Weekly AgNews – June 6, 2017

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Trump Budget Guts Crop Insurance, Includes Other Significant Cuts to USDA Programs

In total President Trump’s FY 2018 budget request cuts mandatory USDA programs by $240 billion over 10 years (27.5% cut). The largest proposed cut is to the Nutrition Title at $193.287 billion over 10 years, or 28.7 percent. This includes reforms to the Supplemental Nutrition Assistance Program ($190.932 billion) and a new retailer user fees ($2.355 billion).

The President’s budget also proposes to cut the crop insurance program significantly. The budget proposes: 1) eliminating premium subsidy for harvest price option (HPO). The budget suggests farmers could continue to buy HPO without subsidy but no Administrative & Operating payment would be provided on the HPO portion – essentially HPO would become a private product. 2) the budget proposes capping premium subsidy at $40,000 per individual or entity and 3) establishing an Adjusted Gross Income (AGI) test at $500,000. Producers with income greater than $500,000 would receive no premium assistance. The three proposals combine for a total 10 year cut of $28.562 billion, roughly a 36% cut, according to the budget. Essentially, these proposals if enacted would render crop insurance ineffective for most farmers. Thankfully, there is little support among House and Senate Agriculture Committee members for these proposals.

Also proposed in the budget is lowering the AGI test for commodity and conservation programs to $500,000 from the current $900,000 level. Conservation programs are also targeted with a proposal to allow no new enrollments in the Conservation Stewardship Program (CSP), no new general sign-ups for the Conservation Reserve Program (CRP), the elimination of the Regional Conservation Partnership Program (RCPP) and cuts to technical assistance provided by the Natural Resource Conservation Service.

House Appropriators Question Secretary Perdue about the Budget Proposal

Following the release of the budget, Secretary Perdue testified before the House appropriations committee about the budget. In the hearing Subcommittee Chairman Robert Aderholt (R-AL), and Congressmen Yoder (R-KS), Palazzo (R-MS) and Young (R-IA) all raised the importance of crop insurance and concerns with the President’s budget proposal to cut crop insurance.

In response to those questions about crop insurance, Secretary Perdue did not directly defend the proposals. He stated that he agrees that crop insurance is important and that these types of policy decisions will ultimately be made by Congress during a farm bill. He was also questioned directly by Representative DeLauro (D-CT) regarding the proposal to cut the Supplemental Nutrition Assistance Program and again did not directly defend the Administration’s proposals.

RMA Issues Bulletin Providing Some Relief for Conservation Compliance Date

The Risk Management Agency (RMA) issued a bulletin in late May, 2017 providing relief to farmers who filed a “began farming after June 1” exception for the 2016 reinsurance year and did not file an AD-1026 by June 1 of 2016. In the bulletin RMA states that it has become aware of many policyholders who qualified and certified for the exception for the 2016 reinsurance year but may not have filed form AD-1026 with FSA on or before June 1, 2016, to maintain premium subsidy eligibility for the 2017 reinsurance year. Currently these farmers are considered out of compliance for 2017. With the issuance of the bulletin, RMA will now consider policyholders receiving an exception for the 2016 reinsurance year to have a certification of conservation compliance on file for the 2017 reinsurance year assuming they filed an AD-1026 with FSA at some point prior to June 1, 2017. 

Read the Bulletin

FSA County Committee Nominations Start June 15, 2017

The U.S. Department of Agriculture announced that the nomination period for local Farm Service Agency (FSA) county committees begins on Thursday, June 15, 2017. Farmers and ranchers may nominate themselves or others. Organizations, including those representing beginning, women and minority producers, may also nominate candidates to better serve their communities. To be eligible to serve on an FSA county committee, a person must participate or cooperate in an agency administered program, and reside in the local administrative area where the election is being held.

After the nomination period, candidates will encourage the eligible producers in their local administrative area to vote. FSA will mail election ballots to eligible voters beginning Nov. 6, 2017. Ballots will be due back to the local county office either via mail or in person by Dec. 4, 2017. Newly-elected committee members and alternates will take office on Jan. 1, 2018.

To become a candidate, an eligible individual must sign an FSA-669A nomination form.

Nomination Form and More Information

Estimating Current and Future Land Values in Kansas

The topic of current and future land values has become a topic of discussion amongst farmers, ranchers, lenders and other types of investors. As Extension begins to get questions on what land is worth right now, as well as predictions for land values in the future, the data presented in this article could be helpful in navigating a struggling farm economy. As in previous articles that have been published, Mykel Taylor, K-State Research and Extension economist, will be referenced for her work and what she has done to prepare Extension professionals to better answer these tough questions. Will it be another repeat of the 1980s farm crisis? How will the economy respond? How quick will land values fall and how long will it take for them to rise again? What data should farmers and ranchers be paying attention to in order to stay ahead of the trough times that they are currently withstanding and appear to be facing for the next few years?

