Podcast Episode 51

Why Farmland Values Have Never Been Higher

With Guest:
  • Kristine Fladeboe-Duininck of Fladeboe Land , Owner

Kristine Fladeboe-Duininck, a farmland specialist, comes back to The Water Table to discuss how farmland values have never been higher, why we are seeing record-breaking farmland sales, and the impact a farm’s tile maps have on its value.

Episode 51 | 20 min

Guest Bio

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 Rodelius (00:05):
A chance to hear the agricultural side of these issues.

Jamie Duininck (00:09):
Place for people to go find information and education.

Matt Helmers: (00:13):
Water management is just going to become even more critical into the future.

Jamie Duininck (00:17):
How misunderstood what we do is.

Kent Rodelius (00:22):
I would encourage people to open their minds and listen to this dialogue.

Jamie Duininck (00:31):
Well, welcome back to The Water Table podcast. Glad to have all your listeners back with us. And today back by popular demand I have my wife Kristine Fladeboe Duininck, who is a land realtor. We’re going to talk a little bit about land values. We did this back in September of 2021, and just thought it was kind of a one time deal, but got a lot of good comments and agricultural farmland land values are pretty dynamic right now. So actually a lot has changed since September. And I just thought we would have you back and chat a little bit again about what’s going on in the world of agricultural auctions, land auctions, and see what you’re thinking about right now.

Kristine Fladeboe Duininck (01:13):
It’s wonderful to be back Jamie. I’m excited about what you’re doing and water management in general, and it’s really, really fun to share.

Jamie Duininck (01:22):
We should probably start by saying this is going to be a little bit of a dull podcast with the two of us, since we both are just recovering from COVID and still a little bit peaked, but we’ll do our best to keep y’all entertained here.

So tell me a little bit about what’s going on in your world, mostly central Minnesota agricultural land that you’re auctioning, but what do you see in the last four or five months in regards to land values?

Kristine Fladeboe Duininck (01:51):
Land values are very strong right now, the strongest of my entire career. We have never seen land this high. A close second was in 2012, 2013. But the land values at this time, not for every farm but good quality farms, have never been stronger.

Now we don’t take that for granted. We never feel entitled, that can all change tomorrow, but it’s a very exciting time to be a land broker. And it’s a really exciting time for our sellers. There is a lot more demand, I should say, versus supply. And the grain prices have been up significantly. And it’s really driving some high values at this time. So a really fun time to be in the business.

Jamie Duininck (02:45):
Sure, sure. I know you had a sale back this spring, March, April timeframe in Southern Kanawha County. For those listeners trying to figure out where that is, Willmar, Minnesota, it’d be south about 20 miles from that, from Willmar. But that was, I think still, but at the time considered the highest sale price of land in the county. Can you talk about that a little bit?

Kristine Fladeboe Duininck (03:12):
That is correct. That is called the Boersma farm. And that is just north of Prinsburg a couple miles. And that farm had a CPI, a crop production index of a 97.9 Jamie, the highest CPI soil quality farm that I’ve ever sold in my career out of countless farms. That sold for $13,850 per tillable acre here in Kandiyohi County. And I do believe that is a record for Kandiyohi County. What was driving the price of that farm is it had tile. It had excellent outlet, and really high soil quality, and had a great shape to it. And a nice crown on that farm. The water just kind of rolls off that farm. So a very exciting sale.

Jamie Duininck (04:11):
Yeah, for sure. For sure. And there’s indications just with what’s happening in agriculture with prices, commodity prices, things that that kind of thing is going to continue. And we don’t know, but that high price could be broken again before the end of the year with more sales coming up. Correct?

Kristine Fladeboe Duininck (04:33):
I think it’s going to be strong. I don’t know how long. I don’t have a crystal ball. I never will. But I believe that we’re going to have a strong end to 2022. Hopefully farmland sales will be strong into 2023. We’re really big believers that families should keep their farms as long as they’re bringing them joy, and as long as it makes sense for a family to keep the family farm, even in this high selling environment.

But for some folks, the time has come. And they’re ready to turn the page. And it is an excellent time to sell if it’s the right decision for a family at this time. But our company, we have to put the best interest of others ahead of ourselves.

