AG NEWSLETTER

SPECIAL SERVICES

www.theranchcompany.net

Appraisals & Sales

Jeff Lien

Tony Toso

Randy Edwards

Visalia

3449 S. Demaree Suite B

Visalia, CA 93277

Hilmar

8408 N. Lander Ave.

Hilmar, CA 95324

Ag Land & Dairy Sales

THE BOTTOM LINE

Volume 37 Number 3 - 2012 Agricultural Real Estate Services Since 1965

The Ranch Co.

FARMLAND • DAIRIES • QUOTA • FEED RANCHES • GROVES

Fees are based on time involved Appraisals - Dairy & Farmland Dairy Facilities Neighbor to Neighbor Land Sales Escrow Supervision Herd and Quota Appraisals Dairy Relocation Services

Farming is a capital intensive business (industry). It requires a business plan that provides for cash reserves to weather the storms. (Not just the ability to call the bank for a loan of money needed during the stress times.) The dairy industry, for years seen as financially invincible, has run into a storm of unprecedent-ed hurricane force. Carefully planned reserves have in most cases been totally wiped out. What is scary is that the same financial disaster could happen to any sector of ag production. In the last 50 years there have been times when certain crop prices returned zero dollars to the ranch while the entire year’s cultural costs were also lost. There are times when reserves are not enough to cover the losses. The late 70’s saw escalating land values as commodity prices kept climbing due to demand and exports. Land was purchased on the basis of the commodity prices of the day. In the early 80’s all of this came to a grinding halt as the dollar gained strength, export markets disappeared and crop loans went to over 20% interest. Again, reserves were not enough to cover the losses and by 1983 land values were at only 50% of a few years earlier. History often repeats itself in some form - Keep your eyes open!

“That’s the Bottom Line!”

John H Grimmius Sales and Consulting

Curtis Brunson

Tom McGuigan

Auctions - Farmland & Dairy IRC1031 - Tax Deferred Exchanges Farmland & Dairy Leasing Financial Consulting Estate/Bankruptcy Sales Agricultural Investment Planning

Jeanie McGuigan

Land Sales Info.

Abel Flores

Rose Vander Weerd

DRE #00304970

MILK POOL QUOTA

LAND

PERMANENT PLANTINGS

DAIRY FACILITIES

97.3 Acres +/- Planted to 16 acres of Serr walnuts, 35 acres 6th leaf Kerman Pistachios and

43 acres of 1st leaf Kerman Pistachios. Irrigation well and Consolidated Peoples surface

water. Great south Visalia location. Asking $21,000 per acre. SALE PENDING

61.57 Acres Almonds! S.S.J.I.D. water plus well and solid set sprinklers. 2/3 Carmel, 1/6

Nonpareil/Allrion, 1/6 Neplus, at 20 years old. 3 Acres of Fuyu Persimmons. Two homes

and other outbuildings - Ripon area (north of Modesto). Asking $1,870,000.

We have buyers for good permanent plantings!

For Lease - Hanford dairy with 380 capacity plus replacements. Double 10 flat with 6,100

gallon holding capacity. Buy your feed from the neighbors. Asking $3,000 per month.

Needed: We have one potential buyer for a 1,500-2,000 cow facility, one for a 1,000

cow facility and another client looking for a 1,500-2,000 cow rental facility.

Turlock Dairy with 328+ acres and 1,215 cows plus 875 heifers. Double

12 flat and freestalls for 1,100 mature cows. Flush, 11,000 gallons milk

tank capacity, feed storage, shop, hospital barn, maternity barn, shades,

silage slabs, commodity barn and hay barns. Heifer corrals with 1,000 ft

of locking stanchions and four stage lagoon system. Quality home, 4 bed,

2 bath plus office. Dairy, cows, heifers and all rolling equipment. All for

less than $8 Million.

Denair Dairy - Permitted for 1,800 lactating cows. Rotary barn, freestalls.

265.95+/- acres in Turlock Irrigation District. Sold on an as-is basis.

A facility for jersey cows - $5,990,000 SALE PENDING

Oakdale Dairy - 316.37 Acres - cropland and pasture. Double-20

milking parlor with two - 3,000 gallon tanks, four - 440 cow freestalls

plus 6 corrals, silage slab, 4 hay barns, commodity barn, shop and truck

scale. 2,100 mature cows permits. Constructed in 1994. Residence -

2,900 sq. ft. with pool. Asking price $10,500,000.

Average October sales of milk pool quota prices were 11.6% lower than the previous

month. This is the second month in a row to see an excess of 15,000# of S.N.F transferred.

If the current sales trend continues, 2012 will be the year of the greatest number of pounds

of S.N.F. quota sold since we began collecting the data 26 years ago.

39.68 Acres - Dry pasture in the Southeast portion of Tulare County. Terms: $30,000 with

$10,000 down and 5% interest for 5 years. Cash price: $25,000! SALE PENDING

Take your choice or buy both - Two - 80 acre parcels near Alpaugh and adjacent to

Alpaugh I.D. land. North 80 priced at $76,000; South 80 priced at $95,000.

17.91 Acres - Ranchette/Homesite - In area of farmed properties with year-around water

available. Very fine sandy loam soil. Southwest location. Priced at $59,900.

