ASFMRA AFM flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Land capability classes

USDA system of eight classes ranking land by limitations; classes I-IV support cultivated crops and V-VIII are limited to pasture, range, forest, or wildlife uses.

Prime farmland

USDA designation for land with the best physical and chemical characteristics for producing food, feed, forage, fiber, and oilseed crops with minimal inputs.

Cation exchange capacity

The soil's capacity to hold exchangeable cations such as calcium, magnesium, and potassium; higher CEC generally means greater nutrient-holding ability and higher fertilizer requirements.

RUSLE equation

Revised Universal Soil Loss Equation: estimated soil loss equals rainfall erosivity times soil erodibility times slope length and steepness times cover management times support practice factors.

Soil pH and nutrient availability

A measure of soil acidity; most nutrients, especially phosphorus, are most plant-available near pH 6.5 to 7.0, and lime is used to raise pH on acidic soils.

Restrictive soil layer

A subsurface zone such as a hardpan, fragipan, or shallow bedrock that limits rooting depth and water movement, constraining yield potential regardless of surface fertility.

Enterprise budget

A production and financial plan for one enterprise that lists expected revenue, variable costs, and fixed costs to estimate gross margin, break-even price, and break-even yield.

Break-even yield

Total production costs divided by the expected price per unit; the yield at which revenue exactly covers costs and below which the enterprise loses money.

Break-even price

Total production costs divided by expected yield; the minimum price per unit needed for the enterprise to cover all costs at the projected production level.

Animal unit month

The forage consumed in one month by one animal unit, commonly a 1,000-pound mature cow; used to match stocking rates to available forage production.

Basis

The difference between a local cash price and the relevant futures price; a key component of realized price and a factor in forward contracting and hedging decisions.

Gross margin

Enterprise revenue minus variable costs such as seed, fertilizer, chemicals, fuel, and custom hire; used to compare enterprise profitability before fixed costs.

Stocking rate

The number of animal units grazed per unit of land over a period; conservative stocking leaves residual forage cover to buffer drought and maintain range condition.

Cost of production per unit

Total enterprise costs divided by units produced; compared against regional benchmarks to identify efficiency gaps and to set marketing and lease targets.

Cash rent lease

A lease in which the tenant pays a fixed rent per acre and bears production and price risk while the landlord receives a stable, predictable income.

Crop-share lease

A lease in which landlord and tenant divide gross crop revenue and share specified input costs in agreed proportions, spreading price and production risk between both parties.

Flexible cash lease

A lease with a base cash rent plus a bonus tied to actual yield, price, or revenue, shifting some risk from tenant to landlord relative to fixed cash rent.

Prior appropriation doctrine

A water rights system granting priority by first beneficial use, first in time first in right; common in western states and independent of land ownership location.

Riparian doctrine

A water rights system tying use rights to ownership of land bordering a watercourse, common in eastern states; rights are typically correlative among riparians.

Conservation easement

A perpetual recorded restriction limiting development or specified uses of a property; it typically reduces market value and must be reflected in the appraisal.

Appurtenant water right

A water right that transfers with the land it serves unless expressly severed; its presence or absence materially affects the value of irrigated farmland.

Direct capitalization

A valuation method where value equals net operating income divided by a capitalization rate derived from comparable agricultural sales or a band of investment.

Net operating income

Gross income minus vacancy and collection loss minus operating expenses; it excludes debt service, income taxes, and depreciation in property valuation.

Highest and best use

The reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive, tested both as vacant and as improved.

Sales comparison approach

A valuation approach adjusting prices of comparable sales for differences such as time, location, size, soil productivity, water rights, and terms, adjusting comparables to the subject.

Land residual technique

A method isolating land value by subtracting the depreciated value of improvements from total property value; useful when direct land comparables are scarce.

Price per productive acre

A unit of comparison dividing sale price by acres of productive capability rather than total acres, useful when properties differ in waste, non-tillable, or low-productivity land.

Capitalization rate support

The rate used to convert income to value; it must be derived from local comparable agricultural sales or band of investment, not national averages.

Independence and objectivity

The ethical requirement that an appraiser's conclusion not be contingent on a predetermined value, direction in value, or a fee tied to a desired outcome.

Competency rule

An appraiser must have the knowledge and experience to complete an assignment competently, or disclose the deficiency and take steps to gain the needed competence.

Confidentiality obligation

Client information and assignment results may not be disclosed except as authorized by the client or required by law, regulation, or legal process.

Workfile retention period

Workfiles must be retained at least five years after report delivery, or two years after final disposition of a judicial proceeding, whichever is longer.