Stamp Farms land auction sees local bidders outdone by investment group
Print By Rosemary Parker
on March 28, 2013 at 12:01 PM, updated March 28, 2013 at 1:47 PM
LAWTON, MI — Thursday’s auction of farmland parcels from several Southwest Michigan counties, a court-ordered action in the bankruptcy of Stamp Farms, LLC, drew a standing-room-only crowd of local farmers hoping to increase their holdings of good land and buildings.
But in the end, they left disappointed, as the combination of their bids on individual parcels and groupings was outbid by an investment group, Ceres Partnes, which bought the whole offering for more than $16 million.
Dale Bent, whose family moved to Michigan from Germany in the mid 1800s and has been farming ever since, said he and other local farmers were disappointed by the outcome.
"I don’t like how the investors came in and bought local farmland from local farmers," Bent said. He lives about 5 miles from the parcels he was hoping to buy, he said, on a road named for his family, testament to their history in Southwest Michigan.
"My family’s grown up around Marcellus, and we own quite a few acres now," Bent said."I had hoped to pick up more" for family members coming up who need land to farm.
He said when farmers own their own land, and depend on it for a livelihood, their interest in maintaining and improving it, and investing in their communities, remains a strong, an arrangement he believes that is better for the whole country.
"We don’t know where the money comes from with an investment group, the money could be coming from others countries," Bent said. "We don’t know and they won’t tell us."
Ceres Partners is an investment company specializing in buying farmland and renting it to local tenants, its president and founder Perry Vieth said.
"Over a year ago I bought a farm, 188 acres by Mendon, and they were bidding right up against me to the end," Bent said.
Vieth said he has already found a farmer or farmers to lease the land his group bought at Wednesday’s auction, he said.
But Bent said he was sorry to see the bankruptcy court allow the sales of the Stamp Farms land to go in huge blocks rather than parceled out among local farmers who are unable to compete against such "big money."
"It’s great for them because they charge 5 percent plus property tax to rent it from them. I know what they are after, they are guys with a lot of money. I won’t rent from them, period."
Stamp Farms LLC filed for Chapter 11 relief on Nov. 30, and court records listed the farm’s assets at $10 million to $50 million and its liabilities at $50 million to $100 million. The bulk of Stamp Farms’ assets was purchased last month by Zeeland farmer Dennis Boersen.
"Is the court doing farmers justice by letting another farmer (Boersen) get that big?" Bent asked. "Most of the local farmers are not happy about one guy getting that big."
It makes harder for smaller farmers to compete for local ground, Bent said, and leaves them vulnerable when things collapse, as they did for Stamp.
"What happens when something does fail, and there’s a bankruptcy? (In the case of Stamp) Wells Fargo will end up losing in the end, and they’re not going to eat it and write it off. It will cost everyone," he said. "The rest of us pay our rent and pay our bills. It is sad in this area to see something like this happen."
Auctioneer Sid Miedema, who Thursday is auctioning off equipment from Stamp Farms that is of yet unsold, said the total selling price of the land, including the buyer premium, was $16,969,250.
"A 143-acre parcel of ground in Cass County brought over $9400 per acre and a 77-acre parcel in Van Buren County brought over $9,000 per acre. We had a standing room only crowd with bidders from four states, including many local farmers," Miedema said.
The total sale proceeds generated 35 percent more than the U.S. Bankruptcy Court had established for minimums, he said.
Statistics: Posted by yoda — Sat Mar 30, 2013 1:55 am
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USA – Not a pretty picture25 Dec 2012
Neither the outcome of the federal election nor the fast-approaching budget “fiscal cliff” bothered any of the 250 gawkers and bidders at a 1,170-acre land rental auction Nov. 10 in Thurman, Iowa.
That’s right, an auction where the right to crop one family’s five parcels of Fremont County, Iowa, the absolute southwest corner of the state, went on the block that Saturday at the appropriately-named Skyline Sportsman Club.
Minutes later, every notion about local land values had surpassed any skyline — nearby Omaha’s, the more distant Des Moines’ and even that of super-tall Chicago. The winning bids were:
· Tract One, 196 acres, all tillable, $545 per acre;
· Tract Two, an all-tillable 158 acres, $470 an acres;
· Tract Three, 296 acres, all tillable, $520 per acre;
· Tract Four, 104 acres, all tillable, $485 per acre and
· Tract Five, 417 acres, all tillable with some grain storage, $615 per acre.
As stunning as those prices are — an average $548 per acre — the terms of the rental deal are even more stunning.
According to Jim Hughes, whose firm, Jim Hughes Real Estate in Glenwood, IA, brokered the deal, the land was rented for two years only. Cash rent terms for 2013 are 25 percent of the day of auction, the remainder on March 1, 2013. For 2014, 25 percent is due Jan. 1, 2014; the balance on March 1, 2014.
In short, you pay, then pray, then plant.
Hughes describes the renters as “local farmers who are willing to risk grain prices and weather on a two-year, $550-an-acre rental deal rather than a 30-year, $12,000-an-acre purchase deal.”
Many ingredients go into the rocket fuel that pushes land values and rents to the moon: commodity prices, aggressive local farmers, excess machinery capacity, cheap labor, low interest rates, federal farm program benefits.
A new, major ingredient, however, is federal crop insurance, the heavily subsidized program that delivers an ironclad guarantee on locked-in revenue regardless of weather, commodity prices and federal farm payments. (In 2012, 62-cents of every $1 in federal crop insurance premium were paid by taxpayers.)
“Oh, crop insurance played a definite role in the prices,” reckons Hughes. “It’s the best thing that ever happened to farmers.”
Bruce Babcock, professor of economics at Iowa State University and a faculty member of ISU’s Center for Agricultural and Rural Development, agrees. “If you can lock in 85 percent of your expected revenue” — the level permitted under current federal crop insurance programs — “you’ve taken virtually all the risk out farming,” he says.
And it will get better. Part, if not all, of the remaining 15 percent of crop revenue presently not insured under the federal program is almost certain to be covered if and when Congress finally approves a 2012 Farm Bill. Both the Senate and House versions raise subsidized coverage over 90 percent.
That’s an unbelievable move, opines Babcock, at a time when there is a bipartisan call in Congress for all Americans to assume “more risk” — take cuts in federal programs like food assistance, retire at an older age, pay more taxes — in the marketplace in order to cut federal spending.
But when it comes to the Farm Bill, Congress is proposing to “ratchet down market risk” — raise the level of subsidized crop insurance — “while doubling down on the cost of these programs rising?” he asks. “This is just insane.”
Babcock is exactly right: how can farmers and farm groups ask taxpayers to underwrite an expansion of an already highly-subsidized revenue insurance program that guarantees farm income and higher land values, but does not — cannot — guarantee food production or conservation compliance?
Farmers better come up with an answer quickly because the question will be asked.
The Farm and Food File is published weekly in more than 70 newspapers in North America. Contact Alan Guebert at http://www.farmandfoodfile.com
Statistics: Posted by yoda — Tue Dec 25, 2012 1:56 pm
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EDMONTON – Ritchie Bros. Auctioneers sold $108 million in equipment over three days in Edmonton this week, setting a new Canadian record.
The auctioneers sold more than 5,600 pieces of equipment and trucks April 24-26.
The previous record was set in Edmonton in 2009, when $93 million in equipment was snapped up by bidders.
“The power of the global market for quality used equipment and trucks was witnessed first-hand in this auction with bidders from 37 countries active in a competitive bidding environment,” Jim Rotlisberger, regional sales manager, said Friday in a news release.
Statistics: Posted by yoda — Sun Apr 29, 2012 7:09 am
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