FarmPolicy

July 21, 2018

Federal Reserve Beige Book: Observations on the Ag Economy- April ’16

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– “Several District farmers reported that they have made limited capital purchases in recent weeks and project little change for the next six months. According to agribusiness contacts, input prices varied since the previous report. Chemical prices grew modestly while fertilizer prices decreased slightly and seed prices remained elevated. Crop prices stabilized on balance.”

* Sixth District- Atlanta– “Agricultural conditions were mixed, while most of the District remained drought free, there were some areas in Florida, Georgia, and Louisiana categorized as abnormally dry. Due to excessive rain and flooding earlier in the year, the USDA designated several counties in central and southern Florida as primary natural disaster areas. Florida’s orange crop forecast increased from the previous month but continued to be lower than last season. On a year-over-year basis, monthly prices paid to farmers for corn, cotton, rice, soybeans, beef, broilers, and eggs have declined.”

* Seventh District- Chicago– “Spring arrived early in much of the District, allowing fieldwork to begin. Corn, soybean, and wheat prices moved up, and fertilizer prices and land rents moved down. However, these changes were not large enough to appreciably improve crop farmers’ earnings prospects. Cattle prices edged higher, while hog and dairy prices were somewhat lower. The drop in dairy prices was large enough that many operations now face losses unless they had made forward contracts at higher prices.”

* Eighth District – St. Louis– “Still facing low crop prices, farmers plan to increase acreage to cover as much of their fixed costs as they can. District corn, cotton, rice, and soybeans acreage is expected to be higher last year. Concerns about December flooding impacting the winter wheat crop have been unfounded so far, as more than 93 percent of the crop is rated fair or better.”

* Ninth District- Minneapolis– “District agricultural conditions remained weak. A contact in eastern Montana reported that less- profitable farms were leaving the business, and more exits were expected. Reports indicated that District farmers intended to plant fewer acres of wheat but more acres of corn in 2016 compared with last year, and an early forecast pointed to a strong growing season in parts of the District this year. Logging in northern Wisconsin was slowed by a warm winter that made the ground too soft for equipment. Farm prices fell in February from a year earlier for corn, wheat, soybeans, hay, hogs, cattle, chickens, eggs, and milk; prices for turkeys increased from a year earlier.”

* Tenth District- Kansas City– “The District farm economy remained subdued since the previous reporting period, though crop prices improved slightly and growing conditions were mostly positive. Crop prices increased moderately in March, but were generally below previous-year levels. Some crop input prices, such as fertilizer and diesel prices, moderated from year-ago levels, but profit margins were expected to remain relatively weak due to suppressed commodity prices. Growing conditions for winter wheat in Oklahoma and Kansas were primarily rated between fair and good, but conditions deteriorated slightly from the previous month due to somewhat warmer weather and relatively little precipitation. Despite a brief rebound in March, livestock prices were significantly lower than a year ago, and profit margins at cattle feedlots remained soft, as livestock prices have decreased more than input costs over the past year.”

* Eleventh District- Dallas– “Row-crop farmers were busy preparing fields or planting, and the USDA Prospective Plantings report showed acreage increases in Texas for cotton, corn and soybeans this year versus 2015, and acreage declines for sorghum and wheat. Production prospects for 2016 crops are quite positive in light of healthy soil moisture and a favorable weather outlook. While crop prices generally increased slightly over the past six weeks, they remained low and contacts continued to mention stressful financial situations among many producers in the region. On the cattle side, prices increased over the reporting period, largely seasonally, and beef production was higher than a year ago.”

* Twelfth District- San Francisco– “Activity in the agriculture sector picked up over the reporting period. Growing conditions in California and other parts of the District have been bolstered by ample winter rainfall that has partially alleviated the challenges created by sustained drought. A seasonal improvement in domestic demand for timber products somewhat offset weaker foreign demand. However, contacts reported that the elevated dollar continued to weigh down exports for most products. Domestic sales of produce strengthened. Despite weak exports, herd costs fell, reducing losses in that sector. Contacts reported that capital spending plans were focused on productivity enhancements and replacing equipment rather than capacity expansion.”

Keith Good

GOP Proposes SNAP Funding Cut

Categories: Farm Bill /Nutrition

Pete Kasperowicz reported today at The Washington Examiner Online that, “House Republicans are looking to push through a Department of Agriculture spending bill this year that would cut the federal food stamp program by $1.2 billion compared to current year funding.

“The House Appropriations Committee released legislation Tuesday that provides $79.7 billion for the Supplemental Nutrition Assistance Program, or SNAP.”

The article noted that, “In March, USDA noted that compared to two years ago, there are 2 million fewer people using SNAP, informally known as the food stamp program.”

kg

GMO Acres Down 1% From Record, While Monsanto Prefers Federal Law Over State on Labeling

Categories: Biotech

Bloomberg writer Jack Kaskey reported today that, “Plantings of genetically modified crops fell for the first time last year as a commodity slump did what decades of activism couldn’t: slow the spread of biotech foods.

“About 179.7 million hectares (444 million acres) of so-called GMO crops were grown last year, down 1 percent from a record in 2014, the International Service for the Acquisition of Agri-Biotech Applications said in a report Wednesday. North America led the decline.

Low commodity prices prompted U.S. farmers to plant less corn and cotton, two of the most frequently engineered crops. Biotech plantings fell 3 percent in the U.S., the largest market for GMO seeds, which are produced by companies such as Monsanto Co. Cultivation also declined in Canada and Europe, where some nations opted to ban the planting of such crops last year.”

Today’s article added that, “Aside from low commodity prices, which have cut U.S. farmer incomes in half, biotech plantings also face challenges from a rapidly growing organic food industry and a Vermont food law that will require labeling products that contain GMOs starting in July.”

Andrew Pollack noted in today’s New York Times that, “With Vermont now set to require labeling of foods containing genetically modified crops, some big food companies like Campbell, General Mills and Mars have said they will start labeling all their foods nationwide. Del Monte Foods went even further, saying it would eliminate ingredients from genetically modified crops in many of its products.”

Meanwhile, Bloomberg writers Jen Skerritt and Alan Bjerga reported yesterday that, “Monsanto Co., the world’s largest seed company, says it would rather have mandatory federal labeling standards for genetically modified organisms instead of a patchwork of state rules that it says will raise food costs and disrupt trade.

“‘I think a federal standard would be the right path to bring that certainty for consumers and certainty for food companies,’ Jesus Madrazo, global corporate engagement lead for Monsanto, said in an interview at an industry conference in Winnipeg, Manitoba. ‘We need to strive for a reasonable approach that provides consumers what they need, but also doesn’t increase the cost of food or disruption on trade.'”

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