An update last week from the Federal Reserve Bank of Minneapolis ("The worst they've ever seen," by Ashwini Sankar) explored some of the lingering impacts of this summer's severe drought in Montana and the Dakotas. The article noted that, "Recent heavy rains have brought relief to drought-stricken parts of the Ninth District, but months of dryness have exacted a heavy toll on crops, cattle herds and natural resources that is likely to weigh upon regional and local economies for months to come."
On Thursday, the Federal Reserve Banks of Chicago, St. Louis and Kansas City each released updates regarding farm income, farmland values and agricultural credit conditions from the third quarter of this year.
Recent news articles have documented that lower crop prices for commodities such as corn and soybeans have caused some producers to make changes to their traditional crop rotation, or to consider organic crop production methods. More broadly, a recent Wall Street Journal article noted that larger operations may still be able to reap profits in times of lower prices, fueling "a cycle in which size begets size" and where, "smaller-scale farmers struggle to expand their operations to become profitable."
A news release on Tuesday from the American Bankers Association (ABA) stated that, "Eighty-two percent of agricultural lenders reported a decline in farm profitability in the last 12 months, according to a joint survey by the [ABA] and the Federal Agricultural Mortgage Corporation. Despite the continued decline, the survey of more than 580 agricultural lenders revealed that the agricultural loan approval rate is 84 percent."
An article on the front page of Saturday's Des Moines Register explored issues associated with corn and soybean production, prices, and farm profitability in Iowa. Meanwhile, the Federal Reserve Bank of Kansas City released a paper last week which noted that, "Lending at agricultural banks appeared to stabilize in the third quarter of 2017, but risks in the sector have remained alongside a persistently weak agricultural economy." Today's update includes highlights from these two current news items that shed additional light on the state of the Corn Belt farm economy.
On Wednesday, the Federal Reserve Board released its October 2017 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.
Earlier this week, the Federal Reserve Bank of Dallas released its Agricultural Credit Survey for the third quarter of 2017. The Fed update indicated that, "Demand for agricultural loans overall decreased for the eighth consecutive quarter. Loan renewals and extensions continued to increase."
Iowa State University (ISU) Extension Economist Alejandro Plastina penned a recent article titled, "Financial Stress in Iowa Farms: 2014-2016." Today’s update recaps some of the key findings from the ISU article.
Reuters writer Rod Nickel reported yesterday that, "On Canada’s fertile Prairies, dominated by the yellows and golds of canola and wheat, summers are too short to grow corn on a major scale. But Monsanto Co is working to develop what it hopes will be North America’s fastest-maturing corn, allowing farmers to grow more in Western Canada and other inhospitable climates, such as Ukraine...The question, amid historically high supplies and low grain prices, is whether the world really needs more corn."
An update on Friday from the Food and Agriculture Organization (FAO) of the United Nations indicated that, "After steadily declining for over a decade, global hunger is on the rise again, affecting 815 million people in 2016, or 11 percent of the global population, says a new edition of the annual United Nations report on world food security and nutrition released today. At the same time, multiple forms of malnutrition are threatening the health of millions worldwide."