Welcome to Agriculture Economic Tidbits, a weekly e-newsletter (emailed Mondays) for farmer and rancher members of Nebraska Farm Bureau. Agriculture Economics Tidbits will provide you with timely tidbits of economic information and policy analysis focused on Nebraska’s largest industry, agriculture, and its key players, Nebraska’s farmers and ranchers.  The newsletter will break down global and national economic trends and what they mean for Nebraska agriculture, stay abreast of latest market movements, and provide the latest results from Farm Bureau research on current policy issues like property taxes, school funding, farm programs and international trade—all with the goal of helping you maintain a viable farming or ranching operation.

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Tidbits will not be distributed next week due to the celebration of Independence Day and the signing of the Declaration of Independence 244 years ago. To read the Declaration go to: https://www.archives.gov/founding-docs/declaration-transcript. Please have an enjoyable celebration of America’s independence!

Agriculture’s deepening financial struggles were evident in the latest Ag Credit Survey conducted by the Kansas City Federal Reserve Bank. Each quarter the Bank surveys commercial banks in its seven-state region regarding credit conditions in agriculture, Nebraska included.

The June 22 crop progress report from the USDA National Agricultural Statistics Service (NASS) showed 96 percent of Nebraska’s wheat crop was headed. This means combines will be rolling soon in Nebraska’s “amber waves of grain”, if not already in some areas.

A new statewide initiative “The Combine” seeks to support high growth entrepreneurs in food and agriculture. The program, housed at Nebraska Innovation Campus, has a broad spectrum of sponsors and supporters including Invest Nebraska, Nebraska Farm Bureau, and Nebraska Corn Board.

Tidbits is providing charts with updated crop progress reports each week.To view this week’s reports, click here.

“to assume the blessings and security of self-government . . . All eyes are opened or opening to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few, booted and spurred, ready to ride them legitimately by the grace of God. These are the grounds of hope for others; for ourselves, let the annual return to this day forever refresh our recollections of these rights, and an undiminished devotion to them.” Thomas Jefferson, declining an invitation to the Fourth of July celebration in 1826 in Washington D.C., quoted in: John Adams, David McCullough, Simon & Schuster, 2001.

With much fanfare, the U.S. and China entered into a Phase 1 trade agreement earlier this year whereby China agreed to purchase, on average, $40 billion of U.S. agricultural goods per year in 2020 and 2021.

The good news: beef and pork slaughter numbers have increased significantly over the past few weeks and have returned to levels seen pre-COVID and comparable to a year ago. The bad news: the backlog of animals to be processed remains, getting heavier each day.

Nebraska Farm Bureau and INTL FCStone Financial Inc. are hosting a free market outlook and educational webinar, Keeping the Nebraska Farm/Ranch Profitable in 2020.

Tidbits is providing charts with updated crop progress reports each week.To view this week’s reports, click here.

“We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.” Franklin D. Roosevelt

An analysis conducted by the Nebraska Farm Bureau indicates Nebraska’s agricultural economy in 2020 could face nearly $3.7 billion in losses due to COVID-19 if economic conditions do not improve. The estimate is based on a “snapshot” of revenue losses on 2019 and 2020 production sold in 2020.

Farmers and ranchers use fuel in producing crops and livestock so fuel is an important expense, but fuel prices also factor into the profitability of ethanol production and, in turn, corn producers. Livestock producers, because of their usage of distillers’ grains, can also be impacted by changes in fuel prices through ethanol production.

Nebraska Farm Bureau and INTL FCStone Financial Inc. are hosting a free market outlook and educational webinar, Keeping the Nebraska Farm/Ranch Profitable in 2020.

Figure 2. Year-to-Year Change in Food-at-Home vs. Food-Away-from-Home: March 2020 eating out expenditures were 51 percent below March 2019

Chart of the Month

 

Easy-to-read charts which plot the weekly crop progress reports for Nebraska released by the USDA National Agricultural Statistics can be found here.

