I’m very pleased to announce that, starting today, I am joining the Department of Agricultural and Consumer Economics at the University of Illinois as the Social Media Manager for the farmdoc Project.
As the farmdoc Social Media Manager, I will be disseminating tweets from my existing FarmPolicy Twitter account that feature farmdocdaily articles, as well as other tools, data and research from the farmdoc team. Also, I will offer tweets on other relevant news articles, government reports, and research analysis related to Corn Belt farm economics.
In addition to Twitter, farmdoc sites on Facebook and Instagram are now available. These sites will also include recently available information from farmdoc.
Lastly, a new farm policy blog site is currently under construction that will be available in the coming weeks. At the new farm policy blog, I will be posting summaries of recent news articles, government reports, current research, and Farm Bill developments tailored to Corn Belt farmers and stakeholders with an interest in the current issues impacting the agricultural economy.
Vibhuti Agarwal reported on Saturday at The Wall Street Journal Online that, “Indians are acquiring a strong taste for soybean oil thanks to lower prices, fueling a surge in imports at a helpful time for a global market struggling with a glut of the commodity.
“India’s imports of soybean oil have quadrupled in the last five years to more than 4 million metric tons this year, according to data compiled by the country’s vegetable oils industry body. India’s soybean oil imports are expected to rise over the next 10 years by as much as 40%, the U.S. Department of Agriculture estimated in May.”
The Journal article stated that, “India dethroned China two years ago as the world’s largest importer of soy oil. Some Indian consumers who have switched to soy oil cited the steep drop in prices—35% since 2012. Prices of palm oil, its main rival used widely in restaurants and by poorer Indians, have mostly been moving sideways.”
Agarwal added that, “The global soybean-oil market has been slumping for two years, as bumper harvests of soybeans everywhere from America to Argentina coincided with a decline in imports by China stemming from rising domestic production. Soybean production around the globe will increase about 5.6% to 330.43 million tons from last year’s 312.97 million tons, the USDA forecast.”
“In addition to a growing middle class that can afford soybean oil, India’s increase in imports reflect a multiyear drop in domestic production. That decline was especially pronounced last year, when production of soybeans fell nearly 20% to its lowest in more than a decade after poor monsoon rains and pest attacks hit yields,” the Journal article said.
Bloomberg writer Anatoly Medetsky reported late last week that, “Long known for its oil and gas, Russia is now moving to retake leadership in the world wheat trade it last held when the Czars ruled. In the process, it’s reshaping the market for one of the world’s most important traded food products.”
The article explained that, “From the Black Sea coast and the Volga River heartland to the sun-scorched steppes of Siberia, Russia’s farm belt is enjoying a renaissance, with grain at the leading edge. Turbocharged by the 45 percent drop in the ruble against the dollar over the last few years and bumper crops, local producers are crowding into export markets long dominated by big western players.
“Last season, Russian topped the U.S. in wheat exports for the first time in decades and is expected to extend those gains to displace the EU from the top spot this year, according to the U.S. Department of Agriculture. Investors from local farmers to billionaire tycoons are pumping money into the business.”
Medetsky added that, “Russian wheat has crowded out U.S. supplies in Egypt, the world’s biggest buyer, and is gaining footholds in some other countries, such as Nigeria, Bangladesh and Indonesia. That’s four decades after the Soviet Union turned to U.S. shipments of wheat and corn to offset shortfalls in its own harvests. Over the last decade, Russia has been the biggest single source of growth in wheat exports, vital to meeting surging global demand.”
“Farmers trace the roots of the rebound to the Kremlin’s move a decade ago to allow land to be bought and sold freely. That set off a wave of investment in new equipment, fertilizers and expansion of farms into lands long left fallow. Government subsidies and the ruble devaluation, along with good weather, have added to harvests in recent years,” the article said.
Gregory Meyer reported today at The Financial Times Online that, “The US grain industry aims to double exports of ethanol, volumes that could boost demand for corn and aid a struggling farm economy.
