ASFMRA AFM cheat sheet

Soil texture classes (sand, sandy loam, loam, clay loam, clay) govern water-holding capacity, drainage, and tillage timing; clay holds more plant-available water but drains slower and has narrower workability windows.

Land capability classification (USDA classes I-VIII) ranks land by limitations; classes I-IV are generally suited to cultivated crops, while V-VIII are restricted to pasture, range, forestry, or wildlife use.

Prime farmland is defined by USDA as land with the best combination of physical and chemical characteristics for producing food, feed, forage, fiber, and oilseed crops with minimal inputs.

Soil pH strongly affects nutrient availability: phosphorus is most available near pH 6.5-7.0, and lime is applied to raise pH on acidic soils based on buffer-pH and target-pH tables.

Cation exchange capacity (CEC) reflects the soil's nutrient-holding ability; higher-CEC soils retain more potassium, calcium, and magnesium and generally require higher fertilizer rates to shift soil test levels.

Topsoil depth, rooting depth, and restrictive layers (hardpans, fragipans, shallow bedrock) constrain yield potential independent of surface fertility and should be evaluated in any land appraisal.

Erosion risk is estimated with the Universal Soil Loss Equation (RUSLE): A = R x K x LS x C x P, where each factor estimates rainfall, erodibility, slope length/steepness, cover, and conservation practice effects.

Soil surveys (NRCS Web Soil Survey) provide map units, productivity indices, and drainage classes that support comparable sales adjustments and income capitalization assumptions.

Enterprise budgets separate variable costs (seed, fertilizer, chemicals, fuel, custom hire) from fixed costs (depreciation, interest, insurance, taxes, land charges); gross margin equals revenue minus variable costs.

Break-even yield = total costs / price per unit; break-even price = total costs / expected yield; these are the core decision thresholds for planting and marketing choices.

Crop rotation economics compare returns across a multi-year sequence, not a single year, because rotation affects pest pressure, nitrogen credits, and yield; legume credits reduce following-year nitrogen needs.

Livestock carrying capacity is expressed in animal unit months (AUM); one animal unit is commonly defined as a 1,000-lb mature cow, and stocking rate must be matched to forage production to avoid overgrazing.

Forage production varies with precipitation and range condition; a common rule is to stock conservatively (using 50-70% of estimated forage) to leave residual cover for drought resilience.

Cost of production per unit is the denominator for margin analysis; comparing an operator's cost of production to regional benchmarks identifies efficiency gaps and informs lease negotiation.

Revenue protection tools include crop insurance (yield and revenue products), forward contracts, hedges, and marketing loans; basis (local cash price minus futures) is a key component of realized price.

Government programs (ARC/PLC, conservation programs) provide risk-management payments; understanding payment triggers and payment limits is essential when projecting net farm income for valuation.

Cash rent leases transfer price risk to the tenant and production risk to the operator, while crop-share leases split both revenue and input costs between landlord and tenant in an agreed ratio.

Crop-share lease fairness is assessed by comparing the landlord's and tenant's shares of gross revenue to their shares of total costs; a balanced lease keeps those percentages roughly equal.

Flexible or variable cash leases set base rent plus a bonus tied to yield and/or price, balancing risk between parties better than fixed cash rent in volatile markets.

Water rights are governed by prior appropriation (first in time, first in right) in most western states and by riparian doctrine in many eastern states; appurtenant water rights transfer with the land unless severed.

Conserved water and irrigation efficiency improvements may be subject to state transfer rules; verify whether saved water can be sold or transferred before capitalizing its value.

Conservation easements restrict development or specific uses in perpetuity; they typically lower market value but may generate tax benefits, and the appraisal must reflect the encumbrance.

Cover crops and reduced tillage improve soil organic matter and infiltration; quantify the effect through yield stability and reduced input costs rather than treating it as a purely qualitative benefit.

Lease terms should specify term length, renewal, termination notice, improvements and fixtures, hunting/recreational access, and conservation practice obligations to avoid disputes.

The three approaches to value are sales comparison, income capitalization, and cost; agricultural land is most often valued by sales comparison and income capitalization, with cost used for specialized improvements.

Direct capitalization: Value = Net Operating Income / Capitalization Rate; the cap rate must be derived from comparable agricultural sales (band of investment or market extraction).

Net operating income excludes debt service, income taxes, and depreciation; it equals gross income minus vacancy/collection loss minus operating expenses.

Highest and best use analysis has four tests: legally permissible, physically possible, financially feasible, and maximally productive; it must be evaluated as vacant and as improved.

Sales comparison adjustments are made for time, location, size, soil productivity, water rights, improvements, and terms of sale; adjust the comparable to the subject, not the reverse.

Units of comparison for farmland include price per acre, price per productive acre, price per animal unit month, and price per acre-foot of water; choose the unit that reflects the market's behavior.

Land residual technique isolates land value by subtracting the depreciated value of improvements from total property value, useful when comparable land sales are scarce.

Capitalization rates for farmland are typically low relative to other real estate because of lower risk and appreciation expectations; cap rates should be supported by local sales evidence, not national averages.

The appraisal must be developed and reported with independence, objectivity, and impartiality; the fee cannot be contingent on a predetermined value, a direction in value, or a desired outcome.

An appraiser must have the knowledge and experience to complete the assignment competently or disclose the lack of it and take steps to gain competence; competence includes geographic and property-type familiarity.

Confidentiality applies to client information and assignment results; disclosure is permitted only as required by law, regulation, or the client's authorization.

The scope of work must be stated and must be sufficient to produce credible assignment results; scope decisions are the appraiser's professional judgment, not the client's instruction.

Conflicts of interest must be disclosed and managed; accepting an assignment where the appraiser has a direct or indirect interest in the property compromises independence.

Record retention: workfiles must be retained for at least five years after delivery of the report, or two years after final disposition of a judicial proceeding, whichever is longer.

Written engagement agreements should identify the client, intended use, intended users, scope, fee, and any assumptions or limiting conditions before work begins.

Ethical practice requires clearly distinguishing appraisal, appraisal review, and consulting services, and not advocating for a value conclusion in a review engagement.