Map and Brochure will be added soon!

There is plenty of room for the family and the pets(s) in this spacious 3500 square foot log, 5 bedroom, 3 bath home. Features include: Covered porch, patio, private well with plenty of good water, tile floors, oversized two car attached garage, carport, storage shed, greenhouse, garden, horse barn, and 29+ acres of scenic grazing land. Reasonably priced at $298,500.00.

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In the last year, farmland values have escalated to new heights.

The Minneapolis Federal Reserve Bank District reports farmland values as of second quarter 2011 up 17 percent from the same period a year ago, while the Kansas City District reports farmland prices up 20 percent.

Nebraska has seen one of the largest increases, with nonirrigated land up 30 percent. Oklahoma ranchland, suffering from a prolonged drought, saw values up just 6.4 percent, with what increase there was driven by oil and gas exploration.

A group of three experts in farmland value analysis discussed the skyrocketing costs of farmland during a plenary session of the 2011 American Bankers Association Agricultural Bankers Conference, held recently at Indianapolis.

Michael Duffy, Ph.D., professor of economics and director of the Beginning Farmer Center at Iowa State University; Don McCabe, an accredited farm manager with Soy Capital Ag Services, Bourbonnais, Ill.; and R.D. Schrader, manager of Schrader Real Estate and Auction Co., Columbia City, Ind., offered their thoughts about higher farmland prices and what they mean to producers and rural America as a whole.

“There are differences, not all of the states are enjoying what we are enjoying now with land values as they are,” Duffy said. “But when you adjust these peaks and valleys for inflation, you can see them much more clearly. This year, we are seeing the highest nominal and inflation-adjusted land values ever. They’re now exceeding values we saw in the 1970s.”

As in any market, land values are being determined by supply and demand, Schrader said, with the increasing global appetite for food, the demand for renewable fuels driving corn prices to new highs and a shrinking value of the U.S. dollar driving sales.

“I am bullish long term on land,” Schrader said. “There is a low correlation between land to other asset classes, such as bonds, T-bills and stocks. Farmland is outperforming so many things these days and is becoming part of a diversified portfolio, since right now it’s undervalued versus gold. There are some very savvy, sophisticated, successful investors understanding this and it’s getting their attention in a big way.”

For the most part, buyers purchase the land to extract an income from the land. McCabe said.

“Production agriculture right now, with a 3 to 5 percent return on your land costs, beats all returns on the alternatives, which have done so poorly in the recent past. Many people question the future of these alternative investments, so they’re turning to purchasing farmland for production instead.

“More than one person over the last year has said to me they are not in the stock market and proud of it. They have to do something with their money, so they’re buying farmland.”

These producer-land buyers plan to hold onto their land, Schrader added.

“These buyers are not speculators,” Schrader said. “They are not looking to flip their land. They’re buying to live with this land and live with it a long time. These guys experienced the 1980s firsthand. They are not going into the market with the intent of getting out.”

Schrader doesn’t see the climb in farmland values as anything sudden. In fact, those price hikes have been happening for quite a while.

“As we look at the future we need to look at how we got to today. We are not experiencing some overnight sensation,” Schrader said. “This didn’t happen just in the last year or two or five or even 10 or 20 years. It’s taken 25 years of appreciation to get where we are at today. That differentiates us with other markets.”

McCabe said, by his surveys, about 60 percent of all farmland is being purchased by active operators, with 15 percent purchased by nonlocal investors, 13 percent by local area investors, 7 percent by institutions and investment groups and 5 percent by other entities.

“The institutions who are acquiring land are things like hospitals and universities that people bequeath land and it’s not acquired by purchase. Some institutions sell the land and others are long-term holders who rent out the land, depending on the institution’s investment strategy. Hedge funds are another factor, but they are buying less than 10 percent of the market. They’re more talk than action, from what we’ve seen.”

Using his state of Iowa as an example, Duffy notes that as farmland values have increased, so to have rental costs.

“On the flip side of this, however, is the rent to value index is at a record low. The previous low we had was back in 1921. We peaked at 9.6 percent in the early 1980s and now we’re at about 3.4 percent. This is something that looking forward we’ll see some correction.

“We need to remember that about one-third of the rents are between relatives and another 20 percent are between family friends. I think that will temper the rise somewhat, but we’re hearing a lot more big increases among land plots that are open.”

Rental agreements also have become more complex over the years.

