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.
On August 12 the USDA dumped a load of data regarding this year’s planted acres, estimated crop production, and prevented planting acres. For Nebraska, the National Agricultural Statistics Service (NASS) estimated 10 million acres of corn were planted; the average yield was forecast at 186 bushels per acre; and total production was pegged at 1.795 billion bushels, roughly the same as last year.
Figure 1. Industrial Hemp Acres Planted, 2019
Friday, August 9, touched off a rough week for cattle markets and producers. A Tyson processing facility near Holcomb, Kansas, suffered a fire which took roughly 5% of the nation’s processing capacity out of service. Steven Koontz of Colorado State University was prescient a week ago when he wrote, “The impact of this event on fed cattle markets will be substantial.
The collapse of the Goshen/Gering-Ft. Laramie canal in July resulted in the loss of irrigation water for 104,000 irrigated acres in Nebraska and Wyoming. A joint analysis by University of Nebraska-Lincoln and the University of Wyoming estimates the collapse could have an $89 million economic impact for the Nebraska and Wyoming economies. UNL extension economist, and Scotts Bluff County Farm Bureau member, Jessica Groskopf, contributed to the study.
“Protectionism is yet another example of government being the disease for which it pretends to be the cure.” George Will, Protectionism a poison, not cure. Lincoln Journal Star. 5.30.19.
The repeated lyrics, “crimson and clover, over and over,” from the Tommy James hit song came to mind when seeing another researcher has found property taxes on farms and ranches in Nebraska are significantly higher compared to other states. Agricultural economist, David Widmar, used several measures to examine the relative burden of property taxes on farms between states in a recent blog. Not surprisingly, he found farm property taxes in Nebraska continue to rank high . . . over and over.
Drive along a Nebraska highway or county road during the winter months and one will see cattle grazing on corn stalks. The integration of Nebraska’s two largest agricultural sectors, corn and beef, has been shown to provide economic value for both sectors according to an economic assessment by professors in the Agricultural Economics, Agronomy, and Animal Science Departments at the University of Nebraska.
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” Murray N. Rothbard.
To no one’s surprise, the Federal Reserve Open Markets Committee voted last week to lower the federal funds interest rate by a quarter-point. The target range for the rate is now 2.0-2.25 percent. The reduction was the first since 2008. The surprise, if any, was that the reduction wasn’t more.
And, the title for the largest beef exporting country in the world, envelope please, goes to: Brazil. U.S. exports of beef have been growing, up 15 percent in value in 2018, but Brazil last year provided close to 20 percent of total global beef exports according to the USDA Economic Research Service to lead the world. In comparison, the U.S. ranked fourth and represented 14 percent of the world’s exports. India and Australia rank second and third respectively.
Will Secor, a CoBank economist, projects operating margins for ethanol plants will remain weak for 2019. Sluggish ethanol demand, excess production capacity, and rising input cost will squeeze margins. As a result, Secor foresees some ethanol plants shutting down or idling production, most likely those with older technology or smaller plants located in areas with higher input costs.
“It’s worth mentioning, consumer debt, not counting mortgages, has climbed to $4 trillion, making it higher than its ever been even after adjusting for inflation. . . Consumers increasingly need it, companies increasingly can’t sell their goods without it, and the economy, which counts on consumer spending for more than two-thirds of GDP, would struggle without a plentiful supply of credit.” Kevin Van Trump, The Van Trump Report, August 5, 2019.
USDA Secretary Sonny Perdue last week announced the details and payment rates for the 2019 Market Facilitation Payments (MFP) program. The USDA calculated payment rates for each county based on the mix of eligible commodities grown in each county, the planted acreage of those commodities, and the impact of trade disruption on those commodities.
Tidbits last week discussed factors which will influence the transition of current agriculture to the long-term. This week Tidbits will explore a few trends, certainly not all, which will have a significant influence on the future of Nebraska agriculture.
Despite efforts to reduce coal consumption across the globe to slow climate change, the International Energy Agency reported global coal consumption is on the rise, up 1 percent in 2018. Coal is used primarily to produce electricity and while the U.S., EU, and other large economies are reducing their use of coal for electricity, developing countries are increasing their use of coal in electricity production.
“The market is in the business of putting the average business out of business.” Michael Gunderson, Purdue University Center for Food and Agriculture Business, Federal Reserve Bank of Kansas City 2019 Agricultural Symposium. July 17, 2019.
Agriculture’s future is generally considered to be positive. Yet currently the sector is mired in a price downturn with reduced incomes. How does agriculture transition from current conditions to the long-term? This question was the focus of the Federal Reserve Bank of Kansas City 2019 Agricultural Symposium.
Figures are starting to trickle in on federal assistance in response to this spring’s floods, blizzards, and severe weather. The Nebraska Farm Service Agency (FSA) last week released data on two federal programs which assists producers. The Emergency Conservation Program (ECP) helps farmers and ranchers repair damage to land caused by natural disasters.
The USDA reported Nebraska farmers have planted 37,000 acres of sunflowers this year, far behind North Dakota and South Dakota which had 436,000 and 571,000 acres respectively, but still enough to make Nebraska one of the top sunflower producing states in the country.
“. . . the majority of the world’s population now lives in countries where over-weight and obesity-related deaths exceed hunger related deaths.” Rosamond Naylor, Stanford University Center on Food Security and the Environment, paper presented at the Federal Reserve Bank of Kansas City 2019 Agricultural Symposium. July 17, 2019.
U.S exports of Nebraska commodities are not faring too well thus far in 2019. Nebraska’s top export commodities include soybeans, corn, beef, animal feeds (ddgs), pork, and hides & skins. Figure 1 compares U.S. export value of these commodities from January through May of this year to the same period last year.
The Census of Agriculture is conducted every five years by the USDA Agricultural Statistics Service with the most recent one being conducted in 2017. Nebraska has both strong crop and livestock sectors and it’s interesting to monitor the relative importance of the sectors across regions of the state using census data.