Let’s start out with a bit of a background on where we have been in the past for farmland. The data presented first is taken from Kansas Farm Management Association. From around 1999 to 2007, farmers were barely breaking even on wheat, corn, beans and milo. In 2008 commodity prices started to improve and continued with that trend until 2013. Profitability then took a downward turn in 2014 and 2015 where farmers went from approximately $50 an acre of profitability to a loss of approximately $50 an acre. When analyzing 2016, farmers had great yields but not great commodity prices. However, the positive that came from the year 2016 was that yields were able to help stabilize the downturn in commodity prices. One topic of concern for the upcoming years is having decreased yields along with lower commodity prices.

When looking at the whole farm and net income per operator, 2015 shows a net farm income of $4,500 for dryland crop farmers. This is a drastic decrease in net farm income when compared to a profitability of approximately $90,000 in 2014. When looking at cattle operations’ difference in net ranch income, 2014 was a record high of a little over $180,000 in profitability. In 2015, that profitability declined to approximately $75,000 in net ranch income, which is a 41 percent decline. The year 2016 will probably be even lower profitability yet for both the crop and cattle farmers.

More on Kansas Land Values

White House Push for Tolls Alarms Waterway Users

WASHINGTON, June 1, 2017 – Agricultural shippers and other waterway users are struggling to talk the Trump administration out of using river tolls to pay for rebuilding locks and dams under its infrastructure initiative.

Representatives of the Waterways Council Inc., which represents shippers and waterway operators, have met twice with administration officials, first in December and then in May to push an industry proposal to fund 24 projects at a cost of $8.7 billion over 10 years.

The projects include the reconstruction of seven locks and dams on the upper Mississippi and Illinois rivers at a cost of $2.8 billion. Congress authorized the projects, collectively known as the Navigation and Ecosystem Sustainability Program (NESP), but they have never been funded.

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U.S. Corn, Soy Conditions in Focus with TR Crop Watch

Every year, agriculture market-watchers wrestle with yield potential for the U.S. corn and soybean crops. The true conditions and the effects of weather keep the market guessing all season long.

To provide more clarity, Thomson Reuters has teamed up with three Midwestern farmers to provide weekly updates on their corn and soybean fields from now through harvest. One farmer is in Minnesota and the other two are in Illinois.

Illinois is the leading U.S. soybean producer and the No. 2 corn grower, and Minnesota is No. 3 in soybeans and No. 4 in corn.

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Brazil Political Turmoil Affects U.S. Soybean Market

U.S. soybean farmers may experience some fallout from Brazil’s unsettled political issues.

Mark Welch, associate professor and Extension economist, grain marketing, at Texas A&M, College Station, reports in his weekly Feed Grain Outlook that officials in Brazil are calling for the resignation of President Michel Temer. Temer was appointed to his position following the impeachment last year of President Dilma Rousseff.

Now, Temer faces his own potential ouster amid accusations of bribery and obstruction of justice.

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There Won’t Be as Many Peaches This Year

ATLANTA (AP) — Georgia’s peach crop is suffering much worse than expected.

Agriculture Commissioner Gary Black told The Atlanta Journal-Constitution on Tuesday that nearly 80 percent of that state’s peach crop has been wiped out this year. He says an overly warm winter and hard freeze in the early spring caused the loss in crops.

Black says the lack of peaches could lead to a shorter season because farmers will not spend the money to ship their products out of the state. Initially, some peach growers in Georgia expected to salvage about 70 percent of the crop.

The newspaper reports that the peach and blueberry crop could mean a $300 million hit to state farmers.

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Court Rules Against FAA UAV Registry

With more and more drones taking to the sky, the tussle continues over how best to regulate the machines and the Federal Aviation Agency’s (FAA) role in doing so. Adding to the confusion: a fresh ruling from the U.S. Court of Appeals for the D.C. Circuit saying the FAA may not require a UAV (unmanned aerial vehicle) registry.

In a statement, the National Agricultural Aviation Association (NAAA), says “agricultural aviators are deeply concerned about their ability to fly safely in air space where pilots could encounter any unmanned aircraft, be it commercial or otherwise. A valuable component of the FAA’s drone registration program is the opportunity to educate the general population about the hazards of careless drone operations, and we believe that the FAA’s drone registration program serves to protect everyone in the air and on land.”

What are aerial applicators’ options now?

More on the Ruling

Data as Agriculture’s New Currency: Advancing to the Next Level

Government and private economists around the globe keep close tabs on estimates for the yields of internationally-traded crops such as corn, oats, soybean, rice and wheat. The US Department of Agriculture, for example, publishes monthly reports and forecasts that keep the markets up-to-date on the progress of these commodities throughout the season.

As with all commodities, prices rise and fall with the global level of supply and demand. That makes accurate and timely information about crop supplies extremely valuable.

When it comes to agricultural commodities, forecasting supply levels is a bit trickier than it is with commonly traded energy commodities like crude oil or precious and industrial metals. Tapping into proven oil reserves or extracting copper and silver from a mine is more straightforward than planting, growing and harvesting something that’s living. Weather conditions, disease outbreaks, insect infestations and farming techniques all have an impact on plant yield.

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