Posts Tagged ‘farm land for sale’

Water and the American Landowner

Monday, July 22nd, 2013

Examples of Forward Thinking in Water and Land Conservation

Part 1 of  3

As much of the country is still in the grips of one of the worst droughts on record and water becomes more expensive and scarce, the rural landowner often faces tough decisions on how to best use this valuable resource. In the next three issues of Open Fences Magazine, we will be exploring topics related to water and the American landowner. The following article is the first in this series where we will be discussing and presenting examples of how farm and ranch owners across the country are embracing alternative methods to utilize this resource and still find ways to conserve water, turn a profit, and enhance the quality of their land. In this first article, we will show how one seed rice farm southwest of Houston, Texas has used precision grading to reduce their water usage by up to 40% while still increasing yield and improving the wildlife habitat on the land.

According to the USDA, agriculture is a major user of ground and surface water in the United States that accounts for nearly 80% of the nation’s consumptive water use and over 90% in many of the western states. While there is no question that the food and other products that are sent to market have made this country what it is today, inefficiencies in the system become more apparent when drought affects supply or when other users, such as municipalities, are competing for the resource. The farmers and ranchers who recognize ways to conserve their water use without hurting their operations will be the ones leading us into the future of best management practices for the land.

One of these farmers is Jacko Garrett of Garrett Farms in Danbury, Texas who owns a 3,046-acre farm and ranch where he grows seed rice, live oak trees seedlings, and raises F1 (Brahman x Angus) females and bulls. Approximately 1,500 acres is currently used for the seed rice operation among this lush green, fertile, and well watered landscape.

Mr. Garrett’s parents bought the land back in 1936 for $10 per acre and developed a successful rice farm and Brahman cattle ranch. Today, Garrett Farms is still located on a portion of the original land and Jacko and his wife Nancy have continued the tradition of success. One of the main reasons for this is their dedication, hard work, and willingness to invest in the future.

Jacko realized that even though the rice farm had been successful for all these years, it still required a great deal of water resources and labor to raise this crop. He also understood that water was becoming a precious resource that continued to increase in price and importance to other sectors of society. He felt that it was his responsibility as a farmer and landowner to find ways to minimize these inefficiencies, but still increase his profitability.

While exploring options to improve his bottom line, Jacko learned about the technique called precision grading that could not only help him significantly reduce his water requirements, but also the amount of hired labor to constantly watch and adjust the many levies needed to flood the rice fields.

The technique involves mapping the fields with highly accurate Global Positioning System (GPS) and laser survey equipment, which then displays a contour map on the computer. The engineers can display different options of how the fields should drain and where the levies would now be located prior to moving the first bucket of soil. Jacko was able to consider other land use options, such as where new access roads would be located as well as an airstrip.

The grading had to be done with highly trained equipment operators since the fall of the land had to be contoured to an accuracy of less than 1/8 of an inch. Graders with dump and ejector buckets were used to scrape the ground and move the soil around so the water would drain properly. Jacko estimates that his water usage is now 40% less than what it was prior to the precision grading on his fields and has also increased his yield by approximately 15% as well. With nearly 1,900 acres of his ranch in seed rice and row crop production of which 855 acres has been precision graded, this equates to a great deal of water and cost savings.

As flat as the land seemed prior to the precision grading, there were still small undulations in the ground plane that resulted in variations in depth of the water that had to be controlled by numerous levies. For example, on one 20-acre piece of this land there were approximately 20 levies, now there are only two. It would take a team of three workers approximately a full day to manage the levies on one of the 450-acre parcels of fields. Now it takes one worker about half a day to accomplish the same task.

Another example of Garrett Farms’ commitment to water conservation is their plan to construct a water storage reservoir on one of the lower areas of the farm that is intended to capture the drainage water from the fields and additional runoff from rains. The fields must be drained about two weeks prior to harvesting the rice crop. Currently, the fields are drained and the water returns to the nearby river. Jacko would like to capture this drainage water in the reservoir and recycle it back to the fields with a series of pipes and pumps. After the first cut of rice, the fields can be re-flooded and the second crop will be ready for harvest in approximately another 75 days. Since water prices from the local water authority have more than doubled in the past year, the recycling of this water will be another improvement to reduce his water use and costs.

