January 23, 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:

* Sixth District- Atlanta- “Agriculture contacts said that the rise in some crop prices, resulting from the drought in the Midwest, had led to increased crop production in the Southeast where soil conditions were more favorable, but the overall rise in feed prices was putting pressure on livestock producers. Compared with the same time last year, prices paid to farmers for corn, rice, soybeans, beef, and broilers were up while cotton prices were down.”

* Seventh District- Chicago– “The corn and soybean harvest began a few weeks earlier than normal across the District, as plants were dry due to the drought. In some areas, late rains helped produce higher- than-anticipated yields, but these made only a small dent in the large drought-related losses. Crop quality also was an issue in parts of the District. The drop in crop volume hurt grain elevators relatively more than crop farmers, as payments from crop insurance and sales at high prices offset much of the loss in farm income from the drought. However, given insurers’ limited processing capacity and the large number of claims, already existing delays in crop insurance payments are likely to get worse. Corn and soybean prices eased down from their peaks, providing a bit of relief for livestock producers, though most operations remained unprofitable. Milk and cattle prices moved higher, while hog prices fell. Many hog facilities are operating below capacity, pointing to future reductions in supplies of pork.”

* Eighth District- St. Louis– “The condition of pastureland in the Eighth District has improved significantly from early August to late September. Excluding Mississippi, where 97 percent of pastureland was already rated as fair or better, the fraction of pastureland in fair or better condition has increased by at least 20 percentage points in all District states. The share of crops in fair or better condition has similarly increased across the District, although the condition of the corn crop remains relatively unchanged. Harvest completion rates have outpaced their 5-year averages for almost all crops in all District states. In particular, harvest completion rates for corn and rice are on average 30 percentage points ahead of their 5-year averages.”

* Ninth District- Minneapolis– “Agriculture was mixed, as crop farmers saw strong prices but widely varying yields, while animal producers saw tighter profit margins. Harvests were well ahead of schedule for crops around the region, thanks to hot and dry conditions late in the summer. District sugar beet producers were expecting a record harvest. The condition of the corn and soybean crops remained much better in Minnesota and North Dakota than in core corn belt states. However, portions of Wisconsin and South Dakota were hit much harder by drought. In addition, meat and dairy producers struggled with higher feed costs. Prices received by farmers increased for most agricultural outputs in September compared with a year earlier; the primary exceptions were milk and hogs, which saw price decreases.”

* Tenth District- Kansas City– “Drought continued to hurt agricultural conditions across the District. Dry, hot weather accelerated crop maturity, prompting an early corn harvest with below-average yields. The soybean crop was rated in mostly poor condition as harvest began. Winter wheat planting was progressing normally, but low soil moisture could delay emergence. Corn and soybean prices fell seasonally, but concerns about global production underpinned wheat prices. Despite drought conditions, high crop prices and crop insurance payments were expected to boost farm income and more than offset lower livestock profits due to higher feed costs. District bankers indicated ample funds were available for qualified borrowers to meet cash flow needs and finance carry-over debt. Demand for farm loans remained modest amidst a pull-back in capital spending. Farmland values rose further and were expected to remain at high levels.”

* Eleventh District- Dallas– “The District remained largely in drought, although scattered rainfall improved soil moisture conditions in several areas. Crops were mostly in fair to good shape. Production is expected to be better than last year—when the drought was much more severe in the Eleventh District—but below average because of ongoing dry conditions. Grain prices remained high due to the Midwest drought, adversely affecting Texas’ large livestock sector as feed costs reached record highs.”

* Twelve District- San Francisco– “Higher grain and feed prices prompted District livestock producers to reduce herd sizes. Favorable weather conditions in some parts of the District helped stabilize production.”


Crop Insurance Industry Announces New Crop Insurance Activism Website

A news release today from National Crop Insurance Services (NCIS) noted in part that, “With the fate of the 2012 Farm Bill still in question and the worst drought in decades fresh in people’s minds, the Crop Insurance Industry is announcing a new website that will serve as a focal point for groups to show their support for crop insurance.

“‘Crop insurance has grown to become the most important tool farmers and ranchers have to manage risk,’ noted Tom Zacharias, NCIS president. ‘As the Farm Bill continues to be discussed, there’s no better time than the present to show your support for this critical risk management tool,’ he said.

“The website ( will serve as a platform allowing organizations, farmers, agents, small businesses and others to sign an open letter to Congress in support of crop insurance. The letter is similar to one that was sent to Congress earlier this summer from major farm and commodity organizations.”

Also from NCIS today: “NCIS and the private crop insurance companies sponsor dozens of schools each year to train crop insurance loss adjusters on industry procedures. These classroom and field sessions ensure uniformity and accuracy in the adjustment process.”

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Policy Issues; Budget; Ag Economy; and, Trade

Policy Issues –Farm Bill

Jason Noble reported yesterday at the Des Moines Register Online that, “Mitt Romney unleashed a rapid-fire critique of President Barack Obama’s farm policies and revealed personal stories so-far unheard on the Iowa campaign trail at a brief and windswept campaign appearance this afternoon.

“Romney, the Republican presidential nominee, spoke for about 16 minutes to a crowd of more than 1,200 on a century farm in northern Madison County, south and west of the Des Moines metro.

“In his more substantive policy remarks [transcript available here], Romney hit Obama, the incumbent Democrat, repeatedly on issues of interest to the farming and agriculture communities, including the estate tax, exports and regulations.”