ASFMRA AgNews - Vol.13 Issue VIII [February 20, 2018]

By ASFMRA Press posted 02-20-2018 13:11


'Downward pressure': Farmland Rental Rates Flat or Down

If you ask a farmer, agricultural economist, ag banker or ag real estate agent about Upper Midwest farmland rental rates, the response probably will include two words: "Downward pressure."

By all accounts, poor crop prices and marginal farm profitability are pushing down what farmers will pay to rent farmland. As a result, most farmland rental rates negotiated this winter "are flat or going down" from what they had been, says Noah Hultgren, a Willmar, Minn., farmer and real estate agent.

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Congress Resolves Budget Impasse, Provides Disaster Payments, Changes Cotton/ Dairy Policy

The Senate and House passed a spending agreement, and President Trump signed the bill to avoid a government shutdown. The bill settles top line appropriation spending for FY 2018 and FY 2019. The agreement paves the way for the Appropriations Committees to write an omnibus appropriation bill for FY 2018 by the middle of March. The bill also includes supplemental disaster spending for 2017 disasters, extends certain tax provisions, for example, the biodiesel tax credit, and amends the 2014 farm bill to aid cotton and dairy growers.

The agreement lifts defense spending limits by $80 billion in FY 2018 and $85 billion in FY 2019. It also increases non-defense spending limits by $63 billion in FY 2018 and $68 billion in FY 2019. The spending limits were previously set by the 2011 Budget agreement. The bill also suspends the debt ceiling until March of 2019.

Supplemental disaster aid in the bill totals nearly $90 billion. Of that amount, $2.36 billion is provided for crop, trees, bushels and vine loss payments related to calendar year 2017 disasters to be administered by USDA via block grants to States. Farmers who purchased crop insurance or were enrolled in the Noninsured Crop Disaster Assistance Program (NAP) can receive assistance up to 85% of their loss, as determined by the Secretary. Producers who did not buy insurance or enroll in NAP can receive up to 65% of the loss, as determined by the Secretary. Payments to farmers come with a mandatory 2-year crop insurance purchase requirement. I anticipate it will take USDA sometime to roll out this disaster program as it will require new procedures/ rules to administer it.

Additional disaster provisions eliminate the $125,000-per-producer payment cap in the Livestock Indemnity Program (LIP), double the acreage eligible for Tree Assistance (TAP), and lift the $20 million annual cap on the emergency assistance for livestock, honey bees and farm-raised fish program.

Changes to the 2014 farm bill include making seed cotton eligible for PLC or ARC enrollment starting with the 2018 crop year. Seed cotton is defined in the bill as "un-ginned upland cotton that includes both lint and seed.’’ Cotton growers will have an opportunity for a one-time base update to convert generic base back into cotton base as well as an opportunity for operators to make the ARC vs. PLC election.

Starting with crop year 2019, cotton growers will not be eligible to purchase STAX on a farm enrolled in PLC or ARC. That means for crop year 2018 cotton growers can purchase STAX as well as enroll cotton base in ARC or PLC. Some sales closing dates for the 2018 crop year cotton have already passed and the major sales closing date for most cotton is the end of this month.

The bill also permanently eliminates the industry-wide cap on sales of all livestock insurance products. The removal of the cap was sought by dairy producers who wish to purchase additional dairy coverage. Other dairy provisions include lower rates for the Margin Protection Program (MPP) administered by the Farm Service Agency as well as changes to how the margin is calculated.

If you would like to see how your members of Congress voted, click on the respective links for the House and Senate below.

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President Trumps Releases FY 2019 Budget Request

Even though Congress has not yet completed the FY 2018 appropriations bills, President Trump released his FY 2019 budget request last week. Consistent with his FY 2018 budget request, this budget calls for significant cuts to agriculture programs. Specifically, the budget proposes to cut crop insurance premium assistance by 15 percentage points for policies with Harvest Price Option (HPO) coverage and 10 percentage points for those policies without HPO. The budget also proposes to means-test farm, conservation, and crop insurance programs with an Adjusted Gross Income (AGI) test of $500,000. Farmers with an AGI greater than $500,000 would receive no crop insurance premium assistance, nor would they be eligible for commodity or conservation program participation.