“The US Grains Council, a non-profit export group, is preparing plans to promote American-made fuel ethanol in countries including Mexico, Japan and India, said Tom Sleight, its president. It comes after the council held a series of workshops on ethanol use in China, according to its annual report.
“The US, the leading biofuel producer, is on track to export 891m gallons of ethanol this year, according to the Renewable Fuels Association. ‘Two billion gallons is a short-term goal,’ Mr Sleight said in an interview. ‘We know it’s not going to happen overnight.'”
Mr. Meyer explained that, “The domestic US market is saturated because most vendors sell petrol with no more than 10 per cent ethanol. Most US ethanol is made from corn, and the amount of corn used by the industry has levelled off at an estimated 5.275bn bushels this year after a furious rise in the previous decade.”
The FT article added that, “The council runs its ethanol export promotion programme in partnership with USDA and two ethanol trade groups, Growth Energy and RFA. Mr Sleight cautioned that ‘a lot of things need to fall into place’ before it could sharply expand the programme.”
“While the Farm Bill doesn’t expire until Sept. 30, 2018, some are calling for a new farm bill as early as possible. Republican Senator Chuck Grassley (R-IA), for example, on Wednesday said he cannot see why the bill couldn’t get done a year in advance, to better help farmers with prices this year, which have been even lower than 2015.
“That kind of talk is pushing senators in both Montana and North Dakota to get their ear to the farm ground early on the farm bill. North Dakota Sen. Heidi Heitkamp (D) and Montana Senators Jon Tester (R) and Steve Daines (R) have already scheduled listening tours to collect input. North Dakota Sen. John Hoeven said he would start his listening tours in 2017.”
The article noted: “‘We should start early and get this wrapped up as soon as possible,’ Daines said. ‘I think it is ridiculous we cannot get a farm bill put together sooner, to remove that uncertainty from the farmer. They face uncertainty all the time from the weather and other things. They don’t need additional uncertainty from Washington, D.C. Let’s get this done a year in advance.'”
Yesterday’s article added that, “‘The push is going to be on to get this done sooner than later and not drag this out,’ [Sen. Heitkamp] said. ‘I’d like to see a farm bill reauthorized before the termination of this one in the Senate.'”
Nonetheless, Ms. Jean pointed out that, “Hoeven, who sits on the committee that writes the farm bill, said an early bill is not only unlikely but impossible. But, he added, they can work on other things to help farmers in the meantime.”
In a separate article last week at the the Sidney Herald (Mont.) Online, Renée Jean reported that, “The ball is already on the ground and rolling for the 2018 farm bill, and U.S. Sen. Steve Daines, R-Mont., had his ear to the ground for those issues most on farmers’ minds during a visit to Sidney Sugars Wednesday, where growers talked about the increasing difficulties they face getting to a profitable harvest.”
The article noted the importance of crop insurance to producers: “Crop insurance is becoming more and more necessary to the survival of family farms, said Don Steinbeisser Jr.
“‘My grandfather didn’t even know what it was, much less use it,’ he said. ‘Now if you have a bad year, you need it. The bank’s not going to ignore it.'”
At that forum, House Ag Committee Chairman Mike Conaway (R., Tex.) noted that low prices have spurred calls for re-opening the Farm Bill and for consideration of ad hoc disaster assistance; he indicated that “we are going to be very resistant to that.” Similarly, Senate Ag Committee Chairman Pat Roberts (R., Kan.) pointed out there could be a risk of losing more than could potentially be gained if the Farm Bill was opened back up.
Gregory Meyer reported yesterday at The Financial Times Online that, “Cargill, one of the world’s biggest wholesale food suppliers, has bowed to consumer trends by offering its first products with a seal of approval from the leading US verifier of products free of bioengineering.”
The FT article explained that, “On Thursday, Cargill said it had for the first time received verification from the Non-GMO Project, a voluntary labelling organisation, for three of its food ingredients. The approval means packaged food companies that are Cargill’s customers can slap the project’s widely recognised butterfly logo on their products.”