“We’re seeing a move away from flat cash rents and crop share deals to a mix that makes it better for the landowner,” McCabe said. “We’re now seeing more bonuses and kickers (based on price and yield) added into rental agreements. The latest surveys we’ve seen are that 15 percent of the flat rental agreements have changed to flexible agreements in the last year.”

Adds Duffy: “There’s also been a huge shift away from crop share agreements, and it’s driven by both sides. It’s so complicated for the operator who has so many different landlords to deal with, it’s hard for everyone to account for bushels anymore. As owners move further away from the land, they don’t want to bin corn. They want cash.”

“I don’t think for the next few years there will be a correction on the land values side. It will be on the rental side. I see a 20 percent increase in rents. We see a lot of land listed and when it is listed it’s not for very long.

“The difference between the 1970s and today is drop in the amount of land is being sold under contract for deed. Back in the 1970s it was a lot easier to just walk away from a contract,” said Duffy.

“We’re seeing a lot of people paying off debt and acquiring land with just a check rather than a loan. That’s great,” McCabe said. “The odds of farmland prices seeing a collapse similar to the 1980s or the urban real estate market are not high, since we’re seeing such low debt levels.”

The trio collectively estimated that in Iowa alone, at least 75 percent of farmland is now held debt free, compared with about 67 percent about 10 years ago.

“A widow over the age of 75 owns one in 10 acres of Iowa farmland. It’s a figure replicated throughout the Midwest and is growing in size. It’s another factor that leads land going from sole proprietors to joint tenants to tenants in common as the land is dispersed among the children,” Duffy said.

“This means we’re seeing a large increase in the number of out-of-state landowners. The reason why they’re holding onto the land is for family or sentimental reasons. Sentimentality has its price, however, but I don’t see a drop in land ownership by these people.”

As generations continue to move farther away from active production and land holdings continue to split among family members, Duffy thinks the “inner value” of farmland will be different among the disparate owners.

“A big question is will the next generations of an old farm family have the same level of inner value for the farm as the preceding generations who actually grew up on the land do,” Duffy said. “Are they going to have the same feelings towards it? If the land is divided among eight to 10 owners to the same piece of ground, will each have the same feeling towards it. That’s something renters will have to look out for.”

The rise in farmland prices has led to one “regrettable but inexorable move,” McCabe said, toward further consolidation of rural areas.

“I can remember how much my dad regretted losing the local co-op elevator because he then had to drive 10 miles to buy dog food,” McCabe said. “The vitality of rural communities will be based on things other than agriculture. The retired farmer towns will have to become something more than retired farmer towns. That may be discouraging but that’s the way it is.

“We see a lot of wealth in land holdings,” Schrader said. “As those holdings are consolidated, it impacts the surrounding communities. Those towns are necessarily the kinds of towns young people want to stay in. It’s an issue, but it’s the nature of the beast.”

Duffy disagreed with his colleagues, mentioning his work as director of the Beginning Farmer Center at Iowa State University in trying to keep rural communities vital.

“One of the things we try to get rural communities to think about is the farmer as the heart of their economic development,” Duffy said. “These towns spend a lot of money to bring in jobs while they’re continuing to lose jobs.

“I think opportunities are going to be different in the future than they are today. Young people that I work with think differently than I do and as a lot of their parents do. They no longer think of agriculture as growing cheap commodities. They think in terms of differentiation, such as the guy I know who has been selling his hay on Craigslist. These things allow for lots of sales opportunities.”

Recalling David and Goliath, Duffy said, is that it was an epic tale because the small man beat the giant.

“In reality, the little guy isn’t always going to beat the big guy, but there are opportunities. We talked all the way back in the 1920s about having a land tenure ladder and how young people had to work to move up,” Duffy said. “We try to work with young people to think about not owning the asset but rather controlling it without some outside force like government help. These higher land values are a hindrance but they can be overcome.”

Some factors to watch for any further increases in land values, Duffy says, includes climate change, changes in oil and fertilizer costs and availability, technology changes, global economic conditions, grain stocks, and debt levels.

“Farmland is a good long-term investment and will likely remain that way for the foreseeable future. Farmers are the majority of land purchasers. They buy land to own it, not to sell it. As long as there is income coming off that land they will hold on to it. Time will tell.”

Larry Dreiling can be reached by phone at 785-628-1117, or by email at ldreiling@aol.com.

The Gosselin ranch is to be offered for auction by Mills Auction and Real Estate.

Auction Date:  1:00 PM, Thursday, October 6, 2011 at the Boyes Community Hall,  Boyes, MT.

