeing in Northwest Iowa.
Jamie (10:34):
Are you seen…? Have the investors stayed in the market or have they left the market with higher interest rates here?
Al Giese (10:42):
There’s some investors in this market, but the vast majority of the land being bought is being bought by farmers or people connected to farmers, I guess you could call them investors, but they have a direct connection to farming operations. We have a lot of large daries, a lot of large feed lots and a lot of hogs in Western Iowa. That drives a really good economic activity and that drives really strong land prices.
Jamie (11:20):
Yep. Well, pretty amazing. $26,000 an acre. How many acres was that that was sold?
Al Giese (11:28):
I think it was a quarter, 160 acres. But land typically in this area right around here, $20 to $22,000 for good land with good CSR pretty much is the standard at this point.
Jamie (11:51):
Yeah.
Al Giese (11:51):
Which-
Jamie (11:52):
[Inaudible 00:11:52] amazing.
Al Giese (11:53):
It is amazing when you think about that. We had an 80 sale near our cattle feed lot a couple months ago that brought 21,100, so that’s $1.6 million for an 80 acres.
Jamie (12:12):
Yeah. Yep. It’s really good for… It creates a lot of challenges when you have land that high for communities, but it’s also really good for tax bases and building small communities in rural America.
Al Giese (12:27):
Exactly. And with the overall economy, the national economy in the shape it’s in, with the stock market showing significant weakness, I think that drives some money toward land investments in good agricultural land as well.
Jamie (12:49):
Yep. For sure. Well, Al, I really appreciate you joining me here on The Water Table today and giving us perspective of what’s happening here during harvest in Western Iowa. So thanks for your time.
Al Giese (13:03):
Well, thank you, Jamie. Appreciated doing it, given the opportunity. Take care.
Jamie (13:09):
All right, take care, bye-bye. Thank you for doing that, sir.
Jamie (13:14):
Thanks for joining us today on The Water Table. You can find us at watertable.ag, find us on Facebook, you can find us on Twitter, and you can also find the podcast on any of your favorite podcast platforms.