However, Mr. Meyer noted that, “The three Cargill ingredients meeting project standards were cane sugar, high oleic sunflower oil and erythritol, a zero-calorie bulk sweetener made from corn. Of the three, corn is the only crop currently grown with genetically modified traits.
‘”There is no GMO sugarcane, and there is no GMO sunflower,’ said Peter Golbitz of Agromeris, a consultant to the natural food industry. ‘It’s somewhat capitulating to the growing consumer fear that there is something to be concerned about in all foods, as opposed to just the foods that may have commercial GMO varieties.'”
Yesterday’s article reminded readers that, “In July, President Barack Obama signed into law a measure requiring food companies to label products containing ingredients from genetically modified crops, pre-empting a Vermont state labelling law.”
Meanwhile, Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Consumers’ desire for deeper transparency into how food is made will continue pushing food companies to label ingredients made from genetically engineered crops, company executives said.
“‘Transparency is the coin of the realm,’ said Denise Morrison, chief executive of Campbell Soup Co., which earlier this year unveiled a plan to voluntarily label such GMO ingredients on its products, as federal and state lawmakers debated their own standards.”
The Journal article indicated that, “For shoppers at Wal-Mart Stores Inc., price, quality and safety are customers’ top priorities when it comes to food, rather than GMO content, said Frank Yiannas, vice president of food safety for the company, speaking at the [WSJ Global Food Forum] event Thursday.
“‘The debate never should have been about labeling,’ Mr. Yiannas said, but rather about whether GMOs are safe or not, and relying on science as the guide.
“When asked if catering to customers based on perceived risk might be overreaction, Mr. Yiannas said food producers and retailers may have to educate consumers to close the gap between perceived and actual risk, but meanwhile Wal-Mart ‘will always offer what the customer wants.'”
Stephanie Strom reported yesterday at The New York Times Online that, “Can people make healthier food choices without spending more money?
In a review of federal food subsidy programs, researchers found that nudging shoppers toward more healthful foods pushed cheap junk food out of the family shopping basket without adding to the government’s costs.
“The data come from a study of purchases by users of the Special Supplemental Nutrition Program for Women, Infants and Children, better known as WIC, before and after changes were imposed to encourage healthy eating.”
Ms. Strom noted that, “In 2009, the Department of Agriculture, which administers the WIC program, added vouchers aimed at increasing consumption of fruit, vegetables and whole grains while reducing saturated fat, cholesterol and sugar. To avoid raising overall costs, the program limited other items. The program restricted the amount of reduced-fat milk, cheese and juice recipients could buy, and eliminated whole milk from the program. If WIC users wanted to purchase foods not on the list, they had to use their own money, rather than the WIC vouchers or cards.
“While many nutritionists today would not agree with all the changes, particularly the focus on lowering fat, the net effect was an overall improvement in the quality of foods and beverages the shopper purchased.”
Jacob Bunge reported yesterday at The Wall Street Journal Online that, “U.S. agriculture officials warned Thursday that farmers, ranchers and food companies could lose out in the long-term if lawmakers shy away from pursuing big trade deals.
“While some hold out hope that the Trans-Pacific Partnership, a wide-ranging trade bill championed by the Obama administration, could yet pass this year, concerns are growing that the U.S. elections may spur a more protectionist stance that could shrink U.S. exports of agricultural goods ranging from meat to grains and dairy.”
Darci Vetter, ambassador and chief agricultural negotiator for the Office of the U.S. Trade Representative, says the Trans-Pacific Partnership would open up growth opportunities for U.S. agriculture in Asian markets. She spoke with WSJ’s Rebecca Blumenstein at the WSJ Global Food Forum.
The Journal article noted that, “‘The issue of trade has become a political football, unfortunately,’ said Julie Maschhoff, co-owner and vice president of the Maschhoffs LLC, an Illinois pork producer.
“Ms. Maschhoff, speaking at the WSJ Global Food Forum in New York, estimated that about one-quarter of U.S. pork is exported, and trade agreements are critical to expanding those sales as U.S. pork production ramps up.”