Ranch will be offered for sale in two venues: 1)  As five separate tracts 2) All tracts as a whole.  Property will be sold in whichever venue returns the highest amount to the Seller(s). 

Map of Gosselin Ranch in its’ entirety

Map of Gosselin Ranch divided into Tracts that will be offered for sale

Tract 1

Tract 2

Tract 3

Tract 4

Tract 5

If tracts sell seperately:   

1. The well that provides water for the pipeline in  Tract 5 is located in Section 30 which lays in Tract 4.  A pipeline/well use agreement will be prepared and filed for Tract 5.  
2. If tracts 4 & 5 are sold separately, 2.25 miles of new 4 wire fence will be constructed to seperate the two tracts. 
3. If tracts 3 & 4 are sold separately, 1 mile of new fence would be constructed to seperate the two tracts . 
4. An access easement to Tract 5 will be granted to travel across section line between Section 29 and Section 28.

If ranch sells in its’ entirety, a $28,000 fencing credit will be issued to the buyer and no fence will be repaired/built.

Terms of sale:

• Tract 5 will sell absolute. 
• Tracts 1-4 will have a base bid of $250/acre.
• Taxes will be paid up to day of closing.  (2010 Taxes on Entire Ranch:  $5,627 )          
• All water rights will transfer with the property.
• State and BLM leases will transfer with respective tracts as noted.
• 10% earnest money must be paid day of sale. 
• Transaction must be closed on or before November 7th, 2011.
• Ranch is sold “AS-IS”.  Buyer must rely on own inspection of the property.
• Seller will furnish title insurance policy. Title Insurance may be reveiwed upon request.
• Bid is final acceptance to terms of auction.
• If Buyer fails to close, earnest money will be non-refundable and forfeited.
• If Seller fails to close, earnest money will be refunded.
• Earnest money will be held in escrow account at Security Abstract in Miles City, Montana

ADVANCE BIDDER REGISTRATION:  You must be registered as a buyer no later than 1:00 PM on October 5th, 2011 to participate in the auction. Bidders will need to provide name, address, and contact information to be registered.  A letter of Guarantee will be required from Buyer’s financial institution prior to bidding on sale day. Contact Mills Auction and Real Estate through one of the following: 

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Acreage Breakdown
Total Acreage Approximate 37,881 Acres +/-

Deeded Land:  15,548 Acres +/-
Real Estate Taxes approximate $0.77 per acre or about $12,000.00 per year.

BLM Lease:  Approximate 19,790 Acres which is 4320 A.U.M.s
 4320 A.U.M.s X $2.00/AUM = $8640.00 per year

BLM leases are leased on an A.U.M. basis. One A.U.M is the amount of forage required by one cow and calf per month.  Twelve A.U.M.s are equal to one animal unit.  The BLM lease is attached to the deeded lands for economic stability.  No one else can take your BLM lease or raise the bid on you.  Leases are renewed every 10 years.  

State of Montana Lease:  2,543 Acres +/-
 583 A.U.M.s X $ 6.23/A.U.M. = $3632.09 per year

There are approximately four sections under four different leases. 
State leases are staggered so that no more than one lease is up for renewal at one time.  The term of a State lease is ten years.  One of the leases has just been renewed and other three have six to nine years left on current lease.  These four leases have been part of this ranch since the 1920’s, when the current system of leasing was implemented. 

Locale

The ranch headquarters lay nestled in the beautiful and historic Cherry Creek Valley just north of the Yellowstone River.

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This area is richly steeped in western history and this location at the confluence of three creeks where the headquarters sit played a prominent role in that history.  The presence of permanent year-round water made this a favorite location to camp from the Indians to the Military to the buffalo hunters to the early cattlemen. 

In late October 1876 Colonel Nelson A. Miles known as “Bear Coat” to the Sioux camped in this very location for two days while trying to negotiate with Sitting Bull.  Military issue shell casing and other artifacts are still regularly found at this campsite.

Beginning in 1890 and continuing for better than 25 years, this particular location was the “End of the Trail” for the famous XIT ranch, the largest ranch in the world at the time.  Here, they turned loose their leg-weary Texas steers after more than a thousand dusty miles on the trail north.

There is no doubt that this is a unique and special location.

General Description

The Seven Ranch is a classic Eastern Montana cake and grass ranch with an ideal mix and diversity of terrain for each season of use.  From miles of open rolling heavily grassed summer range with timbered draws for shade to more sheltered country for spring and fall, some of the best grass on the ranch are in these pastures which lay along Cherry, Cedar, and Brackett Creeks.