Jamie Duininck (05:21):
Sure, sure. But let’s talk a little bit about this Boersma farm as an example. There are other ones too. But that farm had interest from farmers and from investors. And it ended up as I’m aware that an investor bought the land. And at The Water Table here, as we talk a lot about agricultural drainage and water management on the farm, there’s getting to be more and more absentee landowners, whether they are retired farmers that don’t have a succession plan and are renting to neighbors, or to younger farmers, or whether they’re investors that are coming out of the Twin Cities, or Des Moines, or wherever they might be from buying land. And they want to have that land as an investment. They want to rent it. And they want what’s best for that land.

Talk a little bit about absentee land ownership and how that relates to water management, what you’re seeing when absentee landowners buy the land. How knowledgeable are they about water management, and are they interested in improving that farm with a tile system, or what’s going on in regards to that in your world?

Kristine Fladeboe Duininck (06:36):
That’s changed a lot in the last, probably four to seven years. We’re seeing the absentee buyers, which I would also consider naming them investor buyers, much more educated than they used to be. They’re becoming more picky as to the farms they buy. And the biggest part is water management. Five years ago for my business partner and brother Glen, we run our family business Fladeboe Land… Five years ago the first question that we would always get asked by whether it’s an investor, absentee, potential buyer, or a farmer, the first question was, “What is the soil quality on a farm?”

Now by far in a way that’s the second question we get asked. The first question they want to know is, “How much tile does a farm have? And if it doesn’t have tile, can it be tiled with a proper outlet?” And so I think that the public is far greater educated as to water management than they used to be. And they understand the current value that water management brings to a farm with increased yields. And if the farm doesn’t have that, they want to know if it can be done. And for a lot of investors, they’ll quickly pass that farm by if the current tile or potential of tile is not sufficient.

Jamie Duininck (08:12):
Sure, sure. So if things like a challenge at the outlet, almost everything you can figure out how to, with a pump or something. But if there’s a significant challenge with an outlet, or you got to hook into a neighbor’s main or something, those are the types of things that some of these investors will shy away from is what you’re saying?

Kristine Fladeboe Duininck (08:32):
That is correct. If it’s too difficult to drain the water and they’re not able to find a… They want convenience. And you’re right, most everything can be drained somehow. But if it’s too difficult, and the proper chain of easement or a proper outlet isn’t in place or pretty readily available, they’ll pass that by pretty quickly looking for something that does outlet with more convenience to them.

Jamie Duininck (09:03):
I think another thing I wanted to just touch on here is tile maps. We talked about it in the last time that you and I visited on the podcast. And I got a lot of comments about it. That’s partially why I want to mention it again. But I want to come at it from this angle. What do you see, from whether it’s a family IE. this Boersma farm you talked about earlier that you just sold would be a good example of this, where mom and dad have passed away, the children own the farm, have for several years, and now they go to sell it? And I don’t know that particular case, but just bear with me here a minute. If in that case there was a challenge finding all of the tile maps, how much would that affect your ability to get top dollar for that farm?

And also, do you believe that the investors understand the value of… They understand the value of drainage, but understand the value of making sure they have those tile maps all in order for when they come to sell that farm, or to market that farm later on in their ownership timeframe?

Kristine Fladeboe Duininck (10:14):
That has changed in the business a lot. We are realizing the value of tile maps more and more. And I used these words on the first time I was on the podcast, but I want to use them again. Tile maps are like liquid gold when selling a farm. And so we always encourage families, if you can find your maps, if you have maps, if you can find maps, do everything you can to come up with those maps. Because they are very important and will add considerable value most of the time in selling that farm.

Now, for some families there is tile in the farm, they didn’t keep the maps. Again, we’re learning with time the importance of tile maps and having them. But for those families that haven’t kept the maps, we often encourage them to sit down with your renters. Most of the time, the renters will know where the intakes are. They’ll know probably what the tile has been. And oftentimes the renters will be very graceful and helpful to a family in indicating the tile on an aerial map to the very best of their ability. Because that renter knows that if the shoe was on the other foot, they would want as much help as possible in being able to show value with the farm.