Julie Maschhoff, co-owner and vice president of the Maschhoffs LLC, an Illinois pork producer, explains why trade agreements are critical for expanding markets for excess U.S. protein supplies. She spoke with WSJ’s Joanna Chung at the WSJ Global Food Forum in New York.
In his Journal article, Mr. Bunge noted that, “U.S. farmers and ranchers broadly have been supportive of TPP, seeing the chance to break into Japan’s lucrative rice market for the first time, and potentially securing significant reductions in tariffs for markets in Southeast Asia and Canada.”
“Darci Vetter, ambassador and chief agricultural negotiator for the Office of the U.S. Trade Representative, said at the WSJ [Global Food Forum] event that she saw ‘a narrow window’ to approve the Pacific trade agreement in the lame-duck session, following the November election. ‘I’m an eternal optimist,’ Ms. Vetter said, and implementing TPP would help keep the U.S. on ‘a level playing field’ with competing countries.”
Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Perdue Farms Inc. eliminated all antibiotics from its chicken supply, the company’s chairman said, in a move he said makes the Maryland company the first major poultry supplier to do so.”
(Note that recent FarmPolicy.com updates have highlighted issues associated with antibiotics and livestock production (Sept. 20; Oct. 6)).
Mr. Bunge explained that, “Perdue’s move completes 14 years of efforts to replace antibiotics with vaccines and re-engineered chicken barns, and could help the company ramp up production of organic chicken, a market that is growing far faster than that for conventional poultry.
“‘It completes the journey,’ Perdue Chairman Jim Perdue said in an interview Thursday at the WSJ Global Food Forum in New York (See video below).”
Perdue Farms Inc. is the first major poultry supplier to remove all antibiotics from its chicken supply, the company’s chairman Jim Perdue said Thursday. He also spoke about the growing demand for organic chicken and how Perdue’s business model is adjusting, in a conversation at the WSJ Global Food Forum.
The Journal article added that, “Growing pressure from consumer groups has prompted big restaurant chains, including McDonald’s Corp. and Subway, to unveil plans in recent years to reduce the use of antibiotics in their chicken supplies, following earlier efforts by companies such as Panera Bread Co. and Chick-fil-A Inc.”
“The U.S. Food and Drug Administration in late 2013 called on animal drugmakers to stop permitting the use of antibiotics to speed up animal growth, and companies have agreed to comply by 2017,” the article said.
Mr. Bunge also pointed out that, “By the end of September 2017, Tyson Foods Inc., the biggest U.S. meat company by sales, aims to stop using on its chicken farms antibiotics that also are used to treat humans. The company also is expanding its business in pork and beef raised without antibiotics, said Tom Hayes, Tyson’s president.
“Mr. Hayes said the shift, which was driven by consumer demand, has helped Tyson better understand the flexibility of its production system to respond to changing tastes. ‘We have learned a lot about our supply chain, and it’s good,’ he said.”
Wall Street Journal writer Lucy Craymer reported today that, “China’s effort to overhaul its bloated corn sector has sent local prices to their lowest levels in 10 years—and left animal-feed imports from the U.S. more expensive for Chinese livestock farmers.
“China has been trying to auction down its stockpile—the largest in the world—amid the latest step in reforming its agricultural sector: The government this spring scrapped a minimum-price support program for corn started in 2007-08. That program, in which the government bought corn to keep prices above a certain level, had proved so popular that farmers grew more. The stockpile soared, doubling in size between 2009 and now.
“The combination—holding weekly auctions of corn and removing a floor for prices—has driven down China’s corn prices in recent months.”
The Journal article noted that, “Beyond China, the changes are pressuring what last year was a more-than $10 billion imported animal-feed market, much of which originates from the U.S. and has been popular with Chinese livestock farmers because it was cheaper than local corn.
