Agricultural Economy

On Thursday, the Federal Reserve Banks of Chicago and St. Louis released updates regarding farm income, farmland values and agricultural credit conditions from the first quarter of 2018.  Recall that the Federal Reserve Bank of Dallas issued a similar update last month.  Today’s update highlights core findings from Thursday’s reports.

Late last month, Bloomberg writer Alan Bjerga reported that, “American farmers have managed to stay afloat despite years of shrinking crop values, the lowest incomes since the recession and a budding trade war with China. Now, they’re feeling a new squeeze — borrowing money is getting more expensive as interest rates rise. For some, it may be fatal.”

On Wednesday, the Federal Reserve Board released its April 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.

On Monday, the Federal Reserve Bank of Dallas released its quarterly Agricultural Credit Survey.  Also on Monday, the American Bankers Association highlighted several 2017 farm lending variables in its annual Farm Bank Performance Report.  Meanwhile, a recent news article from Minnesota documented that farm incomes in the state remained stagnant last year.  Today’s update highlights key points from these information sources.

Today’s update looks briefly at recent news items that highlight current information on farmland values.  In addition, key parts of a recent Wall Street Journal article that focused on the importance of off-farm income to U.S. farm households are also included.

A news release last week from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri indicated that, “The latest analysis of national and global agricultural trends from the University of Missouri indicates little change in net farm income this year and a slight increase in 2019. However, even with modest projected increases in commodity prices in 2019, net farm income is expected to remain far below the record level set in 2013. Good news in the report includes strong demand for meat, which offset downward pressure on prices from increased production last year.”

On Wednesday, the Federal Reserve Board released its February 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.

Today’s update looks briefly at recent publications from the Federal Reserve Bank of Minneapolis, and the USDA’s National Agricultural Statistics Service.  These reports give additional insight into the state of the U.S. agricultural economy by providing information on agricultural credit conditions and land values, the value of agricultural production, and the number of farms in the U.S.

Today’s update looks briefly at farmland values in the United States, with a specific focus on a recent report from USDA’s Economic Research Service (ERS) that examined farmland values from 2000 to 2016.  The ERS report noted that, “The value of farm real estate accounts for over 80 percent of the value of farm-sector assets and is an important indicator of the sector.”

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.”

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.