January 20, 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–  “Agricultural conditions remained favorable…December was relatively mild across most of the District, with warmer than normal temperatures and significant precipitation. Small grain conditions improved with the added moisture, as did pastures and hayfields.”

* Sixth District- Atlanta– “Prices for corn, soybeans, beef, and poultry remained above year-ago levels, while the price for cotton was lower than this time last year. Dry conditions persisted in much of the District, although late December rains helped many areas in the region.”

* Seventh District- Chicago– “Although drought conditions eased, depleted soil moisture remained a concern in much of the District. The low levels of the Mississippi River hampered barge traffic moving both crops to market and inputs to farms. Crop operations tended to come out ahead for the year if they had adequate insurance coverage, and most crop farmers saw their net worth grow. Uncertainty regarding the tax treatment of capital expenditures led farmers to move up purchases of equipment and other capital improvements into 2012. Corn and soybean prices slid during the reporting period. Milk prices decreased, while cattle and hog prices increased. Of these agricultural products, only hog prices were below the levels of a year ago. Farmland values trended higher, with an extra spurt of farm sales at the end of 2012 in anticipation of tax code changes. Cash rents for cropland increased as well for the upcoming season.”

* Eighth District- St. Louis– “November year-to-date commercial red meat production across the District’s states was 4.3 percent higher in 2012 than the same period in 2011. By contrast, November year-to-date poultry production as measured by the number of young chickens slaughtered was down 2.2 percent relative to 2011. The District’s states ginned 6.4 percent less cotton from January 1 to December 15, 2012, compared with the same period in 2011.”

* Ninth District- Minneapolis– “Agriculture was steady at high levels. Crop prices came down somewhat recently but remain relatively high, a slight relief to livestock and dairy producers who have been hammered by high feed costs. The selloff of livestock herds continued. Sugarbeet producers in Minnesota and North Dakota saw a record crop in 2012, but prices were down. Prices received by farmers increased in December from a year earlier for corn, wheat, soybeans, chicken, dairy products and cattle. Prices for hogs, turkey, eggs and dry beans decreased. According to the Minneapolis Fed’s third-quarter (October) survey of agricultural credit conditions, farmland prices continued their rapid rate of increase.”

* Tenth District- Kansas City– “Drought continued to impact crop conditions and livestock profits improved with higher livestock prices and lower feed costs. District winter wheat conditions remained relatively poor due to persistent drought. The drought also caused water levels on the Mississippi River to fall further, hindering commodity transportation to and from agricultural regions. Still net farm incomes remained high due to historically high crop prices and crop insurance payments. Livestock profit margins also improved over the past six weeks due to a post-harvest decline in crop prices and rising livestock prices. District contacts noted a surge in land sales, sparked by concerns of tax policy changes in the new year.”

* Eleventh District- Dallas– “With little rainfall, most of the District remained in drought conditions since the last report. The drought is negatively impacting the winter wheat crop, and contacts are beginning to express concern for spring planting. Wheat harvest was mostly completed over the last six weeks, and production was up from 2011, mainly because the drought was less severe. Contacts noted that fiscal cliff concerns and the lack of a farm bill are creating a great deal of uncertainty.”



Farm Bill; Budget; Ag Economy; and, Immigration

Farm Bill Issues

Laura Misjak reported yesterday at the Lansing State Journal Online that, “Sen. Debbie Stabenow is ready for round two of retooling the federal farm bill, legislation she said impacts jobs and the economy just as much as the agriculture sector.

“‘Sixteen-million people work in America because of agriculture and one in four people in Michigan have a job because of the food and agriculture industry,’ Stabenow said in her ‘State of Michigan Agriculture’ speech this morning to more than 200 people at the Michigan Agri-Business Association’s 80th Annual Winter Conference at Lansing’s Radisson Hotel.

“‘I needed to care about every page because Michigan is on every page (of the farm bill).’”

The article added that, “‘For the first time ever the House of Representatives would not take up that bill,’ [Chairwoman Stabenow] said. ‘I know there was enough bi-partisan support that if it had been brought up, it would have passed.’”