University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Prospects for Grain Farm Incomes in 2014”) that, “Average grain farm incomes in 2014 likely will be much lower than 2013 incomes. Corn prices near $4.20 per bushel combined with above average yields could result in average incomes on grain farms in Illinois around $45,000 per farm, slightly below the average for the years from 1996 through 2005. A scenario that would result in average incomes near $134,000 per farm, the 2013 level of average income, would be above average yields combined with corn prices near $4.80 per bushel. This is a large range ($45,000 to $134,000), and it represents the likely range of average grain farm incomes over the next several years, with lower incomes possible if low commodity prices occur [related graph].”
Yesterday’s update noted that, “While grain prices and yields are far from certain, most current projections of prices and yields result in much lower incomes for 2014.”
In conclusion, yesterday’s farmdoc update indicated that, “Corn prices in the low $4.00 range likely will result in incomes below $50,000. Corn prices in the high $4.00 range will result in average incomes above $100,000. If corn prices average around $4.50 over the next several years, average incomes likely will be in the above range for the next several years. Lower incomes are possible with corn prices below $4.00 per bushel.”
Donnelle Eller reported yesterday at The Des Moines Register Online that, “Storms over the past week have damaged thousands of crop acres in northwest Iowa, officials say, leaving farmers uncertain whether they’ll be able to replant.
“‘I don’t ever remember seeing this much standing water,’ said Joel DeJong, an Iowa State University field agronomist in northwest Iowa for over two decades. ‘There’s a lot of standing water.’
“Hail and wind also damaged Iowa corn and soybeans. And farmers on the western state border have rising river waters.”
The article noted that, “Farmers will assess over the coming days whether crops can be replanted.”
“Seventy-four percent of the nation’s corn crop is rated good to excellent, compared to 76% last week…Seventy-two percent of the soybeans are rated good to excellent, compared to 73% percent last week.”
The DTN article added that, “Winter wheat harvest is at 33%, compared to 16% last week and a five-year average of 31%. Winter wheat condition is holding steady at 44% poor to very poor and 25% good to excellent.”
Coral Davenport reported in today’s New York Times that, “The Obama administration on Monday will announce one of the strongest actions ever taken by the United States government to fight climate change, a proposed Environmental Protection Agency regulation to cut carbon pollution from the nation’s power plants 30 percent from 2005 levels by 2030, according to people briefed on the plan who spoke anonymously because they had been asked not to reveal details.”
The Times article added that, “It is also likely to stand as President Obama’s last chance to substantially shape domestic policy and as a defining element of his legacy. The president, who failed to push a sweeping climate change bill through Congress in his first term [related FarmPolicy update from June 27, 2009- a measure passed the House, but not the Senate], is now acting on his own by using his executive authority under the 1970 Clean Air Act to issue the regulation.”
Marcia Zarley Taylor reported yesterday at DTN that, “Producers of bulk commodities like corn, soybeans and wheat have made crop insurance a staple of their risk management plans, insuring about 85% of eligible acres nationwide. Unfortunately, specialty crops like fresh sweet corn lag far behind at a mere 21% of planted acres and fresh green beans at 3%. Now the Risk Management Agency hopes attractive new features in a Whole-Farm Revenue Protection policy will aid risk management for diversified specialty crop and livestock producers [related graph].
“‘Crop insurance provides a tremendous safety net for core crops,’ Risk Management Agency Administrator Brandon Willis told DTN. ‘This is just another example if someone wants crop insurance, we have something for them.’
“The new program combines elements of the existing Adjusted Gross Revenue (AGR) and Adjusted Gross Revenue-Lite (AGR-Lite) programs targeting farms selling two to five commodities. It also expands eligibility to new counties and states starting in 2015. In 2014, only 802 of those policies had been sold nationwide, a participation rate Willis hopes to significantly improve.”
Yesterday, the Food and Agriculture Organization of the United Nations (FAO) released its biannual report on global food markets.
Titled, Food Outlook, the report stated that, “Early prospects for 2014 cereal crops point to a decline from the previous year’s record level, but output is nevertheless expected to be the second largest ever. Based on conditions of crops already in the ground and planting intentions for those to be sown later this year and assuming normal weather for the remainder of the season, FAO’s first forecast puts world cereal production in 2014 at around 2 458 million tonnes (including rice in milled terms), some 2.4 percent down from 2013. Wheat and coarse grains would account for the reduction. Total cereal utilization in the new season (2014/15) is forecast to increase by 1.9 percent, which compares with a 4.0 percent rise in 2013/14 [related graph].”
