Speaking on Thursday at USDA’s Agricultural Outlook Forum in Arlington, Virginia, USDA Chief Economist Robert C. Johansson provided a broad outlook for U.S. agriculture. Today’s update provides an overview of key aspects of Dr. Johansson’s presentation.
On Thursday, the Federal Reserve Banks of Chicago and Kansas City each released updates regarding farm income, farmland values and agricultural credit conditions from the fourth quarter of 2017. The Federal Reserve Bank of St. Louis issued a similar update earlier this month. Today's update highlights core findings from the three reports.
On Thursday, the U.S. Department of Agriculture released its 10-year projections for the food and agricultural sector. The report noted that, "Over the next several years, the agricultural sector continues to adjust to lower prices for most farm commodities. Planted acreage drops slightly despite continued low energy costs. However, marked shifts occur – most notably strong global demand for soybeans is expected to induce soybean plantings that exceed corn acreage. Lower feed costs and continued strong global demand provide economic incentives for expansion in the livestock sector." Today’s update highlights aspects of the report that focused on corn and soybeans.
The U.S. Department of Agriculture's Economic Research Service (ERS) indicated on Wednesday that, "Net farm income, a broad measure of profits, is forecast to decrease $4.3 billion (6.7 percent) to $59.5 billion in 2018, which would be the lowest level in nominal terms since 2006."
Secretary of Agriculture Sonny Perdue testified before the House Agriculture Committee on Tuesday morning at a hearing on the “State of the Rural Economy.” Recall that back in May, shortly after his confirmation, Sec. Perdue also provided lawmakers on the Committee with an update on rural economic issues. Trade issues with China and the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) were among the key concerns that emerged on Tuesday.
An update on Friday from the Federal Reserve Bank of Kansas City ("Agricultural Lending Increases, As Do Interest Expenses for Farmers," by Cortney Cowley and John McCoy) stated that, "Lending at agricultural banks increased sharply in the fourth quarter, after appearing to stabilize in previous quarters. Large loans drove the increase in farm lending, which may heighten concerns about cash flow in 2018 as interest rates have continued to rise steadily."
CoBank recently released a new report that explored a variety of issues that will impact the U.S. rural economy in 2018. In addition, recent newspaper articles have discussed reports relating to the value of U.S. farmland. This update briefly highlights core points from the CoBank report, and also looks at the new information on farmland values.
On Wednesday, the Federal Reserve Board released its January 2018 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.
Cortney Cowley, an economist at the Federal Reserve Bank of Kansas City, indicated in an update last week ("As Winter Looms, Key Risks Keep Ag Outlook Cool") that, "Following steep declines for three consecutive years, farm income was expected to stabilize in 2017 and beyond. In inflation-adjusted dollars, real net farm income was forecast to be relatively unchanged from 2016."
Earlier this week, the Federal Reserve Bank of Dallas released its Agricultural Credit Survey for the fourth quarter of 2017. The Fed update indicated that, "Demand for agricultural loans overall continued to decrease for a ninth consecutive quarter. Loan renewals and extensions continued to increase, while the rate of loan repayment stabilized after falling last quarter."