Although this was not an inexpensive undertaking, these efforts have paid off and according to the IRS, if you are in the business of farming, you can choose to currently deduct your expenses for soil or water conservation or for the prevention of erosion of land used in farming.

Jacko Garrett leads by example with a strong commitment to water conservation and land stewardship on this beautiful land that has been in his family since 1936. This is a wonderful example of how even a farmer/rancher from an older generation is taking on the responsibility to understand this new generation’s water issues and has invested in the technology to conserve water while still operating a successful farm and ranch business.

Jacko also said that one of the added benefits to this type of land and water use is that when the fields are flooded there are more teal and other ducks than you could possibly imagine. Certainly a sight worth seeing.

Garrett Farms has been put on the market and additional information regarding the land and operations can be obtained from agent Minor Taylor with Property Connections in Bay City, TX. Phone 979-245-6055. This farm is offered for $7,966,374.

Tom Roberts is the author and will be working on the second and third articles in the Water and the American Land Owner series for Open Fences Magazine. He is the president of Western Lands – Ranch Restoration Services located in Parker, Colorado. His company designs, develops, and manages land enhancement programs for legacy and investment grade ranch projects throughout the United States. www.western-lands.com. Please contact him at tom@western-lands.com with any questions, comments, or ideas.

Search Ranches for sale to find that perfect ranch for water preservation and habitat improvement.

American AgCredit Merges with Colorado‐based Ag Lender Farm Credit Services of the Mountain Plains

Wednesday, January 25th, 2012

January 2012 (Santa Rosa, CA) ‐‐ American AgCredit has announced the merger with Farm Credit Services of the Mountain Plains, based in Greeley, CO, effective January 1, 2012. The merger will make the joint Association the 6
the largest Farm Credit cooperative in the U.S., totaling $5.58 billion in assets, and creating a combined customer base of 6,907 members.

The boards of directors of both organizations released the following statement supporting the merger.

“The combined organization will create efficiency benefitting stockholders, and will strengthen the Association through more diversity and better capitalization. Through this, and through the extension of our national presence, American AgCredit is poised to lead agriculture lending into the next generation.”
This is the fifth merger since 2000 for the multi‐state lender, which has continued to grow its capital and loan portfolio despite the financial challenges in the lending marketplace.  
“It is our fundamental goal to ensure that agricultural financing remains available to agricultural producers who need financing in these challenging times. In order to do this, the Association must remain a safe, well‐diversified organization that can meet the needs of a constantly changing marketplace,” said American AgCredit CEO Ron Carli. “This merger with Mountain Plains strengthens our core structure, and allows us to respond to market demands more efficiently and effectively.”

Merger Benefits
In disclosure documents released to the shareholders of both Associations, the lenders identified the key benefits of the merger for both Associations’ stockholders.
These include:
 A larger capital base, which allows increased equity funding to sustain future loan growth and offer a stronger foundation to weather future economic and credit downturns.American AgCredit and Farm Credit Services of the Mountain Plains Merge
 Improved risk management from increased commodity and borrower diversification.
 Improved business processes through economies of scale – such as increased purchasing power,
reduction in per capital operating costs, and the elimination of redundant professional services.
American AgCredit’s Board Chairman David Santos re‐affirmed the importance of the merger for both Associations and for agricultural lending. “We have a fiduciary obligation to stockholders to ensure that the merger with Mountain Plains
constitutes a benefit for each Association’s customers,” Santos said. “With a strong, diversified portfolio and improved capital reserves, we can now better serve our existing customers, as well as young, beginning, and small farmers who are the future of our industry.”