“One such U.S. product in particular could suffer: a byproduct from the making of ethanol known as distiller’s dried grains with solubles (DDGS), more than half of whose sales last year were in China. Now U.S.-produced DDGS must compete with the cheaper Chinese corn. Adding to the pressure, DDGS on Sep. 26 was hit by a 33.8% duty by the Chinese government after the U.S. was cited for dumping the product. The U.S. was then slapped with a second tax of between 10% to 10.7% a week later.”
Ms. Craymer added that, “But China’s corn prices, propped up for so many years, still have a long way to drop before they would start to compare to international ones: The most widely traded corn futures contract on the Chicago Board of Trade this week was around US$137 a metric ton—about 34% less than prices for the most-traded Chinese corn contract.
“The prices of corn vary, naturally, according to whether the corn is from a new harvest or from earlier ones, which usually end up as animal feed or ethanol. But a look at prices on China’s Dalian Commodity Exchange shows how much prices have fallen from when the price-support mechanism was abandoned: Last Friday, the most recently available price in China, the January corn contract closed at 1,392 yuan—about $208—a metric ton. That was down 12% from March 29 when the price floor was removed.
“Adding to pressure on the Chinese government: new corn from the 2016 harvest is now entering the market.”
More specifically, Reuters writers Karl Plume and Tom Polansek reported last month that, “U.S. wheat farmers, struggling to make money as prices sink and global supplies swell, could be the main beneficiaries if Washington wins a case it brought last week against China over an estimated $100 billion in domestic grain market supports.
“On Tuesday, U.S. trade officials said they would file a case at the World Trade Organization (WTO) against China over allegations that aggressive pricing supports prompted Chinese farmers to overproduce corn, wheat and rice, fuelling a global crop glut and depressing world prices.”
The Reuters article noted that, “While the U.S. allegations cover corn and rice as well as wheat, China has already reformed its corn policy and rice exports were never a major part of U.S. agricultural income.”
UPDATE: The Wall Street Journal editorial board indicated in an item posted on Thursday evening (“China’s Corn Mountain“) that, “Corn prices in China fell more than 20% in the past year, the result of Beijing’s decision to cancel a major subsidy program. That’s good news for farmers as well as consumers, but Beijing still wastes money by the bushel keeping prices of other grains high.”
The Journal added that, “Beijing got smart in March and switched to a policy of ‘market-oriented purchase and subsidy.’ The market will set the price of corn, and farmers will receive cash payments based on acreage. The price of corn could fall another 30% to the global level.
“The problem of what to do with a mountain of rotting corn remains. State trading companies plan to export some of it, but the U.S. government estimates that China will have to write off $10 billion of spoiled grain.
“The disastrous corn policy shows again that China hurt itself by listening to the alarmism of Malthusian prophet Lester Brown, who periodically claims that China faces famine. The best way to make Chinese agriculture efficient is to expose it to international competition. Next on the chopping block should be wheat and rice support prices that the U.S. claims cost nearly $100 billion more than World Trade Organization rules allow.”
Bloomberg writers Shruti Singh and Lydia Mulvany reported on Tuesday that, “Cattle ranchers who quickly expanded their herds after a prolonged Texas drought now have become their own worst enemies.
“The industry-wide buildup was the fastest Shelby Horn, a fourth-generation cattleman with a family ranch in Nebraska, had seen in at least 30 years. The result: An explosion of beef on the market and a 30 percent drop in wholesale prices from a record set in May 2015, when supplies were tight after the drought. And with many of the calves still a year or two from slaughter, the industry finds itself with no easy way to adjust.”
The Bloomberg writers explained that, “Beef production will rise 5.2 percent this year and climb a further 3.4 percent in 2017 to a five-year high, the U.S. Department of Agriculture projects. Output is increasing as the cattle, hog and chicken industries expand simultaneously, leaving the nation set for a year of record meat production and declining prices. Consecutive years of bumper grain harvests have also sparked expansion as feed costs fell.”
And yesterday, Bloomberg’s Simon Casey tweeted that, “Hogs hit 13-year low.”