The winter range is as good as there is anywhere, period.  Grass covered flats and plateaus intercepted by sharp buttes and long deep flat –bottomed cedar draws that twist and turn enough that no matter which way the wind blows livestock find shelter and are never exposed.  There is also a lot of southern exposure that melts and bares off when a lot of country is still snow covered.

This statement is documented by the fact that hay has been fed to the mature cows only three times in the past sixty-three years: 1948-49, 1978-79, and 2009-10.  Think about that when pricing machinery.

The primary range grass is western wheat, blue grama, buffalo, green needle, and blue bunch wheat grass.  There is very little cactus or cheat grass which attests to good ranch management.

The ranch lays exceptionally well with the rougher winter country located on the southern end of the ranch and the more open summer country farther north.  Domestic livestock have the same inherent migratory instinct as wildlife to drift north in the spring and south in the fall.  This Law of Nature helps immensely in the ease of movement of livestock by reducing the labor requirements needed. Simply open a gate, get out of the way, and count the cattle through.   

Improvements

Improvements at the ranch headquarters are new construction all since 2004.  This includes a ranch style 2100 square foot home consisting of the main floor and a fully finished basement totaling 4200 square feet of living space.

The home is cedar-sided with a covered 16’ X 70’ patio of exposed aggregate with a built in fire pit.  The main floor includes a great room with a fireplace, kitchen-dining room, three bedrooms, 2 bathrooms (including a master suite), and a mud room.  The flooring is solid oak and ceramic tile on the main floor.  The basement is finished in knotty pine and includes a den, two bedrooms, one bathroom, storage rooms, and a laundry room.

Custom made oak cabinets are in the kitchen, three bathrooms, and mud room.  Interior doors are solid wood throughout the home, oak upstairs and pine downstairs.  This is a very comfortable home with an open floor plan with big rooms and big windows that “bring the outside in”.

Other improvements include a 56’ X 64’ horse barn with saddle room, tie stalls, and feed storage facilities.  Attached is a 80’ X 64’  open-span calving barn/riding area with 16’ sidewalls with lights and insulation.  There are two 16’ X 32’ L shaped open face barns in the horse corrals adjacent to the horse barn.  There is also a 24’ X 128’ open face barn tied into the corrals adjacent to the calving barn and a 10’ X 20’ storage shed.

All the out buildings were roofed and sided in the same color scheme to gracefully blend into the surrounding landscape. 

The entire corral system including the adjoining traps was laid out and built with the goal of taking advantage of the habits and behavior of cattle and other livestock so as to be able to work cattle with as small as crew as possible in the shortest amount of time to eliminate stress and “shrink” as the old cowman said: “Time is shrink and shrink is money.”

The centerpiece of these corrals is a 60,000 lbs type S Fairbanks-Morse scale with a 13’ X 34’ cement deck capable of weighing half of a pot load of calves at a time.  There are two ground-level loading chutes which cuts the loading time by more than half.

A second set of improvements are located at the northern end of the ranch which includes a good older home, 30’ X 50’ shop with cement floor and welding outlets and miscellaneous out buildings.  Another set of new, very good corrals built on the same blueprint as the corrals at the headquarters with an identical 60,000 lbs scale just being installed and near completion. 

A person would have a hard time finding another ranch with a better or nicer set of improvements in this condition.  We feel the improvements add a tremendous amount of depreciation that you are not necessarily having to pay for.  You need to see this ranch for yourself.  You will not be disappointed. 

General Operation

The carrying capacity for this ranch is rated at approximately 800 cows.  The current operator starts calving about the 1st of May and finishes up about the middle of June.  Calves are marketed in the early part of November.  Supplemental feeding generally starts just after January 1st and ends sometime around the middle of April whenever the grass comes.
 
There are 15 major pastures that are grazed in a rotational manner.  These pastures range in size from two sections to eight sections.  There are also eight different traps or small pastures, four each around both sets of corrals for added ease and efficiency of livestock management during branding and shipping.  These traps range in size from 50-60 acres to about a section and a half.

All boundary and cross-fences are a minimum of four wires and every major cross fence and most of the perimeter has been re-cornered with double H braces and pipe cross bars.  In addition to this there has been approximately 20 miles of new fence built.  Also, most of the shipping traps have five to seven wires. 

The ranch also includes approximately 120 acres that are flood irrigated through a system of laser-leveled dikes that are below a diversion dam on Brackett creek.  The water rights on this system date back to the early 1920’s and are senior on the Brackett creek.  Hay production varies from year to year but average is probably somewhere around one and a half to two ton per acre.

