January 24, 2020

Federal Reserve Beige Book: Observations on the Ag Economy

Today the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

Fifth District- Richmond: “Unseasonably mild temperatures, coupled with below-normal precipitation held back crop yields in some areas of the District. In North Carolina, tobacco and cotton yields reached only 50% of historical averages as a result of damage caused by severe weather last summer. In South Carolina, dry weather late in the season significantly reduced what was previously expected to be an outstanding cotton crop. Moreover, results of our recent agricultural credit survey indicated that farmland values were slightly below the previous quarter and year-ago levels. In contrast, ample amounts of rain throughout Virginia, combined with above-normal temperatures, resulted in above-average yields and near-record commodity prices for most grain producers. An analyst in the Commonwealth described 2011 as a solidly profitable year for most grain producers due to increased export demand.”

Sixth District- Atlanta: “Significant rains have eased drought conditions in parts of Alabama, Mississippi, and Louisiana, while parts of Georgia and Florida have seen drought conditions worsen. Mild temperatures throughout the region are of concern to peach and other fruit crop growers hoping for adequate conditions for the current growing season. On a year-over-year basis, prices received by farmers were higher for many of the region’s agricultural products. Contacts reported that some farmers in Alabama and Georgia were reviewing their planting plans in light of their concerns of labor shortages.”

Seventh District- Chicago: “Corn, soybean, wheat, hog, and cattle prices rose during January and early February. Input costs for agriculture continued to increase, led by sharply higher rental rates for cropland. The increases in these costs have pressured farmers’ margins. In order to offset the risks of price declines or poor harvests, farmers have been willing to spend more on revenue insurance policies. Estimates of corn stocks have come down and are below where they were a year ago. Given current rates of use, the expected supply of corn in stock just before the next harvest is around three weeks, about as tight as last year. Cattle operations are working to build herd sizes, even though bid prices for cattle are very high. Contacts expected farmers to boost their capital expenditures in 2012 compared with 2011.”

Eighth District- St. Louis: “Yields for corn, sorghum, hay, soybeans, and cotton were lower in 2011 compared with 2010, while yields for winter wheat, rice, and tobacco showed positive gains. Monthly output of commercial red meat for December 2011 decreased compared with November 2011; the District’s total live weight and number of chickens slaughtered also decreased during the same period.”

Ninth District- Minneapolis: “Agriculture remained strong. January prices received by farmers for corn and cattle increased. Prices declined somewhat for wheat, soybeans, hogs, dairy products, eggs and poultry, but all prices were above their January 2011 levels. According to preliminary results from the Minneapolis Fed’s fourth-quarter (January) survey of agricultural credit conditions, 67 percent of District lenders reported that farm incomes increased in the previous three months; 10 percent reported decreases. However, drought conditions spread in Minnesota, the Dakotas and District portions of Wisconsin. Low snowfall combined with erratic temperatures were having an uncertain effect on the District’s winter wheat crop.”

Tenth District- Kansas City: “Agricultural growing conditions fluctuated with precipitation levels. After warm, dry weather in January, recent precipitation kept agricultural growing conditions from deteriorating further. The winter wheat crop remained in fair to good condition. Soil moisture levels were low across the District with western Oklahoma and Kansas experiencing severe drought. Ranchers in the southern Plains continued to liquidate herds due to poor pasture conditions and record high cattle prices. In the northern Plains, the lack of harsh winter weather allowed cattle feedlot operators to reduce feed usage and still maintain livestock growth. District contacts expressed concerns about 2012 profit margins due to rising feed, fuel, and fertilizer costs. Still, a rebound in crop prices fueled additional gains to record high farmland values and more bankers expected farmland prices to move higher in the next few months.”

Eleventh District- Dallas: “Recent rainfall eased drought conditions in several areas, particularly in the northeastern parts of the District. The rain helped refill stock tanks and benefitted pasture conditions. Farmers were a little more optimistic about spring planting. Demand for agricultural products remained strong. Contacts said cattle prices climbed to record levels, largely due to tight supplies. High commodity prices have helped agricultural producers’ margins, but elevated input costs have erased some of those gains.”


Farm Bill and Policy Issues; Regulations; and Trade

Categories: Audio /Farm Bill /Trade

Farm Bill and Policy Issues

An update posted yesterday at the Oklahoma Farm Report Online stated that, “One of the biggest challenges facing Oklahoma Representative Frank Lucas as he works to forge a farm bill is how to get all the disparate groups to pull in the same direction. In an interview with Ron Hays, the House Committee on Agriculture Chairman said the obstacles facing his committee as they work on farm legislation are enormous.

