U.S. agricultural exports in fiscal year 2017 increased over $10 billion to the third-highest level on record. Although the U.S. remains the second largest exporter of agricultural goods in the world, the share of U.S. agricultural exports has fallen from 23 percent of global value in 1995 to 12.5 percent in 2013. Nonetheless, U.S. agricultural exports to NAFTA countries and to China have increased since 1995, highlighting the importance of these regions to U.S. agricultural trade. Today’s update looks at these issues in more detail, along with a brief update on the NAFTA renegotiations.
Farm Policy News
Rural America: Perspective from USDA Report, and Federal Reserve Ag Credit Survey
On Thursday, the U.S. Department of Agriculture released its annual Rural America at a Glance report, which summarizes the status of conditions and trends in rural areas. In addition, the Federal Reserve Bank of Minneapolis recently provided details of its third quarter Agricultural Credit Conditions Survey, which follows on the heels of recent third quarter agricultural reports from four other federal reserve districts. Together, the USDA report and Minneapolis Fed update, provide some interesting perspective on the state of non-metro America.
Federal Reserve Bank of Minneapolis: Impacts of Summer Drought in the Plains
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.”
USDA Trade Data; NAFTA Perspectives: Lawmakers, Ag Secretary, Farmers, and Mexico
Today’s update takes a closer look at recent USDA agricultural trade export data for fiscal year 2017, and then proceeds to examine recent news items that provide perspective on NAFTA trade issues from lawmakers, the Secretary of Agriculture, farmers, and Mexico.
Federal Reserve Ag Credit Surveys- 2017 Third Quarter Farm Economy Conditions in the Midwest
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.
Crop Choices, Farm Size: Changes in a Time of Low Corn and Soybean Prices
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.”
U.S. Ag Exports: USDA Data Update, NAFTA Worries Persist
Last week, USDA updated portions of its monthly agricultural trade data. Despite some positive indications, news reports demonstrate that concerns over the renegotiation of the North American Free Trade Agreement (NAFTA) persist in both Mexico and the U.S. agricultural sector.
Survey Sheds Light on Farm Profitability, While Producers Cut Costs
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.”
Farm Bill: “Technical Adjustments,” and “Tweaks”
Jacqui Fatka reported on Friday at Farm Futures Online that, “House Agriculture Committee Chairman Mike Conaway, R-Texas, said [on October 25th] that the Congressional Budget Office (CBO) has sped up its analysis of farm bill provisions that the committee is considering. He told reporters that the committee is still on track to bring out a bill before the end of the year or early 2018.”
USDA- ERS: Opportunities for U.S. Ethanol Exports
A report earlier this month from USDA’s Economic Research Service (ERS) (“Global Ethanol Mandates: Opportunities for U.S. Exports of Ethanol and DDGS,” by Jayson Beckman and Getachew Nigatu) noted that, “The increased use of ethanol globally could provide strong and diverse export market opportunities for U.S. ethanol and ethanol byproducts.” Parts of the ERS report are highlighted in this update.
USDA-FAS Report: China and Biofuels
A recent GAIN (Global Agricultural Information Network) report by USDA’s Foreign Agricultural Service (FAS) took a closer look at important variables regarding biofuels and China. Today’s update includes some highlights from the report, which is available in its entirety here, “China- Biofuels Annual, ‘Growing Interest for Ethanol Brightens Prospects.'”
Corn Belt: “Hoping to Breakeven,” in a “Persistently Weak” Ag Economy
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.
After Pressure from Senators, Iowa Governor- Trump Administration Signals RFS Support
In late September, the Environmental Protection Agency (EPA) released a proposal to reduce the volume requirements for biodiesel for 2018 and 2019 under the Renewable Fuel Standard (RFS). However, on Thursday, in a letter to several senators, the EPA Administrator committed to at least maintain current blending requirements. Today’s update provides a brief timeline of some of the reaction by lawmakers, including Senator Chuck Grassley (R., Iowa), that transpired between the EPA proposal in September, to Thursday’s letter from EPA.
Federal Reserve: Observations on the Ag Economy- October ’17
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.
NAFTA Renegotiation Talks Extended– U.S. Dairy Proposal Rejected
Ana Swanson reported on Tuesday at The New York Times Online that, “Until Tuesday, the North American Free Trade Agreement looked like it might be headed for a quick demise. Now, it could be headed for a slow, painful one. The United States, Canada and Mexico said on Tuesday that they would extend Nafta negotiations into next year, with the parties citing ‘significant conceptual gaps’ in how to rewrite the 1994 trade pact.”
USDA-FAS Report: China’s Meat and Poultry Import Forecast, 2018
On Thursday, the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) released its biannual “Livestock and Poultry: World Markets and Trade” report, which is published in April and October, and is “designed to give a snapshot of the current situation among the major players in world beef, pork, and broiler meat trade.” Today’s update provides a recap of some of the highlights from the FAS report, which was titled, “China’s Meat and Poultry Import Forecast 2018: Decline and Constrained Growth.”
NAFTA Renegotiation Continues- Pres. Trump, Sec. Perdue, Lawmakers Weigh In
William Mauldin reported on Wednesday at The Wall Street Journal Online that, “President Donald Trump, speaking alongside Canadian Prime Minister Justin Trudeau, opened the door to separate trade deals with Canada and Mexico to replace the North American Free Trade Agreement and repeated his warnings that the U.S. could withdraw from the pact.”
U.S. Agricultural Exports- Data Update from USDA
Last week, the U.S. Department of Agriculture updated its monthly agricultural trade data. Today’s update includes an overview of some observations from the data with a focus on corn, soybeans, wheat and livestock.
Senate Hearings- Trade, and Conservation Reserve Program Examined
On Thursday, the Senate Finance Committee held a hearing to consider three nominees for key trade positions, while the Senate Ag Committee questioned two nominees for Undersecretary posts at the USDA. Today’s update highlights some key points from the hearings, including issues related to agricultural trade and the Conservation Reserve Program.
Federal Reserve Bank of Dallas Ag Credit Survey- Third Quarter
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.”