State highway 253 which is paved runs through the ranch east to west and a gravel county road runs through the ranch south to north.  These roads provide excellent all weather access which is a very desirable asset for a ranch. 

The ranch is handled by the owners and usually one full time employee with an absolute minimum of machinery.  Two older four wheel drive pickups, and two older 16’ stock trailers, two cake feeders, two older loader tractors, a bobcat skid steer, and some good saddle horses is all the equipment needed to operate the ranch currently.

In these times of high fuel costs, unbelievably high machinery costs and hard to find (and keep) labor, the value of these low-cost, low-input, low-labor ranches can hardly be overstated.

Livestock Water

The ranch is without question one of the very best watered ranches in Eastern Montana.  There are over 35 electric wells ranging in depth from 30 to 390 feet.  33 of these wells have circular cement or steel tanks 30 to 33 feet in diameter.  Each of these tanks holds approximately 10,000 gallons of water.  Included in these are four separate wells that produce in excess of 35 gpm.  These four wells have their own individual pipeline systems of several miles each.  Totaling approximate 15 miles of pipeline with 36 twelve foot rubber tire tanks.  22 of these tire tanks have insulated cement lids for winter time use.  There are no windmills on the ranch.
 
The three major drainages that flow through the ranch are Cherry Creek, Cedar Creek, and Brackett Creek.  These are intermittent streams that flow from spring to late summer, but always have long, deep, spring fed pools that provide good water year-round.  There are also several reservoirs or dirt tanks.

Nowhere on the ranch does a cow have to walk much more than a half a mile to get a drink.

Wildlife Resources

The ranch provides excellent habitat to a large number of wildlife species.  Trophy mule deer, some whitetail deer, and world-class pronghorn, and occasionally some elk are at home here on the ranch.  Wild turkeys, sage grouse, and sharp tailed grouse are abundant for the enjoyment of bird hunters and coyotes will about run over the top of you when they hear a predator call.  The ranch is currently leased to an outfitter and he has expressed interest in continuing the lease.  The fishing opportunities on the Yellowstone River are known worldwide and speak for themselves.  There are many different species of fish to excite the angler. 

Location

The Seven Ranch is located in Prairie County, Montana in the east-central portion of the state approximately two miles north of the community of Terry, Montana, population approximately 600.  Ranches in the area are primarily serviced by the towns of Miles City and Glendive.  Here, all the staples needed to operate the ranch are available within a 35- minute drive.  Billings, the state’s largest city is located about 185 miles southwest of the ranch via US Highway 94.  Here you will find a full range of services, markets and supplies as well as Montana’s largest commercial airport.  Major carriers such as Horizon, Allegiant, Delta and United combine to offer multiple flights each day to numerous destinations through the continental United States.

JT Korkow, Listing Agent, 406-554-3123

Owner will accept a contract for purchase from a qualified buyer with 30% down. Priced at $1,350 per acre.

Attention ranchers/investors! Realize up to 7% return on your investment on this 10,000 +/- acre ranch located in Carter County near Ekalaka, MT!  Acreage consists of approximately 7440 acres deeded, 640 acres of State lease and 2000+/- acres of BLM lease. Both leases are 10 year leases. BLM leases stay with the commenserate deeded land, and State leases are bid with current lessee having priority.

Ranch lies in one contiguous block on the SE edge of Sheep Mountain. Taxes on this property run under $4500 annually. FSA base property of 1084 acres. 2010 Program payments on base property reported at $8706.00.  Plenty of wild game animals round out the beauty and productivity of this ranch and as an added plus, high speed internet service was recently made available.

This ranch is operated as a year round sheep and summer yearling operation. Water  and grass provide the most efficient, fundamental resource for raising livestock, and this ranch has plenty of both. Current owner utilizes this ranch by running from 1200 to 1500 head of sheep year round and 1400-1500 head of yearling heifers through the summer with potential to run more with good management. Available water sources include 7 wells and several reservoirs   A comfortable 5 bedroom, 4 bath home, barns, and other outbuildings make up the headquarters, with a second home and polebarn on the premises available.  

Resident sheep herd is available at market value to interested buyers. Yearling heifers have been provided by same party for several years and would be interested in continuing. Management and labor is available for absentee owners.

This is a very productive ranch with low operating costs in a beautiful setting that reflects a pride of ownership. Call us for more information and to set up an appointment to view! 

Yearlings Grazing On Big Dipper Ranch

Fall Grazing For Sheep

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