“Lucas said he and Senate Agriculture Food and Forestry Committee Chairman Debbie Stabenow had agreed in December to write legislation anticipating $23 billion in cuts. Since then, the President’s budget shows a $32 billion reduction in spending for farm programs. That budget, declared dead on arrival by both the House and Senate is off the table. Lucas said one proposal for a new budget being floated in the House by Paul Ryan entails $40 billion dollars in cuts.”

(FarmPolicy Note:  Recall that the House GOP budget framework from last year contained a total of $178 billion in cuts to agricultural programs over 10 years, a target that was significantly greater than any other of the other comprehensive budget proposals that contained reductions in Farm Bill spending ($10 billion- President’s Fiscal Commission, $11 billion- Gang of Six, $23 billion- House and Senate Ag Committees, $30 billion- Domenici-Rivlin Proposal, and $32 billion- President’s Deficit Reduction Plan).  If the House proposal for this year contains a similar level of cuts ($178 billion), which is possible, it could add to the difficulty of reconciling a Senate Farm Bill with a House passed measure).

Yesterday’s Oklahoma Farm Report update noted that, “Lucas said he thinks the action taken by the Senate Ag Committee to accelerate its hearings on the conservation title of the farm bill is a positive step, but given the way Washington works, it may mean little. Questions about the possibility of having a farm bill before Easter, may be optimistic, Lucas said, but Senate Committee Chairwoman Debbie Stabenow ‘wants to move quicker rather than later and she told me early on if she had everything together in her chamber, she would move heaven and earth to get it done. I think there is an indication by moving up those hearing dates that perhaps the pieces are coming together. But that is only speculation on my part.’

“Some of the dissension on how to proceed with a comprehensive farm bill, Lucas said, is differences in approach on how the bill should work. There are those who advocate for a ‘shallow loss’ approach and those who prefer crop insurance as the major policy initiative. With money difficulties on the horizon, Lucas said a bill that provides for both may be difficult to achieve.

“‘That’s the real question, will we have enough money to do both. If you’re going to have cuts that are 30 billion or 40 billion dollars or more, it makes it really, really difficult to do both and you can’t just halfway do one or the other. You’ve got to have both elements if you’re going to have a real safety net as some seem to think by stepping off direct payments.’

“‘I have regions that are more focused on the revenue side of the equation. I have regions that are more focused on the crop side of the equation.’”

To listen to the complete interview yesterday with Ron Hays and Chairman Lucas, just click here.


Farm Bill and Policy Issues; Ag Economy; and Regulations

Farm Bill and Policy Issues

Reuters writer Charles Abbott reported yesterday that, “U.S. farmers collected a record $10 billion in crop insurance indemnities for their 2011 crops, said a trade group on Monday, calling insurance a sound safety net as Congress prepares to overhaul crop subsidies.

“Five percent of claims on 2011 crops are outstanding, so the pay-out is likely to climb above the current $10.08 billion, said National Crop Insurance Services (NCIS). The payment record was $8.67 billion in 2008.

“‘The ability of U.S. agriculture to sustain more than $10 billion in insured losses and seamlessly finance itself for the 2012 crop season should not be taken for granted,’ said NCIS president Tom Zacharias.”


Farm Bill and Policy Issues; Ag Economy; and Regulations (MF Global)

Farm Bill and Policy Issues

Paula Peterson reported late last week at the Altus Times Online (Altus, Okla.) that, “With the deficit exploding, [House Agriculture Committee Chairman Frank Lucas (R., Okla.)] said we need a safety net for our food system. This Farm Bill will be different, with a focus on crop insurance. The Direct Payment plan is not ‘do-able’ anymore. Some are talking about having revenue insurance, but that’s hard to make equitable for all regions.

“Lucas said conditions in Washington are not conducive to getting things accomplished right now. The House is controlled by the Republicans, the Democrat President is on the liberal side, and the Senate is 53 to 47.”


Deficit Reduction Proposals for Farm Programs- Anticipating the House Budget Proposal

Categories: Farm Bill

As the House Budget Committee prepares its FY2013 budget proposal in the coming weeks, its worth remembering that last year’s GOP House budget proposal contained a total of $178 billion in cuts to agricultural programs over 10 years.

Although $30 billion is often cited as the benchmark from last year’s outline, that amount was only distributed to programs such as direct payments, crop insurance subsidies, and export assistance programs.

