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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“If corn is a solar panel and seeds are batteries, then livestock and poultry are machines that are ‘hooked up’ to the batteries, which power the animals to produce useful outputs, some of which are food and some of which are not.” Jayson Lusk, Jayson Lusk Blog, Farming Isn’t Just about Food, March 29, 2019.

Agriculture Economic Tidbits is now providing easy-to-read charts which plot the weekly crop progress reports for Nebraska released by the USDA National Agricultural Statistics Services.  To see the latest report, click here.

The outbreak of African Swine Fever (ASF) continues to spread in China and has now been reported in several other countries in Southeast Asia such as Vietnam and Cambodia. The production losses in China stemming from ASF are likely to shape world protein markets for the many years. Bloomberg News reports that more than 80 percent of Chinese farms are choosing not to restock. Reuters reported China’s pork production fell 5 percent in January through March of this year and the USDA projects pork production in China this year will fall 10 percent.

The terms “commoditization” and “decommoditization” are increasingly being used to describe trends in agriculture. Producers will fit into two broad categories: those who produce homogenous commodities like corn, wheat, beef, or soybeans—commoditization; and producers who work through contracts, local markets, and other avenues to produce a commodity with an attribute or quality to more directly supply a consumer demand—decommoditization.

The demand for ethanol is obviously tied to overall fuel consumption. While some ethanol is exported, roughly 10 percent of production in 2018, most of it is consumed domestically. Below is a graph of actual and projected U.S. gasoline consumption based on Energy Information Agency taken from a farmdoc daily article by Scott Irwin of the University of Illinois.

Cargill plans to invest $112 million to expand its corn processing capacity in China. The goal is to expand its corn process capacity in China to 2MMT a year. Thehuebereport, dan hueber, April 23, 2019.

Agriculture Economic Tidbits is now providing easy-to-read charts which plot the weekly crop progress reports for Nebraska released by the USDA National Agricultural Statistics Services.  To see the latest report, click here.

With the release of data from the 2017 Census of Agriculture, “number nerds” will be sorting through the data to examine changes which have occurred over the 5-year period between censuses. The map below is a case in point. The map plots the percentage changes in beef cow numbers in Nebraska counties between 2012 and 2017. Overall, beef cow numbers in Nebraska, 1.97 million head in 2017, were almost 181,000 head greater than the number recorded in 2012, or 10 percent more.

Farmland values have been surprisingly resilient over the past few years. Land values today are lower than the highs seen in 2014, but the declines in values have not been as marked as the declines in crop prices or farm income. According to the Federal Reserve Bank of Kansas City, cropland values in the Tenth District, which includes Nebraska, declined 16 percent from 2013 to 2018.

There’s a silver lining hidden in the latest Farm Bank Performance Report from the American Bankers Association (ABA). Noncurrent farm loans (those more than 90 days past due) account for 0.52 percent of total loans, less than the overall industry noncurrent loan ratio of 1.20 percent. However, the ABA also reports the number of delinquencies did rise.

“. . . just four crops account for about 95% of all planted farmland: corn, soybeans, wheat, and cotton.” Jayson Lusk, Jayson Lusk Blog, Farming Isn’t Just about Food, March 29, 2019.

Tweets and other anecdotal reports indicated a few planters were rolling in Nebraska last week. Time will tell whether the wet winter and spring will cause significant delays in getting this year’s crop in the ground. Conventional wisdom suggests today’s farmers can cover more ground, in less time, due to larger planters and equipment. Meaning farmers today can plant more acres in fewer days compared to the past.

President Trump walked back his threat to close the border with Mexico to trade, but President Trump, if nothing else, has demonstrated he can change his mind on dime. What might be at stake for Nebraska if the border were closed? In 2018, the U.S. exported more than $19 billion in agricultural products to Mexico. Nebraska Farm Bureau estimates show Mexico imported almost $890 million in Nebraska commodities in 2017.

An economist once joked that the future to economists is always straight lines. The economist was making light of projections which show future prices, income, or other economic data as straight lines absent the variation and volatility inherent in the economy. Yet despite this drawback, long-term projections can provide insights into underlying trends evident in the economy.

“He who sees the past as surprise-free is bound to have a future full of surprises.” Amos Tversky quoted in The Undoing Project, Michael Lewis, W.W. Norton & Company, 2017.

Property taxes paid by agriculture as a share of income are considerably more than that paid by other economic sectors in Nebraska according to a report by Goss & Associates released by the Fair Nebraska coalition. Figure X1, from the Goss report, plots property taxes as a share of income for the agriculture, business, and household sectors from 2010 to 2016. In 2016, property taxes paid by agriculture as a share of income was nearly 37 percent, while property taxes paid by businesses and households were 4 percent and 3 percent of income respectively.

The number of farms in Nebraska was 46,332 in 2017, down 7 percent from the number of farms reported in 2012. This factoid is just one of thousands compiled by the USDA National Agricultural Statistics Service (NASS) from the 2017 Census of Agriculture. The NASS conducts the comprehensive survey of American agriculture every five years, with the most recent survey conducted in 2017. The first results of the 2017 survey were released last week. Data on demographic information of producers, decision making, commodity statistics, internet access, and much more is available through the USDA because of the census. The data and information provide a unique picture of U.S. and Nebraska farm and ranches and the people who operate them.