“If men were angels, no government would be necessary.” James Madison in The Federalist papers, quoted in Alexander Hamilton, Ron Chernow, Penguin Books, 2004.

The impact of international trade policy on agricultural trade was a primary reason Nebraska’s middle class viewed trade policy as the most important aspect of U.S. foreign policy. This was a key finding of a University of Nebraska-Lincoln and the Carnegie Endowment for International Peace report, “U.S. Foreign Policy for the Middle Class: Perspectives from Nebraska.”

Perhaps an amusement park should name a roller coaster after the U.S. dollar after the wild ride it’s been on in 2020. One of the impacts to agriculture from COVID-19 somewhat overlooked is the roller coaster ride the value of the dollar has been on since the beginning of the year (Figure 1).

The USDA National Agricultural Statistics Service reported farm and ranch operations in Kansas, Nebraska, North Dakota, and South Dakota employed 42,000 workers during the week of April 12-18, up 40 percent compared to the same week last year. Farm workers were paid an average wage of $15.93 per hour in April. Field workers were paid an average wage of $15.89 per hour while livestock workers were paid $14.59 per hour.

Easy-to-read charts which plot the weekly crop progress reports for Nebraska released by the USDA National Agricultural Statistics can be found here.

“and in 1974 horsehide covers were abandoned in favor of cowhide. The supply of horsehides had dropped sharply over the years as workhorses were replaced by motorized vehicles and farm equipment. People still ate plenty of beef, so cowhide was an obvious substitute.” Uncle John’s Bathroom Reader commenting on how the economic fundamentals of supply/demand and substitute goods affected the evolution of the baseball. Uncle John’s Bathroom Reader Takes a swing at Baseball. The Bathroom Readers’ Institute, Bathroom Readers’ Press, 2008.

The USDA rolled out the final details of its $16 billion direct payment package for farmers and ranchers, the Coronavirus Food Assistance Program (CFAP). The program provides financial assistance to producers who have suffered a price decline of greater than 5 percent or who had losses resulting from market supply chain disruptions due to COVID-19.

U.S. exports of beef and pork are surging in 2020 but exports of other Nebraska-produced commodities are not faring as well. Nebraska’s top export commodities include soybeans, corn, beef, animal feeds (ddgs), pork, and hides and skins.

Prices for goods and the quantities supplied or demanded change in markets. The changes could represent movements along supply/demand curves or shifts in supply/demand.

Easy-to-read charts which plot the weekly crop progress reports for Nebraska released by the USDA National Agricultural Statistics can be found here.

“The supply chains behind an iPhone, or a car component that crisscrosses the Rio Grande, are wonders of co-ordination. But the unsung star of 21st-century logistics is the global food system. From field to fork, it accounts for 10% of world GDP and employs perhaps 1.5bn people. The global supply of food has nearly tripled since 1970, as the population has doubled to 7.7bn. At the same time, they number of people who have too little to eat has fallen from 36% of the population to 11%, and a bushel of maize or cut of beef costs less today than 50 years ago in real terms. Food exports have grown sixfold over the past 30 years; four-fifths of people live in part on calories produced in another country. This happens in spite of governments, not because of them.” The Economist, Supply chains and the pandemic: the food miracle, May 9th, 2020.

InvestingAnswers defines price discovery as “the act of determining the proper price . . . by studying market supply and demand and other factors. . . [it] also depends on the number, size, location, and competitiveness of the buyers and sellers.” Price discovery in fed cattle markets is a growing concern for many participants.

Figure 2. Crude Oil and Ethanol Inputs (To Gasoline Demand)

Crude Oil and Ethenol Inputs

Source: USDA, Economic Research Service

Exports represent a significant market for U.S. agricultural products. For Nebraska, the value of exports each year equals roughly 30 percent of the state’s total agricultural receipts. Agricultural exports benefit not only farmers and ranchers but spills over into other sectors of the economy as well.