Tag Archives: farm
US Land Prices ‘Surge’ Despite Fall In Ag Profits
15 th Aug 2013, by Agrimoney.com Farmland prices in major US agricultural states defied weakening farm incomes to maintain strong gains – in some cases, accelerating – although many bankers feel they may now “have peaked”. Farmland prices in Plains states including Kansas, the top wheat-growing state, and Nebraska, a major corn and soybean producer “surged further” during the April-to-June quarter, the US central bank said. Prices of non-irrigated farms were 18.3% higher than a year before, with those of watered land soaring 25%, faster than the 21% growth recorded in the first three months of the year. “Despite expectations of weaker farm income, district farmland values continued to set records,” the Federal Reserve’s Kansas City bank said. The period “marks the ninth consecutive quarter in which irrigated cropland values have risen more than 20% year over year”, with lingering dryness in some area increasing the premium over land without access to water supplies. Weak income prospects The increase defied dents to farm income from weaker winter wheat yields and prices, and falling cattle values, “although an uptick in hog prices improved profitability for some hog producers”, the bank said. And prospects for farm takings remain “weak for the rest of the year throughout the district”, given weaker prices of corn and soybeans, harvested in the autumn. “Not only would lower crop prices reduce farm income, but persistent drought in parts of the district could limit yield potential, particularly in areas without irrigation,” the Fed said. “With lower expected prices and the possibility of a poor harvest,” lenders contacted for the Fed survey “expected farm income to be less than last year in each state in the district”, which also includes Colorado, Missouri, New Mexico and Wyoming. ‘Overall wealth’ However, it was a dearth of other investment opportunities, for farmers enriched by a strong period for farm incomes, rather than hopes for agricultural returns which was incentivising land purchases “Bankers indicated that expected farm income was not the main factor contributing to the value of farmland,” the Fed said. “Instead, bankers cited the overall wealth level of the farm sector, supported by several years of strong income, as the primary driver of farmland values. “Low interest rates and a lack of alternative investment options were also noted as significant factors.” Price forecasts Nonetheless, lenders expressed doubts as to how long this effect might last in the face of weakened revenue prospects. “While most bankers expected farmland values to remain at current levels, an increasing number of respondents felt farmland values may have peaked,” the fed said. “More bankers also expected farmland values to drop after harvest likely due, at least partially, to expectations of lower farm income,” although the decline was expected to be less than 10% over the next year. Weaker farm prosperity has already become evident in farm credit markets, with loan demand rising for the first time in three years, and repayment rates on borrowings weakening too, and expected to keep falling. The data follow a debate at an investor call by Deere & Co on Wednesday at which analysts persistently questioned forecasts by the tractor maker that cash farm receipts, a key indicator of machinery purchases, will fall only slightly in 2014, despite tumbling crop prices. Continue reading
Forestry And The Farm Bill
TUE JULY 23, 2013 Forestry and the Farm Bill By JULIA ALTEMUS As the U.S. House and Senate inched towards a Conference Committee on the farm bill last week, some believe the failure of Congress to pass a farm bill in 2012 (instead passing a nine-month extension), and the current stalemate, illustrates how impotent this policy has become. Some believed the extension was a gift to the taxpayer, who would have been stuck with paying for potentially exorbitantly expensive insurance, and price support subsidies, while others believed the extension eviscerated a score of important programs. With Congressional leaders, on both sides of the aisle, searching for inefficient, wasteful and outdated programs, at a time when federal budget deficits have simply become unsustainable; one thing is for sure, instead of addressing the urgent challenges our farm, food and wood fiber system faces, the farm bill has become a patchwork of programs that not only fails to support each other, but are often contradictory. Without a larger discussion about long-term goals for a system we want and can afford, this failure is no surprise. A potential solution being brought forward by House Agriculture Committee Chairman Frank Lucas (R-OK) is the replacement of permanent agricultural laws from 1938 and 1949 with the commodity title, which would allow the Supplemental Nutrition Assistance Program, better known as SNAP or food stamps, to continue as an appropriated entitlement rather than be formally reauthorized. It is still unclear when the House will agree to a conference committee and whether negotiators can produce a bill that could pass that chamber. Early indications are that the republican version of the bill will be unacceptable to nearly all democrats. Senate Agriculture Chairwoman Debbie Stabenow (D-MI) formally requested a conference on the farm bill last week, while she and other Senate leaders joined Administration officials in chastising the House for separating farm programs from SNAP. A group of republican House members began meeting last week to discuss the stand-alone nutrition title, and published reports indicated they were considering cuts in the neighborhood of $120 to $130 billion dollars over ten years, six times greater than the amount the original farm bill would have cut. If the Senate conferees demand a conference report that includes nutrition programs, it is unclear whether House conferees would report it back to the House, or whether it could even pass if they did. Unfortunately, many good programs funded by the farm bill are caught in the food stamp crossfire. Forest management, as well as forest research and forestry assistance, has long been within the jurisdictions of the Agriculture Committees. Although most forestry programs are permanently authorized, forestry has usually been addressed in the periodic farm bills. The 2008 farm bill contained a separate forestry title, with provisions establishing national priorities for forestry assistance. These provisions required statewide forest assessments and strategies; provided competitive funding for certain programs; created new programs for open space conservation and for emergency reforestation; and prohibited imports of illegally logged wood products. Forestry provisions were included in other titles as well—the conservation title revised the definition of conservation actions to include forestry activities for all conservation programs; the trade title required special reporting on softwood lumber imports; the energy title established two woody biomass energy programs; and the tax title included three provisions altering tax treatments for forests and landowners. These are all good provisions and are awaiting reauthorization. In addition, the 2013 House and Senate versions include several new and important forestry related provisions, with the majority originating in the House version. Provisions include codifying the Silvicultural Rule, repealing the Administrative Appeals Act, extending Stewardship Contracting, expanding forest health by including a 10,000 acre categorical exclusion for hazardous fuel reduction projects, expanding the Good Neighbor Authority, a categorical exclusion for salvage projects after a declared disaster, and a “know your customer” provision directing the U.S. Forest Service to analyze how the National Forests are meeting the needs of nearby wood consumers. The farm bill is reauthorized every five years. Assuming Congress will find a path forward and pass a bill this year, now is the time to address the many challenges facing our farm, food and wood fiber systems before the 2013 farm bill expires in 2018. We need a public policy agenda that supports a fair and sustainable system that builds resiliency and is able to withstand shocks in the market place, climate-induced events, and many other economic and environmental challenges. On behalf of the Montana Wood Products Association, I am Julia Altemus, thanks for listening. Continue reading
Farm Bill 2013: Is This Big Agriculture’s Last Gasp?
