Dismantling NAFTA Would Be ‘A Blow to U.S. Ag Economy’
Agricultural exports to Mexico and Canada through the North American Free Trade Agreement (NAFTA) are too important to allow political rhetoric and the threat of U.S.-imposed tariffs to jeopardize these crucial markets, says Louis Ribera, Texas A&M AgriLife Extension economist.
Dismantling that agreement would be a significant blow to the U.S. ag economy, he says. Rather, “We need to modernize it.” Issues such as sanitary and phytosanitary certification were not as significant when the trade pact was signed, he notes. Modern technology has changed. “We also did not have the Food Safety and Modernization Act in place” at that time.
The U.S. is the world’s largest exporter of agricultural and food products, with exports now accounting for about 35 percent of the nation’s farm income, up from 28 percent in 1996. The value of ag exports has increased from $46.2 billion in 1994 to $134.9 billion in 2016.
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Farm Managers Embrace Disruptive Technologies
At its annual Summer Education Week, the American Society of Farm Managers and Rural Appraisers (ASFMRA) dedicated an entire day’s workshop to help members leverage disruptive technology.
“We accept technology and use it in our everyday lives, but this is a completely different level. This is career-changing technology,” says Michael Krause, AFM, ASFMRA president and regional manager at Hertz Farm Management. “We get caught up in the day-to-day work, but it’s time to realize we won’t be doing things like we have in the past.”
A key reason for ASFMRA to host the event is the rate at which change in this space has been accelerating due to the increased interest in land.
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Land is an Invaluable Resource
While going through a box of items kept by my father for many years, I came upon a book from Ohio Congressman J. Harry McGregor, The Yearbook of Agriculture, 1958.
This marked the year my dad was seeking advice, putting pencil to paper more than ever, trying to reach the decision whether to remain a full-time equipment salesman and a working-til-midnight, part-time farmer or to go for his goal of becoming a full-time dairy and crop farmer.
An invaluable resource
The book is interesting in many ways, but one thing that kept me reading was the foreword by the Secretary of Agriculture Ezra Taft Benson, reminding the stewards of the land they need to know more about it.
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Senate GOP Budget Proposal Cuts Ag Department Budget
Senate Republicans unveiled a fiscal 2018 budget resolution Friday that they intend to use to push through as much as $1.5 trillion of tax cuts in the coming months, but it won’t allow the GOP to pursue a full repeal of Obamacare.
The budget proposal would still allow Republicans to pursue a much narrower attack on the Affordable Care Act, including repealing the individual mandate to purchase coverage. The resolution also would let the GOP use the fast-track process to open up drilling in the Arctic National Wildlife Refuge.
The budget, authored by Senate Budget Chairman Mike Enzi, forecasts a balance in nine years through $5 trillion in largely unspecified spending cuts. Unlike the House budget proposed in July, Enzi’s blueprint doesn’t call for cuts to Medicaid or a partial privatization of Medicare.
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Data and Outlook for Making 2018 Cash Rental Decisions
Much of the cash rent data for making 2018 cash rental decisions is now available. Data include 1) 2017 county and state cash rents as reported by the National Agricultural Statistical Service (NASS) and 2) actual 2017 and projected 2018 cash rents on professionally managed farmland as reported by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA). These data are reported in this article. For 2018, cash rents likely will continue to decline as farmers are projected to have negative returns when cash rents are at average levels.
2017 County Cash Rents
County cash rents published by NASS are shown in Figure 1. As can be seen in Figure 1, there is variability in 2017 average cash rents across Illinois. The highest county cash rents tend to be located in central Illinois, with Logan County having the highest cash rent of $289 per acre. Southern Illinois counties tend to have lower cash rents, with Johnson County having the lowest cash rent of $72 per acre.
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Low Commodity Prices Spur Senate Interest in Idling Cropland
Senators from the Plains and Upper Midwest pressed for expansion of the long-term CRP during a friendly confirmation hearing for Bill Northey, the USDA nominee who would run the program as agriculture undersecretary. Chairman Pat Roberts said the Agriculture Committee would clear the nominations of Northey and Gregory Ibach “as expeditiously as we can” for a vote by the full Senate.
“Both Mr. Ibach and Mr. Northey have valuable boots-on-the-ground experience. They are both farmers,” said Roberts. Northey, currently Iowa’s elected agriculture secretary, was nominated for undersecretary for farm production and conservation, which oversees farm subsidies, crop insurance, and land stewardship. Ibach, Nebraska’s appointed agriculture director, was nominated for undersecretary for marketing and regulation with a portfolio that ranges from GMO labeling and check-off programs to agencies that combat agricultural pests and diseases.
Senator John Thune of South Dakota asked Northey if the USDA would support his idea of expanding the Conservation Reserve to 30 million acres. Congress set a 24 million-acre cap in the 2014 farm law, as a money-saving step. Enrollment in the program peaked at 36.8 million acres in 2007 before declining during the commodity boom that ended in 2013. During that period, landowners decided they could earn more by growing crops than by idling land in the reserve for 10 years or more in exchange for annual payments.
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As Harvest Continues, Forecasts Differ on Farm Economy Outlook
An official government forecast of higher farm income for 2017 after three down years came as a surprise to many farmers and agricultural economists as combines began to roll this fall.
Grain and farmland prices have been down much of 2017 and there are no signs of a significant rebound. A Creighton University survey released last month of bankers in 10 Midwest states found a little more than half reported restructuring farm loans to accommodate anticipated lower income. The same survey warned lower farm income would ripple through the larger, rural economy in the form of lower equipment, retail and home sales.
