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."
Last week, a Bloomberg news article stated that, "Commodities would be particularly exposed if U.S. President Donald Trump’s decision to impose tariffs on foreign solar panels and washing machines sparks a tit-for-tat trade war with nations around the world...If China wanted to hit back, soybeans could be a weapon."
Financial Times writer Shawn Donnan reported on Monday that, "Talks to renegotiate the North American Free Trade Agreement are moving too slowly, Donald Trump’s trade tsar complained on Monday as he rejected a Canadian proposal to rethink the rules governing the auto trade on the continent."
Today's update looks briefly at the SNAP (food stamps) program within the Farm Bill. The USDA's Economic Research Service (ERS) released a report on Thursday that examined the program in detail. This update looks at core points from the ERS report with particular focus on issues relating to "block granting" the program to States, and program work requirements.
Jacob M. Schlesinger reported on Tuesday at The Wall Street Journal Online that, "Eleven Pacific Rim nations agreed to forge a new trade bloc [TPP] that excludes the U.S. on Tuesday, as President Donald Trump signed an order to block certain cheap Asian imports [Chinese makers of solar panels and South Korean producers of washing machines], illustrating the battle lines of a new global trade climate."
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.
Los Angeles Times writer Lisa Mascaro reported late last week that, "The federal government began shutting down early Saturday after a flurry of dramatic, last-minute negotiations failed to end the congressional deadlock over a spending bill before a midnight deadline." However, a New York Times article from Sunday noted that, "The government shutdown will enter its third day. Senator Mitch McConnell, the majority leader, delayed a procedural vote on a stopgap spending bill until noon on Monday, as a bipartisan group of senators appeared to be inching toward a compromise." The ongoing budget standoff could create increased uncertainty with respect to the Congressional to-do list, including the Farm Bill.
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."