Purdue University ag economist Chris Hurt pointed out earlier this week that, “Lower corn and soybean meal prices this fall will drop estimated costs of production to about $47 to $48 per live hundredweight. With hog prices in the higher $30s this fall and winter, estimated losses will be $25 to $30 per head.”
Meanwhile, with respect to consumer meat preferences, Wall Street Journal writer Jacob Bunge reported earlier this week that, “U.S. food regulators need to take further steps to curb antibiotics use in livestock to maintain the drugs’ ability to defend human health, according to an advocacy group.
“By early next year, animal drugmakers have agreed to abide by U.S. Food and Drug Administration guidelines to stop using antibiotics used in human medicine to help livestock and poultry gain weight faster. Some antibiotics had been used for that purpose on farms for decades, alongside treating and preventing disease.
“But researchers for the Pew Charitable Trusts said Tuesday in a review of livestock antibiotics that the new guidelines don’t go far enough. The Philadelphia-based group said regulators need to clamp down on how long some antibiotics can be used, and more closely scrutinize some uses that may not directly relate to keeping animals healthy. Pew is a nonpartisan, nonprofit group that researches consumer, environmental and health issues, including a focus on the impacts of large-scale food production.”
Mr. Bunge added that, “Regulators’ efforts to scale back antibiotics use on farms gained momentum as some of the biggest U.S. restaurant chains, including McDonald’s Corp. and Subway, over the past few years announced plans to buy meat produced with less antibiotics.”
Lastly, Kelsey Gee and Heather Haddon reported in today’s Wall Street Journal that, “In grocery store cases stuffed with exotic grass-fed and organic meats, new ‘single-origin‘ cuts are taking the local food craze to new heights.
“Retailers including Whole Foods Market Inc., FreshDirect, and Amazon.com Inc. are building farm-to-store meat operations that sate some consumers’ desires to trace their burger or bacon all the way back to an individual animal.”
Graph from today’s WSJ
The Journal writers explained that, “These efforts take aim at the industrial meat processors like Cargill Inc. and Tyson Foods Inc. that sit at the center of a hub-and-spoke system tying hundreds of thousands of farmers across the country with retailers and food distributors.”
Gee and Haddon added that, “Sales of conventional meat last year grew less than 3% in value, compared with a 12% uptick for meat labeled ‘natural’ and a 23% gain in sales of labeled ‘antibiotic free,’ according to market research firm Nielsen.”
An update last week from University of Missouri Extension indicated that, “The U.S. Department of Agriculture’s Sept. 12 crop production report estimates corn production up by 11 percent over last year. USDA predicts 3 percent more soybean this year.
“Crop producers will have more grain to sell at lower prices in 2016. Storage might become tight after this year’s excellent wheat yields, says University of Missouri Extension agricultural engineer Charlie Ellis. Although not as big as 2014, this year’s bumper crop will take longer to haul, dry and store than in past years, Ellis says.”
The update explained that, “Crop cash receipts—the cash income from crop sales—are expected to fall 3.7 percent in 2016 as prices for cash crops continue to decline….[T]hat motivates farmers to hold grain for feeding or a later sale.”
The University of Missouri item added that, “MU Extension offers guides and customized spreadsheets to help farmers make good decisions about storage, says Joe Zulovich, MU Extension agricultural engineering specialist. Charts, spreadsheets and guides are available at extension.missouri.edu/grainstorage.”
“MU economist Ray Massey recommends MU Extension’s ‘Grain Bin & Storage Cost’ decision tool to look at the cost of commercial storage and drying when corn prices are low. Users input information from their operation to help with decision-making in changing agricultural markets. Download the free spreadsheet at bit.ly/2cRbaoK.”
“Yes, we have to get these beans out while the getting is good, but when we get caught up and can get into the corn, prioritize the areas where the stalks are weak. This is one of those seasons when it might not be a question of if you’ll have stalk rot, but rather where and how much. While we like to take advantage of as much field drying as possible, I’ve been in quite a few fields and had calls on many others, where it would be pretty risky leaving the corn out there very long.”
