Agricultural Economy

On Wednesday, the Federal Reserve Board released its April 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.

Today’s update summarizes recent news items relating to important components of the U.S. farm economy including farmland values, farm income and trade issues with China.

Today’s update looks at a variety of information sources that highlight recent developments relating to the U.S. farm economy, including variables associated with farmland values, agricultural prices, and farm income.

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 continued financial pressure on United States farm sector. Good news in the report includes a modest recovery in grain prices in 2017.”

Last week, the Federal Reserve Board released its February ’17 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.

Last week, USDA’s Economic Research Service (ERS) released a report titled, “Farm Household Income Volatility: An Analysis Using Panel Data From a National Survey.” The report noted that, “There has long been information tracking farm income at the national level, yet little information exists about income variability of individual farm households.” Due to the volatility associated with agricultural production, federal lawmakers have worked to craft policies that minimize farm household income fluctuations. House and Senate Ag Committees in the 115th Congress have already begun the process of continuing this goal as they conduct hearings relating to the next Farm Bill. Today’s update looks at some of the highlights of the ERS report.

Speaking yesterday 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 U.S. Department of Agriculture released its 10-year projections for the food and agriculture sector. The report noted that, “Over the next several years, the agricultural sector continues to adjust to lower prices for most farm commodities. Although reduced energy prices have decreased energy-related agricultural production costs, lower crop prices result in declines in planted acreage. Lower feed costs provide economic incentives for expansion in the livestock sector.” Today’s update highlights aspects of the report that focused on corn and soybeans.

On Monday, February 13th, Patrick Gillespie reported at CNN Money Online that, “Mexico is one of the top buyers of American corn in the world today. And Mexican senator Armando Rios Piter, who leads a congressional committee on foreign relations, says he will introduce a bill this week where Mexico will buy corn from Brazil and Argentina instead of the United States.”

On Thursday, the Federal Reserve Banks of Chicago, St. Louis and Kansas City each released updates regarding farmland values and agricultural credit conditions from the fourth quarter of last year. The Fed reports, which contained concerning news for farmers, came on the heels of USDA’s forecast that U.S. farm incomes will drop 8.7% in 2017, and on the same day that The Wall Street Journal ran a front page story titled, “The Next Farm Bust is Coming.”

Jesse Newman reported yesterday at The Wall Street Journal Online that, “U.S. farm incomes will drop 8.7% in 2017, a fourth consecutive year of declines amid a deep slump in prices for many crops.”

A complex mix of agricultural economic variables help form the basis of what farmers and ranchers consider essential policy priorities. As Farm Bill conversations have already begun, today’s update looks very briefly at several issues such as farm lending, production costs, commodity stock levels, and biofuels that have gained recent attention in the news.

Yesterday, the Federal Reserve Board released its January ’17 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.

An update yesterday from the Federal Reserve Bank of Atlanta indicated that, “When Joe Boddiford is in Atlanta, 200 miles from his Southeast Georgia farm, he can operate his irrigation systems with his smartphone. Boddiford can turn on the water to a particular set of nozzles or shut it off. He can activate an underground well or monitor the entire system. ‘That gives me a lot of peace of mind,’ says Boddiford, who grows cotton, peanuts, and corn on 2,200 acres about 60 miles from Savannah.”

Last month, in its third-quarter 2016 Agricultural Credit Conditions Survey, the Federal Reserve Bank of Minneapolis indicated that, “Following a trend from recent quarterly surveys, land prices and cash rents retreated from historic highs. The average value for nonirrigated cropland in the district fell by more than 3 percent from a year earlier, according to survey respondents. Irrigated land values fell 1 percent, while ranch- and pastureland values fell 5 percent, perhaps reflecting the more recent downturn in livestock prices.”

Earlier this week, the Federal Reserve Bank of Dallas released the results of its 2016 Fourth Quarter Agricultural Credit Survey.

Los Angeles Times writer Geoffrey Mohan reported on the front page of the business section on Friday, December 30th that, “For food shoppers, 2016 was a back-to-the-future experience, with retail prices deflating for the first time since Lyndon Johnson was president.”

In a special section of the Christmas Day edition of the Omaha World-Herald, Barbara Soderlin reported that, “The outlook may sound bleak for Nebraska’s agriculture-dependent economy as farmers wrap up the third year in a row with falling profits: The decline has economists talking about state budget cuts, rising farm loan defaults and falling land values. Main Street businesses that depend on farm spending say the picture might be dimmer, but they’re not yet turning out the lights.”