So for anyone listening, if you’re going to put in future tile, make sure to keep those maps. If you have current tile in your farms, start looking today. And do the best you can to come up with your tile maps. If you can’t find them, that’s understandable. But then sit down with your tenant while you still own the farm and have that person to the very best of their ability help to indicate where the tile or tile intakes might be.

Jamie Duininck (12:08):
Sure. Sure. And I also think it’s important for those listening too, if you’re a farmer or a landowner that isn’t… Farmers probably know this, but landowners that are absentee landowners, you have every right to those tile maps and you should get them from your contractor. When you pay the final bill, you should expect a thumb drive or hard maps, thumb drive, whatever it might be with your information since you paid for that information. And then make sure you’re keeping that in a safety deposit box right along with your farm information, your deed, all that kind of stuff. Keep it because it’s super important to have and adds significant value to your farm. And that’s what you’re saying.

Kristine Fladeboe Duininck (12:56):
Well, I’m glad you said that Jamie, even if the farm has been tiled 5, 10, 20 years ago, and you remember who the contractor or contractors are, give them a call and kindly and firmly do your best to get those maps. Because like you said, that landowner has paid for that tile, and it could very well be that they have those in their records. And when you go to sell that farm, or even if you’re going to keep the farm, tile maps and the value that it brings to your farm truly is critical in our world. And like you said Jamie, the investors, the absentee owners, and even the neighboring farmers, we’re realizing more and more of the importance of water management. And so this is a very hot topic in our world and adds great value to these farms.

Jamie Duininck (13:48):
Sure. Another topic, maybe a little bit old news in your world, but new news for The Water Table podcast, and just kind of a fun loving story. You sold a farm back in December of last year that was owned by a church, and is a kind of a neat story. Why don’t you share that with our listeners?

Kristine Fladeboe Duininck (14:11):
I’ll just first say that our family business Fladeboe Land has been around 44 years. Our parents Dale and Grace Fladeboe founded our company. They’re still very active and very helpful today in bringing value. My brother Glen, as I mentioned, and business partner, we run the business. And it brings us great joy to serve communities.

And right here locally, this one was near and dear to our heart. We grew up in Vinje Church here in Willmar, Minnesota. But a sister church to Vinje is Calvary. Well back in 2014 a fun story, a bachelor parishioner at Calvary he passed away. And he gifted 407 tillable acres to Calvary Church. We were humbled and very grateful to be chosen to represent Calvary Church in the sale of that farmland back in December. We expect of ourselves Jamie to do an outstanding job of marketing when we represent an entity, or a church, or a family, or a business in selling farmland. We’re never getting that opportunity back. And so we have to do an unbelievable job of marketing as we expect of ourselves.

But on that auction day I’ll never forget it. It was a couple days before Christmas. We prayed that there won’t be a snowstorm and there wasn’t. But the Atwater Community Center was just full of people. You couldn’t get more people in the Atwater Community Center. We had Christmas cookies coming out of our ears. And we had a ton of people online, many, many people live and online that were excited to participate in that auction. Those were strong parcels that the church, owned parcels to be proud of.

But I think part of the specialness is the story behind those parcels and that the money goes back to Calvary Lutheran Church. So that was a really fun project. And those parcels and speaking of water management, they are more than likely going to have more tile added to them. But they had some tile, they had an excellent outlet. And that auction would’ve been a different story probably without an excellent outlet. And so really proud to have represented Calvary Lutheran Church.

Jamie Duininck (16:44):
Sure. And that was I think a little more than 400 acres and sold. We don’t need exact, but in that $11,000 range on average per acre. And I think there was three buyers, is that right? There was more than three parcels, but three buyers is that right?

Kristine Fladeboe Duininck (17:03):
That was correct. Five parcels and three buyers.

Jamie Duininck (17:06):
And I mentioned that only because they’re already has been. That was sold in December, closed in January, and tiled, not all of it, but a couple of those parcels were tiled in April. So that’s how this works. That’s how this industry works, is if you’re selling property, and you’re getting that kind of value per acre of land, the people buying it are saying, “I need to get the most I can out of this land,” which means, “I need to manage the water better. And I need to tile the ground.” So we’re seeing that all the time. And it’s just another example of that happening. So a great story. A nice windfall for Calvary church. And I don’t know what their plans are with that money, but I’m sure they’ll do good with it. So fun, fun story to have.

