Welcome to Agriculture Economic Tidbits, a new weekly e-newsletter for farmer and rancher members of Nebraska Farm Bureau Federation. The 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.
Agriculture Economic Tidbits will be emailed each Monday. As a Farm Bureau member, you will receive a copy for the next three weeks. If you like what you see, and want to continue receiving Agriculture Economic Tidbits, simply click here:
And if you have any questions or comments on Agriculture Economic Tidbits, please email Jay Rempe.
No doubt expletives have been voiced by folks involved in Nebraska agriculture regarding this year’s weather. Weather is a constant influence on production agriculture, but this year is one for the record books. Farmers’ struggles in getting crops planted have been well documented. Last week’s NASS crop progress report (as of May 26) indicated 81 percent of the state’s corn acres and 56 percent of the state’s soybean acres were planted.
For the first time in 20 years, property taxes levied on agricultural land statewide declined year-to-year. Taxes levied in 2018, $1.183 billion, were 1.5 percent or $17.5 million less than that levied in 2017. The decline marks the first time since 1998 that taxes on agricultural land have declined and only the fourth time over the past 38 years (1986, 1987, 1990, & 1998).
President Trump has been quoted as stating the federal government is collecting “hundreds of billions of dollars” in tariff revenue. The website Shopify defines a tariff as “a tax imposed by a government on goods and services imported from other countries to increase the price and make imports less desirable . . .” Tariffs are imposed by the federal government and the tax revenues flow to the federal treasury.
“We should never lose sight of the fact that the job of the market is to disseminate the information at hand and attempt to come up with a price that reflects what happens on a global scale.” Dan Hueber, thehueberreport, May 31, 2019.
Monday’s crop progress reports showed 70 percent of Nebraska’s estimated corn acres and 40 percent of the estimated soybean acres were planted as of May 20. In comparison, the 5-year planting progress averages are 86 percent for corn and 54 percent for soybeans. In March the USDA estimated 9.7 million acres of corn would be planted and 5.4 million acres of soybeans in Nebraska.
In Nebraska, for crop insurance purposes, the final planting date for corn in all counties is May 25 and the final planting date for soybeans is June 10. Farmers may be eligible for a prevented planting payment if acres have not been planted due to an insured cause of loss by the final planting date. Prevented planting will provide coverage equal to 55 percent of the original production guarantee in the crop insurance policy.
A recent Agricultural Economic Insights blog highlighted the impacts of delayed planting on national average yields. The article noted that there were only four years since 1980 in which the corn planting progress nationally was less than the progress made this year at a similar time in the planting season (week of May 13).
U.S. gross domestic product (GDP) grew 3.2 percent in the first quarter, higher than most economists expected. The growth marks 38 consecutive quarters of growth. Bob Young, President of Agricultural Prospects and former economist with American Farm Bureau, likens the recent GDP report to knowing what your blood pressure was this morning, “it provides no real information as to how your spouse’s actions will affect those numbers tomorrow.” Peeking underneath the surface in the recent report, Young worries “there’s a dark cast to these seemingly bright numbers.”
The 2017 Census of Agriculture provides another reminder of Nebraska’s high property tax on agricultural property. Figure 1 shows the average property taxes paid per farm as reported in the census. Nebraska ranks second nationally in taxes paid per farm, only behind California. Average property taxes paid per Nebraska farm and ranch operation was $16,107 in 2017.
Domestic production increases and foreign demand drove U.S. beef and pork exports higher in 2018 according to the USDA Economic Research Service. Beef exports increased 10.3 percent last year, the third consecutive year of increases. The growth was driven most notably by increases in exports to South Korea, 35 percent larger than that shipped in 2017.
“Despite a voluminous and often fervent literature on "income distribution," the cold fact is that most income is not distributed: It is earned.” Thomas Sowell
Agricultural exports in 2017 were worth more than $130 million for Cuming, Platte, Holt, Custer, and Dawson counties, the top Nebraska counties in terms of export value. This and other findings are part of a Nebraska Farm Bureau report on the value of agricultural exports to the state’s agricultural producers and counties. This year marks the second iteration of the report and includes comparisons of export data from 2016 and 2017. Commodities included in the analysis were corn, soybeans, soybean meal, beef, hides and skins, pork, wheat, ethanol and distillers’ grains.
Farms in Nebraska in 2017 numbered 46,332, down from 49,969 in 2012 according to the USDA Census of Agriculture. The USDA counts any farm which sells agricultural products of $1,000 or more as a farm. The number of farms in 2017 was the lowest reported over the past 20 years, with the only upswing occurring in 2012. Changes in the number of farms between each census are watched closely, while changes in producers often gets overlooked.
“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.
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.
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.