Agricultural Economy

Last week, the Federal Reserve Banks of Chicago, St. Louis and Kansas City released updates regarding farm income, farmland values and agricultural credit conditions from the first quarter of 2019.  And earlier this year, the Federal Reserve Bank of Dallas released its Agricultural Survey for the first quarter of 2019.  Today’s update highlights core findings from the Fed reports.

On Thursday, the House Agriculture Subcommittee on General Farm Commodities and Risk Management held a hearing titled, “Reviewing the State of the Farm Economy.” Today’s updates provides a brief recap of some of the issues that were discussed at the Subcommittee meeting.

An update last month from the Federal Reserve Bank of Kansas City (“Ag Banks Make Adjustments as Lending Remains Elevated,” by Cortney Cowley and Ty Kreitman) stated that, “According to the National Survey of Terms of Lending to Farmers, non-real estate lending continued to increase at a moderate pace in the first quarter. The volume of non-real estate loans increased 9 percent from a year ago. Although the volume of loans to finance operating expenses remained relatively steady, volumes for livestock loans and loans to finance machinery and equipment increased.”

Last week, the American Bankers Association (ABA) released its annual Farm Bank Performance Report.  Today’s update includes several highlights from the ABA update.

On Wednesday, the Federal Reserve Board released its April 2019 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.

Recent news items from the Corn Belt point to several economic challenges facing producers as spring planting approaches.  Nonetheless, relatively steady farmland values continue to be a bright spot.  But a recent update from the Federal Reserve Bank of Kansas City noted that: “If farmland sales continue to increase in 2019 alongside persistently low agricultural commodity prices and higher interest rates, farmland values could decline further.”

A news release yesterday from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri indicated that, “Pressure on farm finances appears likely to continue according to the latest analysis of national and global agricultural trends from the University of Missouri. While the analysis shows a projected net farm income increase in 2019, farm income remains below the average of 2014-17. Longer-term projections suggest little change in real net farm income over the next decade, resulting in continued increases in the farm sector’s debt-to-asset ratio.”

On Tuesday, the House Appropriations Subcommittee on Agriculture held a hearing titled, “The Rural Economy.”  Today’s updates provides a brief recap of some of the issues that were discussed at the Subcommittee meeting.

Flooding and gloomy price prospects for corn and soybeans are diminishing optimism in the Corn Belt as spring planting nears.  Recent news articles continue to discuss the ongoing negative impacts of Midwestern floods on an already battered farm economy.  Meanwhile, corn and soybean prices fell on Friday after the U.S. Department of Agriculture released data relating to prospective planting intentions and grain stocks.

A Reuters news article this week stated that, “Frustration is building across farm country at what feels like a never-ending season of bad news.”  And an update from the Federal Reserve Bank of Minneapolis recently noted that, “Farmers are dealing with a host of compounding problems.”  As spring planting in the Corn Belt approaches, today’s update looks at recent news items that shed light on the condition of the agricultural economy.

Today’s update looks briefly at how relatively steady farmland values are impacting farm financial variables, and then discusses recent developments relating to farmland values in Illinois, Iowa and Nebraska.

On Wednesday, 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 will continue to adjust to the ongoing China-U.S. trade dispute (which is assumed to last the duration of the projection period). This results in an expected shift away from soybean production in the U.S. due to lower prices and towards corn and wheat which are expected to generate relatively higher returns.”  Today’s update highlights aspects of the report that focused on corn and soybeans. 

On Wednesday, the Federal Reserve Board released its February 2019 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.

The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase $6.3 billion (10.0 percent) from 2018 to $69.4 billion in 2019, after decreasing $12.0 billion (16.0 percent) in 2018. Net cash farm income is forecast to increase $4.3 billion (4.7 percent) to $95.7 billion.”

Following Wednesday’s appearance before the House Agriculture Committee, Secretary of Agriculture Sonny Perdue testified on Thursday before the Senate Agriculture Committee at a hearing titled, “Implementing the Agriculture Improvement Act of 2018.”  A variety of topics were discussed at the meeting, today’s update highlights some of these issues including: Trade, and Farm Bill payment limits.

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.

Last week, the Federal Reserve Banks of Chicago, St. Louis, Kansas City, and Minneapolis released updates regarding farm income, farmland values and agricultural credit conditions from the fourth quarter of 2018. Today’s update highlights core findings from the Fed reports.