With over 35 years as an agricultural appraiser, Jeff Berg, president and founder of Crown Appraisals Inc., has seen a lot pertaining to that corner of the profession. He is an accredited member of the ASFMRA (American Society of Farm Managers & Rural Appraisers) and the ASA (American Society of Appraisers) specializing in machinery and equipment appraisals. Berg is also a member of GEAPS (Grain elevator and Processing Society) and was the 2012 ASFMRA national president.

Berg noted agricultural appraisers within the rural arena have had their fair share of challenges brought on by the pandemic.

“Our firm works all over the country. We quit flying temporarily and instead drove around the Midwest looking at properties,” he told us. “After about 4 to 5 weeks, we said enough of that and started flying again to see facilities across the country. Some appraisers chose virtual inspections, especially in states where lockdowns were tighter.”

“I conducted a couple virtual tours of food processing plants based on client request because of COVID concerns,” Berg added. “As appraisers, we did what we had to do. For many ag appraisers who primarily appraise farmland, it was business as usual. Some appraisers worked from home and cut back on inspections. There was a wide range of how inspections were carried out with some looking at

properties directly, and others cutting back on inspections altogether.”

In the world of residential and commercial appraising, the arrival of desktop appraisals has caused some

confidence concerns from clients and homeowners as to the trust factor surrounding data appraisers

have accumulated. Do agricultural appraisers face similar concerns?

“From what I have heard in the agricultural sector, there hasn’t been a great deal of pushback when it comes to these types of concerns,” Berg said. “Of course, on the residential side of things, they certainly have heard concerns. When it comes to agribusiness facilities, the appraisers typically are still doing full inspections. Desktop appraisals without inspections typically don’t work for complex assignments with a lot of equipment and machinery present.”

We also touched on tillable land, which is land that can be farmed productively. Berg emphasized that the buzz in farmland is focused on the highest quality tillable land, which currently is “on fire” when it comes to price. The price of marginal quality farmland is increasing as well, he said, but not as rapidly as “top-quality” farmland.

“Since Labor Day, we are seeing tillable land prices up 20 to 40 percent,” Berg told us. “We are getting back up to prices exceeding records set in 2012. The two types of market participants in the farmland market are farmers and investors. Farmers, driven by low interest rates and stronger farm income, have been the most active in the farmland market recently. In general, farming has been relatively profitable in the last couple years. Excess cash is being used to buy land. There are still investors present, but a high percentage of the farmland buyers recently have been farmers. The brokers I have spoken with recently estimate that 65 to 75 percent of the buyers are farmers.”

Berg pointed out that farmland is generally viewed as a safe investment. Inflation might impact prices, causing some loss in value from the high prices currently being paid for farmland, but it won’t go to zero like some other types of investments. Many investors made a lot of money in the farmland market the last few years.

“Another thing impacting farmland in some states,” Berg added, “is teacher retirement funds and pension funds are diversifying their holdings by investing in farmland. With today’s stronger commodity prices and farmland rental rates, a lot of money is available for farmland; it is generally a good investment.”

In addition to driving farmland values upwards, today’s economics are also leading to more mergers and acquisitions in agribusiness.

“The recent rise in commodity prices has created plenty of opportunity but also brings its challenges for farmers and grain elevators. For example, many operations mitigate their price risk by hedging the crop – or assuming an opposing position with a futures contract. This type of risk mitigation usually works quite well, but the extreme volatility in prices leads to margin calls, requiring the operation to pay in extra funds to cover their position. The margin calls can be huge amounts of money if the operation has millions of bushels of grain hedged. Today’s commodity prices bring benefits and challenges to grain elevators.”

“In the grain elevator industry, some operations are struggling to make good profit margins,” Berg said. “If a smaller operator is highly leveraged and paying a lot of interest, profitability is a huge challenge. Some grain elevator operators are choosing to exit the business and are being purchased by a larger entity before all equity is lost. A number of our clients have told us to keep an eye on smaller operations merging or becoming available for acquisition. Overall, the trend is that the large operations want to continue growing bigger.”

The Russia‐Ukraine conflict, as Berg pointed out, has consequences, as well. Although prices were going up prior to the outbreak of war, this conflict just throws more gas onto the fire. Russia and Ukraine are among the largest wheat exporters in the world, according to Berg. They feed a lot of the Mediterranean and now suddenly those two huge wheat exporters are essentially out of the market, leaving the United State as a major supplier.

“Wheat prices are spiking like crazy,” Berg said. “If Ukrainian and Russian wheat is taken off the table, there is not enough wheat to go around, and the higher prices will essentially ration the wheat. Reportedly, China recently agreed to purchase a bunch of wheat from Russia. How does it get it there? I don’t know.”

“That is interesting, because China is typically not a big buyer of wheat from Russia,” Berg added. “The situation with Russia and Ukraine has a huge effect on agricultural markets and the complex issues facing agriculture appraisers.”

In many earlier stories, the subject of whether or not it is a good time to be an appraiser seemingly always enters the conversation. Be it residentially or commercially speaking, many industry veterans agree that, yes, this is a good time to be an appraiser.

The sentiment seems to be the same when it comes to appraising properties on the agricultural side.

“It is absolutely a great time to become an ag appraiser,” Berg said. “Many are retiring. A lot of appraisers got into the business back in late 1980s after the savings and loan crisis hit, which created many rules including prohibiting loan officers from conducting appraisals. Overall, the industry has not done a great job of attracting enough young people to the profession.

“However, there is a serious move to recruit into the agricultural (rural) appraising industry,” Berg added. “The recent changes and challenges in agriculture mean appraisers are needed! One of the great things about our industry is that appraisers are needed whether the market is going up or down. The only difference is the purpose of the appraisal.”

Berg also reminded us that one thing currently impacting the industry is the recognition of bias being an issue, and that the appraisal profession, as a whole, will have the spotlight shone upon it.

“The potential regulations would impact the appraisal business, particularly for residential appraisers. New rules proposed by groups outside the profession can be unsettling. We all need to be aware of any conscious or unconscious bias and ensure it doesn’t impact our valuations.”