Sean McElwee in Politics Farm Bill 2013: Is This Big Agriculture’s Last Gasp? The farm bill’s original failure to pass Congress ( it has since been approved by the House without food-stamp aid ) has largely been viewed in light of immigration reform and congressional dysfunction, but it also underlies another specter: the weakening farm lobby. Since our nation’s founding, farmers (originally slave-owners) have had an unequal voice. The Senate, for instance, is made up of two representatives from every state, no matter how large or small. The Electoral College was designed to give small states a voice, and with the development of primaries, farm states like Iowa have become more and more important. Even Republicans, the so-called party against government waste, have traditionally been afraid to touch farm subsidies (just food stamps!). Since Reagan, the Republican Party has been the party of wealth. Reagan happily doled out tax cuts along with spending cuts, but suspiciously, the tax cuts only went to rich people and the spending cuts only hurt poor people. Similarly, Bush’s tax cuts for the rich turned a projected $5 trillion surplus to a $5 trillion deficit, which Republicans like Paul Ryan argue should be paid for by, you guessed it: cutting Medicaid. So here’s a quiz. If the farm bill contains huge subsidies for rich farmers (like Bon Jovi) and food stamps to protect poor people, which half will the Republicans cut? Answer: One of the most effective anti-poverty programs in history. Seriously. Now that I’m done trolling the PolicyMic conservatives, let’s address the real meat of the story here — the farm lobby. The failure of the farm bill indicates that the great hydra agriculture lobby may have only a few ugly heads left to rear. What’s the problem with the farm lobby? Don’t farmers need representation too? Don’t farm subsidies help keep the food market stable? Yes and yes. But, American farm policy may be one of the most incoherently developed and rigidly path-dependent systems in the world. P.J. O’Rourke once noted, “Farm policy can be explained. What it can’t be is believed.” Many of us don’t remember when farming was a killer lobby, able to fight off any representative who questioned the billions funnelled to them. In a supposedly “free-market” country, our ag policy is run like Russia during central planning. Huge tariffs protect the American sugar manufactures from Brazilian competition, to the tune of $3.5 billion a year. That also drives up the demand for high-fructose corn syrup, giving us something to do with the corn we massively overproduce . The big story for the farm bill is that the U.S. government is trimming direct payments and replacing them with an expanded crop insurance program. Crop insurance protects farmers from dramatic drops in the price of crops, but the premiums rarely add up to the payouts. Last year, the crop insurance program paid out $17 billion, three-quarters of which was paid for by Uncle Sam. As any economist knows, such programs (private gain with public risk) encourage moral hazard, and the result is that farmers have taken more risk “by farming on flood plains or steep hills.” The crop insurance program overwhelmingly helps wealthier farmers, but that fact that the lobby couldn’t keep direct payments indicates a level of atrophy. There are other indications of the weakening farm lobby. For instance, last year, the U.S. was hit by its worst drought in 50 years, which was likely exacerbated by climate change . Farmers’ groups sought a bill that would provide relief, but while the bill made it out of committee, it was never brought to a vote on the House floor . Of course, the grand narrative of the bill (i.e. that the Republicans in the House are insane) is also accurate. They’re clearly crazy-level congresso-terrorists, something data showed us long ago and that other conservatives have been hammering them for. The chaos surrounding the farm bill is certainly a reminder that this is the most polarized Congress in a long time , and a harbinger of more inaction (immigration, student loans, tax reform). But it’s also a reminder that while we consume more food, few, if any of us remain attached to nature and very few of us farm. It’s an indication that what used to be a broadly bipartisan issue has now become an area for savage political fighting . That will have increasing political implications in the years to come. Picture Credit: ThinkProgress Continue reading