About American AgCredit  
Founded in 1916, the cooperative nationwide Farm Credit System provides lending and other financial services to farmers, ranchers, agribusinesses and rural homeowners. With this merger, American AgCredit is now the 6th
largest Farm Credit cooperative in the nation. The organization specializes in providing financial services to agricultural and rural customers throughout California, north central
and western Colorado, northwestern New Mexico, Nevada, central Kansas and northern Oklahoma as well as to capital markets customers in 30 states across the nation.
Financial services include production and mortgage financing, equipment and vehicle leasing, lines of credit, crop insurance, and the Young, Beginning and Small farmer program. In addition, the Association provides interest‐free loans for qualifying 4‐H and FFA AgYouth programs, as well as
college scholarships to young people interested in agriculture.  

For more information about American AgCredit’s financial services, call 800‐800‐4865 or visit the website at www.agloan.com for a listing of offices by region.  
  

Summary Fact Sheet
Key advantages of the merger between American AgCredit and Farm Credit Services of the Mountain Plains

Diversification
The merger will provide greater geographic, commodity and borrower diversification. Mountain Plains’ loan portfolio is
heavily concentrated in small grain and field crops (22.2%) and beef and other livestock (22.5%), with a large percentage
(37.4%) comprised of a variety of small market commodities. American AgCredit’s portfolio is spread across a number of
industries, commodities and specialty crops that Mountain Plains does not finance, such as wine grapes, vegetables, tree
fruit and nuts, timber and dairy. The merger will reduce Mountain Plains’ two highest commodity concentrations by more than 50% and 33%, respectively Following the merger, the largest industry/commodity concentration will be in a spectrum of small market miscellaneous commodities (21%), followed by wine grapes and wine at 16%. The significant concentrations in the vineyard/winery and dairy industries will be diluted, thereby mitigating risk exposure in these specific commodities.

The key benefit of broader diversification is that it better positions the organization to withstand credit adversity.
Specifically, by bringing together two portfolios with little overlapping commodity exposures, a downturn in the credit
quality of one area or commodity, whether caused by adverse weather patterns or market conditions, is less likely to
place significant financial distress on the merged association.
Approximately 70% of Mountain Plains’ individual loan balances are less than $250,000. The addition of these loans to American AgCredit’s portfolio will reduce the overall average loan size and help to minimize a material adverse
impact to the Association from any one individual borrower or group of borrowers.

Cost and Overhead Reduction
The merger will provide both Associations with a larger asset base over which fixed costs and overhead can be spread.
Due to its larger size, American AgCredit can spread costs over a larger asset base and thus operate more efficiently.
Following the merger, cost reductions in the range of $1.7 to 2.0 million annually are expected. Farm Credit System costs and CoBank District allocations (such as regulatory charges and insurance premiums) have large fixed cost components that will be spread over a greater volume of assets. In the area of technology, a savings of approximately $1 million per year will be achieved by converting Mountain Plains to American AgCredit’s technology platform. Another cost savings opportunity is in the area of professional services. By being able to access American AgCredit’s in-house legal, marketing and accounting staffs, Mountain Plains will save the fees paid to external providers of these professional services. Salaries and employee benefits are expected to decrease by approximately $1 million annually from the premerger state as redundant positions are consolidated over a period of two to three years.

In addition, increased purchasing power should result in savings in areas such as information technology, telephone systems, fleet vehicles and advertising as volume discounts are applied on a larger scale. The merger should not substantially increase any category of annual operating expenses, apart from a modest increase in certain expenses
caused by the expansion in territory (such as travel expenses).

Management Succession
The merger will create a larger organization which will enhance opportunities to retain and attract talented employees.
Further, it will provide additional staff depth and create more opportunities to build succession at all organizational
levels. The benefits of combining the human capital pool run in both directions. Mountain Plains’ employees will have
opportunities to succeed to open positions within the combined organization. Also, American AgCredit employees will
fill areas where Mountain Plains lack particular expertise, depth or skill sets or are at risk of losing experienced personnel.

Improved Capital Position
The merger will improve capital position and regulatory capital ratios. This larger capital level will increase lending limits
which will better serve the larger loan customers by taking bigger positions in loans consistent with prudent
underwriting standards. Increased equity funding will also sustain loan growth into the future, as the larger absolute
capital level will increase lending limits, enabling the joint Association to take bigger positions in loans consistent with
prudent underwriting standards.