The UN update noted that, “Global wheat production in 2014 is forecast at some 702 million tonnes, 1.9 percent below last year’s record, but still the second largest ever. Much of the reduction is anticipated to be concentrated in Canada, but smaller harvests are also expected in Australia, Morocco, the Syrian Arab Republic, the Russian Federation, Ukraine and the United States, which would more than offset larger outputs in Argentina, Brazil, India, Mexico and Pakistan [related graph].”
Justin Gillis reported in today’s New York Times that, “The effects of human-induced climate change are being felt in every corner of the United States, scientists reported Tuesday, with water growing scarcer in dry regions, torrential rains increasing in wet regions, heat waves becoming more common and more severe, wildfires growing worse, and forests dying under assault from heat-loving insects.
“Such sweeping changes have been caused by an average warming of less than 2 degrees Fahrenheit over most land areas of the country in the past century, the scientists found. If greenhouse gases like carbon dioxide and methane continue to escalate at a rapid pace, they said, the warming could conceivably exceed 10 degrees by the end of this century.”
Mikkel Pates reported on Friday at Agweek Online that, “The U.S. Department of Agriculture isn’t likely to announce the fine points of the farm bill commodity title any time soon, two key congressional staffers said.
“Because the payment options are decoupled from planting decisions, the programs farmers choose won’t have bearing for 2014 planting. Bart Fischer, chief economist for the Republican-led U.S. House Agriculture Committee, and Matt Schertz, senior professional staff member, spoke to about 150 people in a two-hour ‘farm bill implementation seminar’ in Fargo, N.D., on May 2. The seminar was organized by U.S. Rep. Kevin Cramer, R-N.D.
“The two largely discussed the evolution of the farm bill and spent the last 20 minutes of the meeting discussing implementation. Cramer said farmers and their advisers need to know how to make decisions with multi-year consequences under the farm bill, which took four years to create and was signed into law on Feb. 7.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Demonstrating some of the complications involved in agriculture and climate change, U.S. Agriculture Secretary Tom Vilsackdisputed Republican views on the Obama administration’s work with dairy producers to reduce methane while the secretary also dismissed a study raising doubts about carbon emissions from cellulosic biofuels.
“Vilsack spoke at an Earth Day forum on climate change held at Drake University and co-sponsored by the magazine New Republic and the League of Women Voters.
“USDA also used the forum to announce $6 million in grants to 10 universitiesto study the effects of climate change on agriculture. The universities are designated as USDA’s ‘climate hubs’ to help producers adapt to changing climate conditions.”
David Rogers reported yesterday at Politico that, “After the buckets of political blood spilled over food stamps this past year, the Congressional Budget Office has quietly lowered its cost estimate for the nutrition program by $24 billion over the next decade.
“The ‘technical’ adjustment is tucked into a report issued Monday and reflects revisions in how CBO calculates what the average beneficiary receives each month under food stamps, formally known as the Supplemental Nutrition Assistance Program.
“It’s just a 3 percent change but more than a little ironic after the fighting over fewer SNAP dollars that dogged the recently enacted five-year farm bill. Indeed, having announced the adjustment, CBO’s report then goes out of its way to say as little as possible about the rest of the farm bill’s costs, even with the drop in grain prices.”
Donnelle Eller reported in yesterday’s Des Moines Register that, “More than ever, Craig Boot says there’s little room for error this year as Iowa farmers prepare to plant this spring.
“Prices for corn and soybeans are improving, but depending on land and other expenses, they’re close to production costs for many farmers.”
The article indicated that, “‘We’ll take care of the things we need to take care of … but as far as buying something new and green, there won’t be any big-ticket items like there were in the last few years,’ said [Jerry Mohr, who farms in eastern Iowa near Davenport] recently as he applied fertilizer on fields where he will grow corn and seed corn.
Climate Issues- White House Proposal, and Farm Bill Issues
Justin Gillis reported on the front page of today’s New York Times that, “Climate change is already having sweeping effects on every continent and throughout the world’s oceans, scientists reported Monday, and they warned that the problem is likely to grow substantially worse unless greenhouse emissions are brought under control.