The U.S. Department of Agriculture, in contrast, forecast an increase of 3.1 percent in net farm income this year from 2016 to $1.9 billion. With income falling in 2014, 2015 and 2016, the increase still would not return to levels of 2010 to 2013, according to USDA.
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Farm Safety Net, Conservation Payments Top $9.6B
Agriculture producers suffering losses from natural disasters will be among those receiving some relief as U.S. Department of Agriculture payments begin going out this week.
Agriculture Secretary Sonny Perdue announced Tuesday that over $9.6 billion in payments will be made to producers through the Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC) and Conservation Reserve (CRP) programs. The United States Department of Agriculture (USDA) is issuing approximately $8 billion in payments under the ARC and PLC programs for the 2016 crop year, and $1.6 billion under CRP for 2017.
“Many of these payments will be made to landowners and producers in rural communities that have recently been ravaged by drought, wildfires, and deadly hurricanes,” Perdue said. “I am hopeful this financial assistance will help those experiencing losses with immediate cash flow needs as we head toward the end of the year.”
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“Drowning In Grain”- Reuters Special Report on the Global Grains Glut
Reuters writer Rod Nickel reported yesterday that, “On Canada’s fertile Prairies, dominated by the yellows and golds of canola and wheat, summers are too short to grow corn on a major scale.
“But Monsanto Co is working to develop what it hopes will be North America’s fastest-maturing corn, allowing farmers to grow more in Western Canada and other inhospitable climates, such as Ukraine.
“The seed and chemical giant projects that western Canadian corn plantings could multiply 20 times to 10 million acres by 2025 – adding some 1.1 billion bushels, or nearly 3 percent to current global production.”
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Sonoma Wine Grape Harvest Faces Weather, Labor Challenges
Weather will likely be a high topic of conversation as Sonoma County’s famed wine grape harvest finishes.
A year that began with record winter rainfall was followed by a mild spring and a scorching summer before welcome cooling came in mid-September. That respite helped bring order to the harvest, though it did not last long as rain sprinkles turned to thunderstorms in late September creating new concerns for growers.
Reports from the vineyards indicate that this year’s extreme weather, particularly the sustained heat waves, will likely impact the size of the harvest. Early estimates suggest an average size crop of excellent quality. However, in the past few weeks farmers report some significant weight loss in grapes due to the heat, which caused some growers and vintners to pick grapes earlier than they had planned.
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Wanted: More Farm Bill Funding to Grow California Almond Industry
California’s largest specialty crop is looking to the next federal farm bill for assistance with trade, conservation bioenergy, technical assistance, and research.
Almond Alliance President Kelly Covello’s remarks to the U.S. House Committee on Agriculture outlined the value of the California almond industry and the unique needs of its producers.
California almond producers attending the farm bill listening session held at Modesto also emphasized the importance of crop insurance, Environmental Quality Incentive Program (EQIP) funding, and the Market Access Program (MAP).
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Low Income Growth Story
LINCOLN, Neb. (AP) — A stagnant farm economy that has slowed Nebraska and Iowa’s income growth to the lowest levels in the nation is also contributing to state budget problems that could linger through next year, officials said.
Key lawmakers from both states said they’re concerned the agricultural downturn will persist, ripping through other sectors and putting additional strain on their budgets.
Declining farm income was the leading cause of the slowdown in many states, including Iowa and Nebraska, according to the U.S. Bureau of Economic Analysis. The sluggish growth also hurt agricultural manufacturing, lending, land-rental income and other industries tied to farming, officials said.
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Mechanical Harvester Advances to Improve Pistachio Removal Efficiency
Faced with a possible loss of harvesting efficiency when shaking large circumference pistachio trees, machine fabricators have upped their game.
“They are making them more robust and have improved the shaking patterns,” says University of California researcher Louise Ferguson.
Known for her work in the mechanical harvest of table olives, Ferguson was funded by the California Pistachio Research Board to work on alternative harvest techniques to improve the harvesting percentage of pistachio nuts.
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Successful Washington Chapter Fall Meeting
The Washington Chapter held their fall meeting in Pendleton, Oregon where they have a number of active members working on the border. The program covered several headline issues for the area. Idaho Power representatives spoke on the status of the Broadman to Hemingway Transmission line Project that entails 290 miles of new 500 kv transmission line, and the tribal coordinator for the Confederated Tribes spoke on the land acquisitions they have made and the challenges with that effort. The chairman of the Oregon Cattleman’s Association Wolf committee and a rancher whose ranch is significantly impacted by wolf activity also spoke. The question appraiser’s asked: does wolf activity impact the market value?
The area is dryland wheat producing country. The regional manager of the Pendleton Grain Grower facilities that were acquired by United Grain Corporation in the fall of 2016 updated the group on the changes they have made and intend to make to stay competitive in the low margin industry. Key to the wheat growing region is the FSA payments and programs. The Umatilla County Executive Director shared the impact of low wheat prices, base acres and CRP expirations as well as the TIPP program with the group. Appraisers, note the impact on market value if you do not have base acres and or CRP has expired or is about to expire.
Instruction was given on timber cruises, and what is involved with the Forest Practices Act. A ranch manager shared the practical side of forest fires, recovery, the CREP program and economics of thinning, replanting and grazing cattle. Bonneville Power Administration representatives spoke about the new more rigorous vegetation management requirements, which they are facing. They will be seeking YellowBook appraisals for easement modifications where vegetation changes are required. This will impact our orchard areas primarily where fruit trees may no longer be allowed or must be maintained at 12’ beneath transmission lines. Appraisers: what’s the “taking” of the top few feet of an apple orchard?
The meeting concluded with presentations on the Oregon State University research farm, where researches share on topics from the impact of wheat residue on water retention, the value of carbon, the rising pH in the soils of the area and others.
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