An additional $127 billion in cuts were allocated to convert SNAP program benefits (food stamps) to state block grants, while the remaining $21 billion was unspecified, but was likely to include cuts to conservation programs.

This summary table (click to expand, from page six of the CRS report) from a recent Congressional Research Service Report, “Previewing the Next Farm Bill,” illustrates that proposed cuts to agricultural program spending by the House Budget Committee was significantly greater than any other of the other comprehensive budget proposals that contained reductions in Farm Bill spending ($10 billion, $11 billion, $23 billion, $30 billion and $32 billion).


Recall also that a Politico article from last month summarized an appearance by House Budget Committee Chairman Paul Ryan (R., Wis.) on the January 29th edition of Fox News Sunday: “Ryan on ‘Fox News Sunday’ said he hasn’t written the budget yet because the Congressional Budget Office baseline isn’t out, but he added, ‘We’re not going backward; we’re going forward. We’re not backing off of any of our ideas, any of our solutions.'”

Some policy observers have inferred that the upcoming budget proposal from the House may not look much different than it did last year.

Keith Good



Secretary Vilsack Sees Continued Strong Farm Economy And New Opportunities

Secretaries of Agriculture — 30 Leaders; 150 Years

Ag Economy (USDA Outlook Forum); Farm Bill; Regulations; and Political Notes

Agricultural Economy (USDA Outlook Forum)

Reuters writer Charles Abbott reported yesterday that, “Global crop prices will retreat sharply this year as farmers around the world expand production to bring stability back to commodity markets and ease fears of food inflation, the U.S. government forecast on Thursday.

“After two years of razor thin stocks, world crop supplies, led by wheat, are recovering.

“‘Certainly the high prices that we saw last year have prompted a global production response for most commodities,’ USDA Chief Economist Joe Glauber told the agency’s annual outlook forum.”  (A copy of Dr. Glauber’s prepared remarks  and slide presentation can be found here and here).


Farm Bill; Ag Economy; Trade; and MF Global

Farm Bill and Policy Issues

Gregory Meyer and Hal Weitzman reported yesterday at The Financial Times Online that, “Brad Lawrence has been farming for 40 years. Following his father and grandfather into the family business, he and his brother grow seed corn, soyabeans and peppermint on 6,000 acres in Knox, north-west Indiana.

“The 57-year-old has seen his share of booms and busts in the agricultural markets, but with commodity prices soaring in recent years and land values at record highs, he says farmers are experiencing an unprecedented windfall. ‘This is the best we’ve ever had it, financially speaking,’ Mr Lawrence says.

“The good times have not escaped notice in Washington, where the federal government is this year expected to write $11bn in cheques to farmers, up 4 per cent from 2011. These kinds of payments might have been justifiable in the 1980s when family farmers were struggling, but with slashing deficits now a priority in Washington, subsidies are under attack.”


USDA Study Shows Cropland Decreasing, Productivity Increasing

Crop Insurance Perspective from Lawmakers

Categories: Farm Bill

Bi-Partisan Remarks from the Senate Agriculture Committee Farm Bill Hearing, Wednesday, February 15, 2012

Committee Ranking Member, Pat Roberts (R., Kans.)- While we’re here to discuss other matters, I’d be remiss if I didn’t comment about the President’s budget announcement this week. I was very disappointed to see yet again, I might add, a proposal that cuts nearly $8 billion out of the crop insurance program. Madame Chairman, this is the number one issue that we have heard about in every hearing we’ve had in regard to what farmers need and what they rely on. This is on top of the $6 billion cut from the previous SRA [Standard Reinsurance Agreement].

Committee Chairwoman, Debbie Stabenow (D., Mich.)- But in all of that, we placed at a cornerstone crop insurance. And as Senator Roberts had mentioned, we’ve heard across the country from our field hearings in Michigan to Kansas to people coming in and speaking with us here how critical crop insurance is. So we need you to speak to the President’s proposals and cuts in farm programs and I’m particularly concerned about crop insurance.

Former Secretary of Agriculture, Sen. Mike Johanns (R., Neb.)- I look at the risk management aspect which essentially is crop insurance. And overwhelmingly, producers are telling me — not only from Nebraska but when I visit with producers around the country that they think risk management is really the key issue of the next Farm Bill and they like — by and large, like crop insurance.

Sen. Amy Klobuchar (D., Minn.)- I just wanted to echo some of the comments from my colleagues about the concerns on crop insurance.

