Agricultural Economy

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.”

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.

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.”

The Agricultural Economics Department at Purdue University recently released its annual outlook report that contained 12 specific articles looking at various aspects of the U.S. agricultural economy.  This post highlights key points from the Purdue report relating to cash rents, farmland values, and the price outlook for corn and soybeans.

The U.S. Department of Agriculture’s Economic Research Service (ERS) has recently released two separate reports that provide interesting perspective on the structure of U.S. agriculture.  The first provides a detailed overview of current statistics relating to U.S. farms, while the second highlights the evolving distribution of Federal farm payments (1991-2015).  This update underscores key findings from the two recent ERS reports.

The 2017 Iowa State University Land Value Survey was released on Tuesday, and showed that farmland values climbed 2% this year.  The survey was conducted in November by the Center for Agricultural and Rural Development at Iowa State University and Iowa State University Extension and Outreach.  Highlights of the survey are discussed in today’s update, along with recent news articles that explored the state of the Corn Belt agricultural economy in greater detail.

On Wednesday, the Federal Reserve Board released its November 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.

On Wednesday, the USDA’s Economic Research Service (ERS) released its November 2017 Farm Income Forecast.   This follows the August revision of the initial net farm income forecast released by ERS in February.  The USDA will release one more revision of the 2017 net farm income forecast in February 2018, and the 2017 official estimates will be released in August 2018.  Today’s update provides a recap of highlights from the farm income forecast.

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.”