The ISU update added that, “Iowa State University Extension and Outreach Plant Pathologist Alison Robertson recommends the following procedure to assess your fields before harvest:
“- If you are scouting for stalk rot, look for lower stalk discoloration and check stalk firmness by pinching the lower internodes.
“- Simply pinch the stalk between your thumb and fingers. Healthy stalks are firm and won’t compress easily; if a node can be ‘squished’ or if it otherwise feels soft, that means stalk rot has set in and risk of lodging goes up.
“- Instead of this ‘pinch’ test, some agronomists and farmers prefer using the ‘push’ test, but either way works fine.
“- Check at least 100 plants per field; 20 plants in five spots.”
Reuters writer Tom Polansek reported yesterday that, “The U.S. Department of Agriculture will pay more than $7 billion of taxpayers’ money to farmers this fall to keep them afloat in the face of low crop prices, agency officials said on Tuesday.
“The USDA released the total on the same day that payments started going out to more than 1.5 million growers of corn, soybeans and other crops, who had enrolled in U.S. safety-net programs to protect themselves from market downturns last year.
“Prices for the crops have stayed low in 2016 as massive harvests around the world have increased inventories and intensified competition for exports.”
The Reuters article noted that, “In August, the USDA predicted net farm income in 2016 would fall 11.5 percent from 2015 to $71.5 billion because of low commodity prices. If realized, that would be the lowest since 2009.
“It also would mean that USDA’s safety-net payments accounted for about 10 percent of net farm income for 2016.”
Mr. Polansek added that, “Last year, the agency paid farmers $5.2 billion under the programs to cover weak markets in 2014.”
Also yesterday, Julie Harker reported at Brownfield Online that, “[USDA’s Farm Service Agency (FSA) Administrator Val Dolcini] says more money is going out to farmers than last year, ‘We’re about 50% more than the 2014 crop year and that means we are paying more farmers and more counties around the country. Certainly, corn and soybeans and wheat all had very high levels of payment activity.’
“Dolcini says farms enrolled in ARC have suffered $27-Billion in revenue losses in the last year or so. He admits the ARC and PLC payments won’t make farmers ‘whole‘ but says assistance from Congress on the loan side and USDA assistance in other ways will also help. Funding from the recently passed continuing resolution, Dolcini says, will take care of the FSA loan backlog.”
The FSA released more specific details regarding the Farm Bill payments for corn yesterday, and noted that, “The following maps show 2014 and 2015 ARC/PLC payments by crop and the average of the payments for the two years. The map of average payments shows how ARC/PLC works to pay different counties over time based on the yields and price in those counties. As this map shows, over time high and low payment rates under ARC-CO are moderated and the pattern tends to be smoothed. This effect is expected to result in further smoothing as the entire 5-year program is completed in future years.
“Approximately 1.7 million farms are enrolled in the ARC/PLC program. In 2014, the ARC-CO program paid approximately 900,000 farms a total of $4.4 billion for all crops. In 2015, the initial ARC-CO program payment run (additional payments are expected later in the year as price and eligibility data become available) is expected to pay approximately $5.6 billion to about 1.2 million farms.
“While not reflected in the maps, the Price Loss Coverage (PLC) program paid approximately $800,000 to about 90,000 farms in 2014 for all crops. In 2015, the initial PLC payment run (additional payments are also expected) is estimated to be about $1.2 billion to over 350,000 farms.”
Similar information from FSA regarding soybean payments can be viewed here, while wheat maps and analysis can be found here.
In addition to the Payment Rate maps, FSA also released Revenue Maps yesterday for corn, soybeans and wheat.
In a tweet yesterday, Todd Gleason noted that, “Interesting ARC County analysis via @usdafsa. One map shows revenue shortfall, the other how well ARC covered it.”
The Federal Reserve Bank of Dallas recently released its Quarterly Survey of Agricultural Credit Conditions for the third-quarter of this year, which stated in part that, “Bankers responding to the third-quarter survey continued to report concern for producers’ financial positions due to low commodity prices. Low prices for crops and livestock were the chief concerns among bankers. Farmland conditions varied by region, with most in good shape due to summer rains but some suffered from excessive rain.
