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.”
Farm Policy News
U.S. Farm Income Forecast Released
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.”
Trade Policy Uncertainty: Lingering Concern for Farmers
Recent news items suggest that anxiety in the agricultural community over Trump administration trade policy is not going away. After promising to renegotiate the North American Free Trade Agreement (NAFTA), floating the the idea of a 20% border tax adjustment or a tariff on Mexican imports, and pulling out of the Trans-PacifcPartnership (TPP), farmers are on edge about disruptions in export markets. In the past couple of days, from California specialty crops, to the U.S. livestock sector, to row crop growers in Nebraska and Illinois, agricultural reporters have scrutinized the potential impact of obstacles in agricultural trade flows. Other articles have shown that the future outcomes of trade policy remain uncertain.
Farm Economy Variables – A Checkup
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.
Trade Policy with Mexico- Farmer Apprehension
Reuters writers Tom Polansek and Mark Weinraub reported on Tuesday that, “U.S. food producers and shippers are trying to speed up exports to Mexico and line up alternative markets as concerns rise that this lucrative business could be at risk if clashes over trade and immigration between the Trump administration and Mexico City escalate.”
The Importance of the Non-Farm Rural Economy to Farm Household Income
A recent study (“Income Trends for Iowa Farms and Farm Families 2003-2015”) by David Peters, associate professor and extension rural sociologist with Iowa State University, summarized current trends in farm income by type of farm operation and pointed to more specific issues regarding the importance of non-farm income to the financial picture of farm households.
Water Quality– Iowa Case Resolves One Issue, Clean Water Act Permitting Issue Remains Open
Nutrient-impacted water runoff from farm fields can have environmental consequences. A case filed by Des Moines Water Works (DMWW) involving financial damages from treatment of this water recently made its way to the Iowa Supreme Court. On Friday, January 27, the Iowa Supreme Court resolved one issue associated with the DMWW case; however, non-point source permitting issues under the Clean Water Act will still be considered by a trial court in June.
“Rural” Voters May Not Align with “Farm” Voters on Trade Issues
Donnelle Eller reported on the front page of Tuesday’s Des Moines Register that, “President Donald Trump’s decision to jettison the Trans-Pacific Partnership deal and renegotiate U.S. trade with Canada and Mexico could lead to a trade war that could put Iowa in the cross-hairs, worried state leaders told the Register on Monday.”
U.S. Out of TPP- Ag Export Opportunities Potentially Lost
Financial Times writers Demetri Sevastopulo, Shawn Donnan and Courtney Weaver reported yesterday that, “President Donald Trump signalled he will put trade protectionism at the heart of his economic policy, withdrawing the US from a historic Pacific trade pact and threatening to punish American companies for moving production overseas on his first working day in office.”
Trump Talks NAFTA Renegotiation; Tariff Issues a Separate Concern- China, North America Key to U.S. Ag Trade
Bloomberg writer Shannon Pettypiece reported late last week that, “President-elect Donald Trump won’t wait for Congress to confirm trade officials to act on his promises to withdraw from the Trans-Pacific Partnership trade deal and give notice he will renegotiate NAFTA, press secretary Sean Spicer said.”
USDA Crop Surveys- Falling Response Rates from Producers
An update posted yesterday at the farmdoc daily blog by USDA Chief Economist Robert Johansson, Anne Effland of USDA’s Economic Research Service, and Mississippi State University agricultural economist Keith Coble, explored issues associated with response rates from USDA’s National Agricultural Statistics Service (NASS) surveys, and examined the impact of response rates on county yield estimates for an important new farm program–the ARC-CO program.
Federal Reserve: Observations on the Ag Economy- January ’17
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.
Farm Bill- 115th Congress- House and Senate Ag Committee Members
After taking a quick look at some basic parameters and issues associated with the 2018 Farm Bill (Dec. 8), and exploring federal agricultural appropriations (Jan. 4) in more detail, today’s update looks at the recently named members of the House and Senate Agriculture Committees for the 115th Congress, and concludes wth some general observations.
Ag Technology: Increasing Availability and Use
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.”
Upper Midwest Land Values
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.”
Cuba Agricultural Trade Issues
Frank E. Lockwood reported on the front page of the Arkansas Democrat Gazette on January 2nd that, “A congressman from northeast Arkansas will reintroduce legislation to ease trade restrictions with Cuba, and says he’s hopeful that barriers to agricultural sales will be addressed early in 2017.”
China Trade, Export Focus as Commodity Prices Pressured
Shawn Donnan and Sam Fleming reported last week at The Financial Times Online that, “Robert Lighthizer, the lawyer [President-elect Donald Trump] picked for US trade representative, has for years likened free-trade advocates to political naifs. He will join Peter Navarro, another outspoken China hawk set to lead a new National Trade Council, and Wilbur Ross, the billionaire investor and the president-elect’s pick for commerce secretary, in a triumvirate chosen to deliver on Mr Trump’s campaign promise of an ‘America First’ trade policy.”
Dallas Fed Ag Credit Survey, “Concern” Noted
Earlier this week, the Federal Reserve Bank of Dallas released the results of its 2016 Fourth Quarter Agricultural Credit Survey.
Lower Food Prices Benefit Consumers, Complicate Farmer’s Ledger
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.”
Agricultural Appropriations: Mostly “Mandatory,” Nutrition Related
A recent Congressional Research Service report provided an overview of the Agricultural appropriations bill, which funds the U.S. Department of Agriculture, except for the Forest Service, and is compromised mostly of mandatory spending set by law.