“The report by the Intergovernmental Panel on Climate Change, a United Nations group that periodically summarizes climate science, concluded that ice caps are melting, sea ice in the Arctic is collapsing, water supplies are coming under stress, heat waves and heavy rains are intensifying, coral reefs are dying, and fish and many other creatures are migrating toward the poles or in some cases going extinct.”
Chapter Seven of the report, which is available here, is titled, “Food Security & Food Production Systems.”
Paul Davidson reported this week at USA Today Online that, “Prices are rising for a range of food staples, from meat and pork to fruits and vegetables, squeezing consumers still struggling with modest wage gains.
Tony C. Dreibus reported in today’s Wall Street Journal that, “Wheat futures jumped to the highest price in more than 10 months amid concerns that dry weather will curtail production of the grain in the U.S. southern Great Plains.
“Little rain is forecast for the next two weeks in parts of Kansas, Oklahoma and Texas, private weather forecaster Commodity Weather Group said in a report Wednesday. Nearly the entire western half of Kansas, the biggest U.S. wheat producer, is suffering from severe to extreme drought conditions, according to the U.S. Drought Monitor.”
The Journal article stated that, “About 34% of wheat in the state was rated good or excellent as of March 13, down from 37% a week earlier, as dry, windy weather curbed crop prospects, the U.S. Department of Agriculture said in a report Monday. Hard-red winter wheat, grown in the southern Plains and used to make bread, is planted in the fall, lies dormant for the winter, then starts growing again in March and April. Growers harvest the crop mostly in June.”
Mr. Dreibus explained that, “Along with the dry weather in the U.S., unrest in Eastern Europe’s Black Sea region also may be boosting prices, said Craig Turner, a senior broker at Daniels Trading in Chicago.
“Russia is expected to move quickly to annex the Ukrainian peninsula of Crimea after voters last week opted to secede. That could slow exports from Ukraine, expected to be the world’s sixth-biggest exporter of the grain this year. If embargoes are put in place, Russian exports may decline, Mr. Turner said.
“‘The more Russia-Ukraine heats up, the more concern that the grain trade could get disrupted,’ Mr. Turner said.”
“Agriculture Secretary Tom Vilsack announced the support initiative Monday after speaking to members of the National Farmers Union at the group’s annual meeting being held in Santa Fe, N.M. USDA rolled out the programs without characterizing what defines a small to mid-sized farmer or rancher.”
AP writer Henry C. Jackson reported yesterday that, “South Dakota’s congressional delegation pressed the U.S. agriculture secretary Wednesday to expedite a provision in the new farm bill that helps ranchers in the Dakotas and Nebraska recover from an October blizzard.
“The nearly $100 billion-a-year federal farm bill, which awaits President Barack Obama’s signature, restarts a livestock disaster program that had expired. Members of the South Dakota delegation were among those urging Agriculture Secretary Tom Vilsack to make sure there are no delays getting the relief money to ranchers.
“Sens. John Thune, R-S.D., Tim Johnson, D-S.D., Sen. Heidi Heitkamp, D-N.D., and other lawmakers signed a letter Wednesday asking Vilsack to move quickly to provide relief to ranchers and farmers who suffered heavy losses. The total amount of the aid was not clear and would depend on total losses for producers.”
The AP article noted that, “‘They’ve waited long enough for much-needed support,’ said Rep. Kristi Noem, R-S.D., who worked on the committee that combined the House and Senate versions of the farm bill.”
Rep. Noem also wrote a letter to Sec. Vilsack yesterday regarding the implementation of livestock related provisions.
Brett Neely reported on Friday at Minnesota Public Radio Online that, “While several key [Farm Bill] issues remain unresolved despite more three years of work on the bill, one of the latest roadblocks is a disagreement about how the federal government should provide a safety net to dairy farmers with GOP House Speaker John Boehner publicly challenging policies long pushed by U.S. Rep. Collin Peterson, D-Minn., the top Democrat on the House Agriculture Committee.”
Mr. Neely explained that, “Peterson wants to establish an insurance program to protect farmers from fluctuations in the cost of feed and what he calls a market stabilization program that would encourage farmers to reduce production when prices drop too far.
“‘The only thing we’re saying is that if you’re taking government help and the market gets oversupplied and so it starts costing the government money, that that cost should be put on the dairy farmers, not on the taxpayers,’ Peterson told MPR News.”