“Demand for agricultural loans decreased for a fourth consecutive quarter. Loan renewals and extensions continued to increase as loan repayment rates continued to decline. Overall, the volume of non-real-estate farm loans was lower than a year ago. Operating loans continued to increase year over year; all other loan categories fell in volume year over year in the third quarter.”
The report from the Dallas Fed also indicated that, “District land values increased in the third quarter. Real irrigated land values rose the most, up 7.2 percent over the previous quarter. Real ranchland values were up 6.5 percent, and real dryland values were up 5.6 percent (Figure 2). According to bankers who responded both in third quarter 2016 and in third quarter 2015, ranchland and dryland values increased year over year, while irrigated land values were mostly unchanged from a year ago.
“The anticipated trend in the farmland values index remained negative for a fth consecutive quarter, suggesting respondents expect farmland values to trend down in the upcoming months. Comments from bankers point to poor crop production, low commodity prices and concern about the economy as causing slowing land sales and depressing values. The credit standards index indicated continued tightening of standards (Figure 4).”
Additional comments from District Bankers were also included in the Dallas Fed Survey, including the following:
“- 2016 is shaping up to be financially challenging for ag producers. Low grain and cattle prices will place many producers in a position of large equity losses and partial fixed asset liquidation to remain in business.”
“- Due to weather-related issues and low commodity prices, we are expecting some producers to fall short of paying off operating lines for 2016. There is an increased concern for the upcoming crop year with overall low commodity prices and possibly higher debt carry by producers.”
The Dallas Fed Survey also included this graph related to cash rents:
Joseph Morton reported today at the World-Herald Herald Online that, “The efficiency of modern American farming certainly looks like a success story.
“Agriculture Secretary Tom Vilsack said Monday that over the course of his lifetime, the country’s agricultural production has risen 170 percent — all while using 26 percent less land. But the production gains since he was born in 1950 also reduced the number of farmers needed.
“‘The challenge was that our country didn’t ask the question as we were becoming more efficient in production agriculture: What are we going to do with the 22 million families that are no longer farming?’ Vilsack said during an appearance at the National Press Club. ‘How can we create opportunities for them if they so desire to stay in their small community, in their rural area? How can we create job opportunities for their children and grandchildren?‘”
Mr. Morton noted that, “Vilsack’s session with reporters focused on expanding economic opportunities in rural America. He talked up the importance of trade exports, renewable energy sources and bio-based products from textiles to cleaning supplies.”
Today’s World-Herald item added that, “In particular, [Sec. Vilsack] talked about the need to continue supporting renewable fuels and the bio-based industry.
“A new report says that industry contributes $393 billion to the economy, he said, adding that it has helped rural areas recover from the Great Recession by supporting 4.2 million jobs.”
And Christopher Doering reported yesterday at The Des Moines Register Online that, “Iowa is the nation’s No. 1 ethanol producer, but 27th when it comes to creating jobs from the manufacture of bio-based products. California leads the nation with 145,000 bio-based jobs.
“Nearly all of Iowa’s bio-based impact on the state’s economy came from forest products, at $1.5 billion. Smaller contributions came from bio-based chemicals and enzymes.”
Also yesterday, Jack Fitzpatrick reported at the Morning Consult Online that, “In addition to supporting biofuels, Vilsack said the federal government can help rural areas by investing in the community college system, improving high-speed broadband connection.”
The update added that, “Vilsack, who was seen as a possible running mate for Hillary Clinton, was cagey when asked about his political future, whether it includes serving as Clinton’s chief of staff or running for office in his home state of Iowa, where he previously served as governor. Vilsack did say he enjoyed executive positions more than when he served in the Iowa state Senate.
“‘Here’s what I know about myself. I’m an executive. I like to make decisions. I like to implement decisions,’ Vilsack said.”