FarmPolicy

November 17, 2017

Video, Transcript: Chairman Lucas Discusses Issues with Fed Chair Yellen

House Agriculture Committee Chairman Frank Lucas (R., Okla.) discussed issues associated with the agricultural economy with Federal Reserve Chairwoman Janet Yellen on Tuesday during a House Financial Services Committee Hearing.

Related Transcript bellow:

LUCAS: Thank you, Mr. Chair. Chair Yellen, it is a pleasure to be with you today to visit (ph) a little bit about the pressing issues out there.

Sitting on the AG committee and working on the 2012, 2013 and ’14 farm bill now signed into law, there are several things we look at in the committee. And some are directly or indirectly related to the activities of the Fed.

For instance — and not so much an AG-related issue — but the observation from some of my constituents that after the financial problems in 2008, the dramatic downturn in the stock market, and now over the course of the last five years, going from losing half its value basically back to where it was, a little bit on the positive side, not just that, but, for instance, in farm land prices we watched over the course of the last five years a rather dramatic appreciation in the value of farm land.

Now some might say that part of the rebound in the stock market reflected the simple fact that the equities should not have collapsed that far in value five years ago, but — and some would also say that a big part of the takeoff in farm land values reflected the renewable fuel standard, a new government mandate consuming 40 percent of the crop, driving a demand in price responses that hadn’t been there before.

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Ag Economy; Food Safety; Farm Bill; Regulations; and, the Budget

Agricultural Economy

An update yesterday from USDA’s Economic Research Service (ERS), “2014 Farm Sector Income Forecast,” stated that, “Net farm income is forecast to be $95.8 billion in 2014, down 26.6 percent from 2013’s forecast of $130.5 billion. The 2014 forecast would be the lowest since 2010, but would remain $8 billion above the previous 10-year average.”

The value of crop production is expected to decline substantially in 2014, falling back to pre-2011 levels.  Commensurate with this drop is an expected decline in both crop cash receipts and the value of crop inventory adjustment,” the ERS update said; adding that, “Large U.S. corn production increases are expected as U.S. farm operations continue bouncing back from the 2012 drought. Both sales receipts and value of inventory change for corn in 2014 are expected to decline significantly, reflecting a large forecast decline in the average price of corn for grain. The world corn market has become much more competitive.”

ERS noted that, “Soybean receipts and value of production are expected to decline significantly, reflecting a large expected decline (19.3 percent) in the annual price” [see related graphs here and here].

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