Sen. John Hoeven (R., N.D.)- I just want to start off with a couple of comments regarding the President’s budget relative to the Farm Bill. First, I want to echo my concern. You’ve heard it from the others here today and that’s crop insurance. Everybody, you know, throughout our state, all the producers are telling us that crop insurance is absolutely the number one priority, number one.

Sen. Michael Bennet (D., Colo.)- Senator Hoeven’s comments on crop insurance, I think we all share his view there…

Sen. John Thune (R., S.D.)- I would echo what’s been said by most of my colleagues with regard to the number one priority of South Dakotan in the Farm Bill is a strong crop insurance program. By hands down, it’s what the people want to see maintained, it’s the thing that they’re most concerned with and that is that we have a good risk management tool available to them. And that’s not the only priority we have in the next Farm Bill, but that certainly I think is the most important in terms of the people that I represent.


Farm Policy Issues; Trade; and Regulations

Farm Bill and Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Despite the economics of crop production and federal spending right now, there is still room for conservation practices and promoting wildlife, USDA’s chief conservationist said.

Dave White, chief of the Natural Resources Conservation Service, spoke over the weekend to hunters at the Pheasant Fest convention and expo in Kansas City. White said landowners are trying to balance the various growing demands on their land.

“‘We have agriculture production and we have sustainability and we can have it built in where wildlife is a part of it,’ White said. ‘I don’t think there is one farm or one ranch or one woodlot in the United States of America that doesn’t have room for wildlife.’”


Farm Bill; Regulations; Biofuels; and the Ag Economy

Farm Bill Issues

On yesterday’s Agriculture Today radio program (The Red River Farm Network) Mike Hergert conducted an interview with House Agriculture Committee Ranking Member Collin Peterson (D., Minn.).

An audio replay of the Red River Farm Network interview is available here (MP3- 8:07), while an unofficial transcript of their conversation is available here.


Farm Bill Issues

Categories: Audio /Farm Bill

Farm Bill: Legislative Timing, Budget Variables, Safety Net and Crop Insurance Issues

Late last week, Mike Hergert of the Red River Farm Network spoke with Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) about the 2012 Farm Bill.  In part, their discussion focused on regional issues and the safety net, budget concerns, and legislative timing of the Farm Bill- the full interview can be heard here (MP3- 5:33).

Meanwhile, Agri-Pulse Senior Editor Stewart Doan spoke with Senate Agriculture Committee Ranking Member Pat Roberts (R., Kans.) on this week’s Agri-Pulse Open Mic program.

An Agri-Pulse summary of the discussion indicated that, “The top Republican on the Senate Ag Committee bristles at the suggestion that he’s blocking a legislative fix to a court order requiring EPA to regulate aquatic pesticide applications, and he says the Labor Department’s child labor in agriculture proposal should be withdrawn. Speaking the day after the Senate Ag panel’s first farm bill hearing of 2012, Sen. Pat Roberts says he and Chairman Debbie Stabenow are working in a bipartisan fashion to markup a bill ASAP containing a ‘crop insurance-plus’ commodity title that serves the needs of all of U.S. agriculture.”

To listen to the Open Mic interview with Sen. Roberts, just click here.


Budget Developments; Farm Bill and Policy Issues; Ag Economy; and China

Budget: Payroll Tax –Debt Limit –Energy 

Paul Kane and Ben Pershing reported in today’s Washington Post that, “Amid some dissent, House and Senate leaders prepared for final votes Friday for an economic package worth more than $150 billion that would extend a payroll tax holiday and unemployment benefits for the rest of the year.

“While Senate Republicans protested, the remaining members of a House-Senate committee tasked with forging a compromise pronounced themselves satisfied with the deal, signing the 270-page compromise Thursday afternoon in a bipartisan ceremony that stood in sharp contrast to the otherwise bitterly partisan tone of this Congress.”


Budget Issues -Senate Farm Bill Hearing; Policy Issues; Ag Economy; and China

Budget issues and Senate Farm Bill Hearing

Naftali Bendavid and Siobhan Hughes reported in today’s Wall Street Journal that, “Congressional negotiators working on a deal to extend jobless benefits and a payroll-tax cut say they have come to a deal, paving the way for a vote before the policies expire at the end of the month.

“‘We have reached an agreement,’ said Rep. Dave Camp (R, Mich.) shortly after midnight. ‘We’re confident that this can be concluded.’

“Sen. Max Baucus (D, Mont.) said, ‘It’s clear that we’ll have a majority of conferees sign the conference report.’”


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