The budget also proposes to eliminate commodity certificates; eliminate the separate $125,000 payment limit for peanuts; make Marketing Assistance Loans (MALs) forfeitures subject to the $125,000 payment limit; limit all farms to one manager that can qualify as actively engaged; target enrollment in CRP to environmentally sensitive areas, limit the enrollment of whole farm fields and eliminate all funding for signing incentive payment (SIPs) and practice incentive payments ( PIPs), with the exception of the Conservation Reserve Enhancement Program; limit CRP annual rental payments to 80 percent of the average county rental rates as determined by National Agriculture Statistics Service (NASS); eliminate all funding for the Economic Adjustment Assistance Program (EAAP) for Upland Cotton Users; and eliminate all funding for the Livestock Forage Disaster Program (LFP).

The budget also proposes to make significant changes to the Supplemental Nutrition Assistance Program (SNAP), including to replace SNAP Electronic Benefit Transfer cards with a USDA Foods Box that contains 100- percent American grown products.

Like most Presidential budget requests, this one is largely dead on arrival as Congress will certainly not look to implement most, if any, of the President’s budget proposals. House Agriculture Committee Chairman Mike Conaway (R-TX) and Senate Agriculture Committee Chairman Pat Roberts (R-KS) issued the joint statement below after the budget was released:

"As Chairmen of the Agriculture Committees, the task at hand is to produce a Farm Bill for the benefit of our farmers, ranchers, consumers and other stakeholders. This budget, as with every other president’s budget before, will not prevent us from doing that job. We are committed to maintaining a strong safety net for agricultural producers during these times of low prices and uncertain markets and continuing to improve our nation’s nutrition programs." House Agriculture Committee Ranking Member Peterson (D-MN) issued the following statement regarding the budget:

"Contrary to the Administration’s infrastructure proposal, this budget will harm rural America and agriculture. While it’s safe to assume this proposal won’t pass Congress, the individual provisions represent a blueprint for lawmakers seeking to weaken or completely do away with the farm and food safety net, making the already difficult task of passing a farm bill that much harder. All of agriculture should stand together in opposition to this budget."
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Farm Production and Conservation Business Center

The President’s budget reflects the USDA reorganization of Undersecretaries and the creation of the Farm Production and Conservation (FPAC) Undersecretary who would oversee the Farm Service Agency (FSA), the Risk Management Agency (RMA), and the Natural Resource Conservation Service (NRCS). Within FPAC, USDA has consolidated certain business functions and created the FPAC Business Center. The FPAC Business Center will be responsible for financial management, budgeting, human resources, information technology, acquisitions/procurement, customer experience, internal controls, risk management, strategic and annual planning, and other mission-wide activities in support of the customers and employees of FSA, NRCS, and RMA.

The FPAC Business Center will be established in 2018 via a transfer of funding and personnel from FSA, RMA, and NRCS. Accordingly, the FY 2019 budget request proposes to reduce the direct appropriation for FSA, RMA, and NRCS and provide funding directly to the FPAC Business Center. For FY2019 the budget requests, $272.7 million for the Business Center and 1,750 staff years would be available for the Business Center. This includes, $131.5 million and 832 staff years from FSA, $17 million and 82 staff years from RMA, and $124.3 million and 836 staff years from NRCS.
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USDA Releases 10-Year Agricultural Projections- Focus on Corn, Soybeans

On Thursday, the U.S. Department of Agriculture released its 10-year projections for the food and agricultural sector. The report noted that, "Over the next several years, the agricultural sector continues to adjust to lower prices for most farm commodities. Planted acreage drops slightly despite continued low energy costs. However, marked shifts occur – most notably strong global demand for soybeans is expected to induce soybean plantings that exceed corn acreage. Lower feed costs and continued strong global demand provide economic incentives for expansion in the livestock sector.” Today’s update highlights aspects of the report that focused on corn and soybeans.


After establishing a set of macroeconomic and policy assumptions, USDA indicated that, "Demand for U.S. corn is projected to continue to grow over the next decade both domestically and internationally as expanding meat production increases feed usage. Despite planted area dropping as real prices and relative net returns fall, in part due to large stocks and rising global demand for soybeans and sorghum, increasing yields support the growing demand.”

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Commodity Price Slump is Ending, USDA Says

WASHINGTON, D.C.--When U.S. farmers bring their crops to market this year, they will see "the beginning of gradual price increases that are expected to continue through the decade," ending the slump that began in 2013, said USDA projections.