What else you want to share with us today on the podcast?

Kristine Fladeboe Duininck (18:02):
Well, a couple other things I’ll just share about timing. Had that auction been early November, I believe that farmland sold probably a $1,000 to $1,500 extra per tillable acre in the matter of about eight weeks. We had a lot of farmland auctions this past November, 2021 into December. And farmland sales were going up by the week with commodity prices. And so the timing was impeccable. I think the good Lord gets the glory for that. So again, really grateful to have partnered with Calvary Lutheran Church.

The other thing I want to share interesting with you Jamie that I shared on the first podcast. This is just my opinion. When a farm is tiled I believe it sells for a $1,000 to $2,500 extra per tillable acre, tiled farmland versus non-tiled farmland. And potentially even more rubbing on about $3,000. But that additional gain that we see as farmland selling professionals, when a farm is tiled, it is amazing again. And I’ve upped my numbers since I told you on the first podcast. But I believe it’s around that $1,000 to $2,500, sometimes even $3,000 extra per tillable acre on tiled farmland versus non-tiled farmland. That is truly the importance and the difference that water management is making, and how educated people are today even versus five years ago.

The other interesting thing I want to share with you when it comes to quality of farms, I would rather have a crop production index, a CPI, a soil quality of an 85 out of a 100 that has tile or can be drained properly to the proper outlet, than sell a farm that’s a CPI of a 92, that has quite a bit better soils, but can’t be drained properly. Investors and farmers will drive the wheels off their car for that farm that’s an 85 versus a 92 if it has proper tile, or if it can be managed, the water, with proper tile to a proper outlet versus a wet farm that has an inconvenient or expensive outlet. It’s just critical.

And it all goes back to… You know this, but it excites me. The yields that it will produce with water management, and the extra money that will be produced, goes right back to the families, goes right back to the communities, goes right back to the churches, goes right back to the schools, goes right back to the churches. You and I as a married couple, we talk about it all the time, the passion we have behind our jobs and the difference that it makes in communities, let alone feeding the world. So it’s not about you and I. It’s about serving people and making a difference in the lives of others, which that’s our passion and what excites us.

Jamie Duininck (21:26):
Yeah. So if you listeners haven’t figured out what our passion is, let me paint this picture. It’s a late afternoon and a beautiful July summer day. And we’re sitting in a cold studio without windows doing a podcast because we enjoy it. We enjoy talking about this. And we enjoy talking about how what we do, whether it’s selling farmland to the next available owner that wants to do something great with it, or whether it’s manufacturing and selling water management products, what we do makes a difference in the lives of other people. It grows more food for the world.

And it also, when it comes to water management, we’re building a tax base in rural America. That tax base then builds schools, and hospitals, and churches in communities. And there isn’t a better place that I can see to be invested in and to build your career, and then something like this in rural America. And we’ve talked so much about that on this podcast about what it’s like to live in rural America, and how it’s a great place to raise kids, a great place to put your flag in the ground and become part of the community.

So I’m excited to have you. Thanks for being here again today. I’m sure we’ll do this again. Buying land, managing the water on your land is similar to that of planting a tree. It’s, what’s the best time to plant a tree? Probably 10 years ago, because it’s then the same thing with, if you own a farm or you’re buying a farm, get the farm tiled and manage the water as soon as you can, because it starts to pay the very next day and continues to pay every year. And then like you just said, it’s worth a lot more when you go to sell it. So it really is a no brainer and why we continue to talk about it because not everybody understands that. It’s kind of surprising that not everybody understands it, but they don’t. And here at The Water Table we want to make sure that all those, even our adversaries, understand the good that can be done by managing water properly. So thanks for being here.

 Kristine Fladeboe Duininck (23:46):
Thank you Jamie. I’m proud of you, and proud of The Water Table and the difference that you’re making in this world.

Jamie Duininck (23:54):
Thank you very much. We’ll see you again.

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.