Does higher income lead to greater levels of happiness? It’s an age-old question. An analysis by The Economist magazine of data reported by the World Happiness Report sponsored by the United Nations suggests that there is a correlation between happiness scores and income, but it is a weak one. The World Happiness Report is a survey of global happiness which ranks 156 countries on how happy their citizens perceive themselves to be. The report, based on data from the Gallup World Poll, was begun in 2012.

“Economist should be spelled echonomist, because they all repeat each other.” Jason Kintz

Agriculture Economic Tidbits can now be found on the Nebraska Farm Bureau website. If a past item in Tidbits caught your attention, and you want to re-read it, it can now be found on the web at www.nefb.org. From the menu across the top of Farm Bureau’s home page, click on the Newsroom tab and Tidbits will appear on the list of choices under the tab. The Tidbits page features archived stories beginning with January of this year and will be updated each week.

The University of Nebraska Agricultural Economics Department annual real estate survey shows the average market value of agricultural land in Nebraska declined 3 percent this year compared to last year. The average land value is now $2,650 per acre. This marks the fifth consecutive year of declines in value as market values have dropped approximately 20 percent since reaching a high of $3,315 in 2014. The annual February survey conducted by the department questions land industry professionals in Nebraska on land market happenings.

American Farm Bureau and 23 other organizations recently released a report showing that America’s food and agriculture sectors support over 22 million jobs, or 15 percent of U.S. employment. These 22 million jobs grow to over 45 million jobs when supplier and other economic multiplier effects are considered and total output from agriculture and food sectors exceeds $7 trillion. The report, 2019 Food and Agriculture Industries Economic Impact Study, estimates the economic contribution of the food industry to the U.S. economy in 2019. This includes businesses involved in food agriculture, food manufacturing, food wholesaling, and food retailing. John Dunham & Associates conducted the research.

Christine Lagarde, Managing Director of the International Monetary Fund (IMF), described the world’s economy as facing a “delicate moment” in a recent speech to the U.S. Chamber of Commerce. Lagarde said growth in the global economy is slowing, and for this year, the IMF expects 70 percent of the world economy to experience a slowdown in growth. In January, the IMF projected global growth for this year and next at 3.5 percent, but that is likely to be ratcheted down in the next forecast. Lagarde says the slowdown in global growth is largely due to rising trade tensions and tightening of financial conditions by the world’s central bankers.

“This ‘ability’ to explain that which we cannot predict, even in the absence of any additional information, represents an important, though subtle, flaw in our reasoning. It leads us to believe that there is a less uncertain world than actually might be.” Amos Tversky quoted in The Undoing Project, Michael Lewis, W.W. Norton & Company, 2017.

Agriculture Economic Tidbits can now be found on the Nebraska Farm Bureau website. If a past item in Tidbits caught your attention, and you want to re-read it, it can now be found on the web at www.nefb.org. From the menu across the top of Farm Bureau’s home page, click on the Newsroom tab and Tidbits will appear on the list of choices under the tab. The Tidbits page features archived stories beginning with January of this year and will be updated each week.

Extreme winter weather in February and March and the devasting floods two weeks ago have hit Nebraska ranchers hard. Cold temperatures, rain, freezing rain, snow, high winds, and blizzard conditions have pummeled Nebraska resulting in higher mortality rates for both cows and calves this year. Even before the flooding, anecdotal reports suggested death losses for calves as high as 20-25 percent this year. The normal mortality rate for calves in Nebraska is 5 percent according to the USDA Farm Service Agency (FSA).

The Livestock Indemnity Program (LIP) administered by the USDA Farm Service Agency (FSA), can provide compensation to offset the abnormal death losses experienced this year. In a recent BeefWatch piece, Jay Parsons and Aaron Berger of the University of Nebraska Extension Service give an example of how LIP can assist producers. Parsons and Berger use an example of a beef producer with 400 pregnant cows. The producer could expect to lose 5 cows and 20 calves in a typical year. This year, due to adverse weather conditions, the producer loses 7 cows and 32 calves. Under LIP, the producer could receive compensation for 12 calves and 2 cows, losses over and above what is considered normal. Parson and Berger calculate the producer, based on 2018 payment rates, could receive $983.90 for each cow, and $468.92 for each calf lost, roughly 40 percent of the value of the calf.

Most Nebraskans realize the state is near the top in the nation in the production of corn, soybeans, beef, and hay. But most Nebraskans probably don’t know Nebraska is also near the top in the nation in production of greenhouse tomatoes. Nebraska’s production of greenhouse tomatoes tops 10 million pounds each year according to the USDA Economic Research Service (ERS) which ranks the state, along with California, Minnesota, and New York, as a leading producer in the country. The growth of greenhouse tomato production in the country has been a recent phenomenon. Greenhouse production did not register on a USDA survey of tomato shipments in 2000. However, in the most recent survey in 2017, greenhouse tomato shipments accounted for more than 5 percent of all tomato shipments.