THE RANCH COMPANY STAFF (Visalia)

All listings offered in the NEWSLETTER are subject to prior sale, price change or withdrawal from the market.

All property information is from sources believed reliable, however not guaranteed.

To have property listed in THE RANCH CO. NEWSLETTER-Call the office-(559)733-3232.

Owner will Finance!

Can you use:

- Home, 2,064 sq. ft. - 4 bed, 2 bath

- Meeting hall with fireplace, 2,320 sq. ft., full kitchen

- Office space - 7,222 sq. ft.: 18 offices, conference rooms,

kitchen and more

- Shop

- Three Mobile Homes

- 20 minute drive to downtown Visalia

- Sits on: 9.44 Acres

- Includes two parcels

Great Country Setting with Grand Views of Pastureland, Foothills, and the Sierras.

All for just $490,000.

FEATURED PROPERTY

SPECIAL PROPERTIES

Plant almonds, pistachios, or vineyard! The finest class 1 soil, excellent water conditions and great location.

Planted to alfalfa.

47.61 Acres of Cajon & Foster soil series. Irrigation well. Ditch stock

available (Farmers). Located southeast of Visalia on Caldwell. A close-in

property - the kind that builds an estate. Reduced to $15,543 per acre.

Curtis Brunson

Broker

559-786-1399

Jeanie McGuigan

Comparable Sales

559-901-5633

John Grimmius

Broker

559-901-9322

Tom McGuigan

Broker

559-907-0023

Tracie Bushnell

Admin. Assistant

559-733-3232

Verlyn DeWit

Estate Planning

712-722-1627

Abel Flores

Land Sales

559-799-9776

Jeff Lien

Dairy Land Sales

209-495-3114

Rose Vander Weerd

Dairy Land Sales

559-280-1066

THE BACK PAGE Unearned taxable income - IMPORTANT! If you have a

$200,000 income ($250,000 if married) and sell property on which

you have capital gains, you will pay 3.8% Medicare tax on these

gains! This is a new tax and it also applies to interest income,

dividend income and rental income. Begins January 1 with a

possibility of also a higher capital gains tax. Consult your CPA.

We’ve had a few people contact us to discuss the pros and cons

of selling at this particular time. On the one hand you see almost

the entire world printing money including Europe, US, China and

Japan. That could create inflation and positively affect property

values. The other side of the coin is that consumers will have to

pay more for all their purchases, which could affect some of the

“luxury” commodities such as walnuts, almonds, pistachios, citrus,

table grapes for domestic and exports sales. Unless incomes rise

with the inflation, (not likely in a labor surplus environment) we’ll

experience stagflation and that seems to work against property

values. Something to think about if you’re thinking of selling.

In the early eighties, interest rates ran as high as 20% plus.

Historically, interest rates have been averaging in the 7-10%

range. Interest rates will go up from where we find them today -

guaranteed! There is no way that interest rates will go lower for

any length of time. Maybe no rush yet, but a fixed rate of 4-5% is

really going to look like a smart move in years ahead. There will

be no guarantee that a loan will even be available when the rates

begin to rise!

Ag financing health is much stronger than in the 1980’s. USDA

projects the ag sector’s debt-to-equity ratio for 2011 at 11.6%. In

1986 it was 28.5%. Capacity to repay the debt is very high. The

lessons learned in the 1980’s have not yet been lost!

Midwest Drought apparently does not have a negative affect on

land prices. A 163 acre parcel in Central Illinois was sold for

$15,600 per acre by auction which had 12 registered bidders and

purchased by a neighboring farmer. (Mike Wolston, Pro Farmer).

Best reason for selling a property today: Capital gain rates at

only 15%! These rates could easily double that after the election!

You’d have to get an extra $2,250 per acre to put the same

amount of cash in your pocket on a $15,000 per acre sale.

Why have farmland values increased? 1) A limit to the supply

of farmland. 2) High commodity prices. 3) Inflation. 4) Shortage of

good alternative investments. 5) Low interest rates. 6) Increased

yields over the years. 7) Access to capital due to good track

records on commodity prices over the last few years.

1950 - Minimum wage was 75¢ per hour, gasoline cost you 27¢

per gallon and you got into the movies for 48¢. Average rent for

your home was $42 per month. The most astounding is that you

had to work only 22 minutes for a gallon of gas and a week and a

half for you house rent!

Fathom the hypocrisy of a government that will require every

citizen to prove they are insured… but not everyone must prove

they are a citizen. ~Author Unknown.

Field crop yields have improved astonishingly over the past 60-

70 years, not unlike milk production which was 14 billion gallons

from 26 million cows in 1944 and now 22 billion gallons from only

9 million cows - a 65% increase of total production from one-third

less cows. (htrnew.com)

The Ranch Co. • 3449 S. Demaree Suite B • Visalia, CA 93277 • 559-733-3232

Year Number of Parcels Sold Acreage Total Estimate Value Per Acre Value

2011 240 22,284 $184,235,000 $8,268

2010 161 16,031 $110,952,000 $6,921

2009 115 9,108 $81,850,000 $8,987

2008 182 17,150 $157,168,000 $9,164

2007 211 16,417 $145,878,000 $8,886

2006 261 23,338 $173,311,000 $7,426

2011 Tulare County Farm & Ranch Sales