Prices for most crops will remain below their 10-year average, however, and to maximize returns, farmers will plant more soybeans, making it the No. 1 crop, while planting less corn and wheat.

"These projections are the first in history where soybean acreage is expected to eclipse corn acreage," said USDA in its 10-year projections of U.S. and world agriculture. USDA released a slimmed-down version of the baseline last November, which also projected soybeans to consistently outrun corn as the most widely planted U.S. crop through 2027. The projections were based on weather and market conditions last fall and will be updated at USDA's Ag Outlook Forum next Thursday and Friday.

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U.S. Bankers say Q4 Farmland Values Holding Steady -Kansas City Fed

CHICAGO, Feb 15 (Reuters) - The Federal Reserve Bank of Kansas City on Thursday issued its fourth-quarter 2017 report on the agricultural economy for the Tenth Federal Reserve District.

The district includes all or parts of Colorado, Kansas, Missouri, Nebraska, New Mexico, Oklahoma and Wyoming.
See the Report
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Thinking About Crop Insurance: Deadlines Approaching

USDA’s Risk Management Agency is reminding producers that now is the time to sign up for federal crop insurance. The sales closing dates for most spring-planted crops are Feb. 28 or March 15.

Sales closing dates vary by crop, state, and county. More information about deadlines are available in the RMA Actuarial Browser. To discuss dates and options, producers should contact their agent.

Federal crop insurance helps producers recover after severe weather and manage other business risks. RMA implemented a number of program improvements for the 2018 year. Coverage is available for nearly every commodity, including fruit, vegetable, and organic, with crop specific plans or the Whole-Farm Revenue Protection policy.

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Trump Budget: Slash Farm Programs by $47B in 10 Years

President Trump’s budget proposal is calling for cuts to the core agricultural programs. Over the next 10 years, Trump is proposing $1.8 trillion in cuts from mandatory spending programs.

At the USDA, the budget is requesting a 16 percent decrease from 2017 levels, cutting crop insurance and other farm programs by $47 billion over the next decade.

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Farm Groups Applaud Trump Infrastructure Proposal

On Monday, the Trump Administration released a $1.5 trillion dollar plan to rebuild and revitalize America’s infrastructure. The agriculture industry, which has long-voiced concerns over America’s roadways, waterways and railways, is pleased with the attention given to rural America in the proposal.

"President Trump’s ‘Building a Stronger America’ plan promises to bring long overdue improvements to the country roads, bridges and broader infrastructure that farmers and ranchers depend on to reach customers at home and abroad,” said Zippy Duval, president of the American Farm Bureau Federation. "While past infrastructure plans have left rural America in the dust, this administration has not forgotten the rural communities that form the backbone of our nation.”

According to Duval, the $50 billion allocated to rural America will "help restore our deteriorating infrastructure and protect U.S. agriculture’s place as a world leader in production.”

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Five-Year Decline in Farmland Sales Volume

The number of farms sold in 2017 declined for the fifth year in a row, according to data from Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit. The lenders report the number of sales in their service area declined by about 270, or 7.5%, compared to 2016. FCSAmerica serves Iowa, Nebraska, South Dakota and Wyoming. Frontier Farm Credit serves eastern Kansas.

The data, generated by the lenders’ appraisal teams, confirms recent surveys pointing to a continuing downturn in the number of farm properties on the market.

At 3,334 completed sales, 2017’s sales volume is the lowest since at least 2009—the extent of our historical data. This year’s total is down nearly 2,600 from the peak of 5,925 sales in 2012—a decline of 44%.

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Survey: U.S. Farmland Values Rise

The number of U.S. farmland sales and the value of U.S. ag land that was sold both rose last year, a new national survey finds.

But neither farmland values nor ag land sales rose much as overall land sales or land values, according to the annual survey released recently by the Realtors Land Institute and the National Association of Realtors.

The survey, which measured the 12-month period ending in September 2017, found that the value of all U.S. land rose 3 percent, led by a 5 percent increase in residential land.

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Appraisal Standards Board Public Meeting

The Appraisal Standards Board (ASB) will conduct a Public Meeting on April 20, 2018, in Las Vegas, NV, where input will be solicited on the Discussion Draft of Potential Areas of Change for the 2020-21 edition of Uniform Standards of Professional Appraisal Practice (USPAP). For the first time, the ASB will also be live streaming the meeting. All are encouraged to attend the meeting in person or watch remotely via live stream.

Register to Attend
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