ASFMRA AgNews - Vol. 13 Issue XXXI [July 31, 2018]

By ASFMRA Press posted 17 days ago

  

Farmers' Working Capital Drops to 10-Year Low

The financial condition of the U.S. farm sector continues to deteriorate.

The extent of the deterioration is perhaps best seen in the level of working capital which has fallen sharply since 2012. This decline does not bode well for the financial condition of many U.S. farmers.

The amount of working capital (current assets minus current liabilities) in the U.S. farm sector provides an indication of the liquidity of the sector. Working capital provides a financial cushion for farmers.

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Administration Earmarks Up to $12 Billion for Agriculture to Offset Trade War

WASHINGTON - Two days before President Trump is to face farmers in Iowa, the administration announced on Tuesday it would spend up to $12 billion, with the largest share going to row crop
and livestock producers, to offset the impact of the tit-for-tat tariff war facing U.S. exports.

“This is only a short-term solution,” said Agriculture Secretary Sonny Perdue, and is intended to give Trump time to rebalance trade rules worldwide. It also is “a firm statement the United States won’t cave in” to other nations, he added.

The administration announced the package weeks earlier than initially planned. During a briefing, USDA officials said details would be released in the next couple of weeks. Sign up for payments probably will begin around Labor Day. “To run this program, we need producers to harvest their crops,” said USDA farm program official Brad Karmen, because payments will be based on this year’s crops. Payment rates are yet to be set.

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USDA Funding May Get Caught Up in Wall Funding Battle

House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell met with President Donald Trump at the White House Wednesday to discuss how to avoid a politically damaging government shutdown on Oct. 1, a month before elections that will determine control of Congress.

Ryan said before the meeting the leaders planned to discuss Trump’s request for funding for a wall on the U.S.-Mexico border, which Democrats vigorously oppose. Ryan, in an interview on the Fox News program “Fox & Friends,” said he’d talk with Trump about “how to get this appropriation process back on track” so that Congress passes smaller packages of spending bills.

Trump over the past year has called for a “good” government shutdown to achieve up to $25 billion in border wall funding. He also has vowed never again to sign a 12-part omnibus spending bill like the $1.3 trillion law the White House and Congress negotiated earlier this year to fund the government through September.

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Cotton Consumption on Pace to Set All-Time World Record

There is “a really big increase” in overall cotton demand globally, and if projections for the new marketing year hold, it will be the most cotton that has ever been consumed worldwide, says Hank Reichle, executive vice president of the Staplcotn cooperative at Greenwood, Miss.

“We’re finally climbing above the demand levels we had before the recession and $2 cotton,” he said at the joint annual meeting of the Mississippi Boll Weevil Management Corporation and the Mississippi Farm Bureau Federation Cotton Policy Committee. “Certainly, a highlight of this year is the fast rebound we’re seeing in cotton consumption.”

Reichle, who had extensive experience in exports and marketing with Staplcotn before assuming his present role, says, “We’ve got good numbers this year in terms of supporting cotton price. Ending stocks are set to go down from 85 million at the beginning of the current marketing year to 77.8 million a year from now, July 31, 2019. This is happening because consumption is on the rise.

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Study: Most Landlords Don't Own Oil and Gas Rights

From 2005 to 2014, high energy prices and innovation in extraction methods spurred annual United States production of oil and gas to grow by 69 percent, with almost 67 percent of the production occurring on farmland in 2014. The growth generated tens of billions of dollars in additional revenue for owners of oil and gas rights and increased the value of the rights.

Ownership of oil and gas rights affects the ability of farm operators and landlords to benefit financially from development and to shape development terms. Yet oil and gas development’s effect on farm-sector finances as a whole is poorly understood.

In a new report, U.S. Department of Agriculture Economic Research Service economists Claudia Hitaj, Jeremy Weber and Ken Erickson quantify the farm sector’s oil and gas wealth and income, including the extent that farm operators and landlords own the rights to the oil and gas beneath their land, the value of the rights and the timing and prevalence of leasing with energy firms. Since oil and gas production is expected to grow by 23 percent from 2016 to 2025, the effect of such income could be significant.

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'Big Four' Goal is Farm Bill as Quickly as Possible

The Republican chairmen and senior Democrats on the Senate and House Agriculture Committees, known collectively as the “Big Four,” met on Thursday and agreed “to get a farm bill finished as quickly as possible.” Senate Agriculture Chairman Pat Roberts brushed aside a broadcaster’s question about whether the Senate would prevail over the House on the issue of work requirements for SNAP.

“I wouldn’t say it’s going to look either way,” Roberts said on the AgriTalk program. “We’re going to work that out. … We have to do that.” The major issue for negotiators is the House proposal to require an estimated 7 million “work-capable” adults ages 18 to 59 to work at least 20 hours a week or spend equivalent time in job training or workfare to qualify for food stamps. The Senate farm bill focuses on SNAP integrity but does not change eligibility rules.

“We look forward to working together to get a farm bill finished as quickly as possible, and we’re committed to finding solutions to resolve the differences,” said Roberts, House Chairman Michael Conaway, Senator Debbie Stabenow, and Representative Collin Peterson in a joint statement. “We must keep working to provide American farmers and families with the certainty and predictability they need and deserve.”

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President Trump Asks Farmers For Their Patience

Peosta, Iowa, population 1,500, got its moment of fame today when President Trump stopped by for a visit. He brought along an entourage that included his daughter, Ivanka, plus his secretaries of commerce and labor, and several state-level officials from Iowa.

In a roundtable format at Northeast Iowa Community College (NEICC), the president spoke for 30 minutes to a friendly audience of about 200 Republican supporters. The purpose was partly to campaign for Congressman Rod Blum and also to draw attention to a new workforce development jobs bill that is working its way through Congress.

Championed largely by Ivanka Trump, it will provide training funds for technical jobs such as welding, building, computer science, and other in-demand jobs. The training will take place at community colleges, such as NEICC, across the country.

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Farm Bill Should Promote Stewardship of Natural Resources

What do monarch butterflies, energy efficiency subsidies in agricultural production and the Supplemental Nutrition Assistance Program (SNAP) dollars have in common?

Conservation and energy cost-savings programs, and social services such as SNAP, are all components of the federal farm bill, legislation which is reviewed and updated by Congress every five years. The 2018 farm bill has been getting a lot of press this spring and summer — and for good reason. Its reach encompasses so much more than farm subsidies.

Important programs included in previous versions of the farm bill ranged from measures that incentivized conservation practices on working farms to programs which supported energy efficiency in agricultural production. Local farmers markets were allocated tens of millions of dollars to advance local and regional “farm to table” systems. The final form of the 2018 farm bill, with investments of more than $950 billion, will have serious implications for all Missourians, farmers and non-farmers alike.

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CoBank report: Steadily Rising Interest Rates Add Stress to Rural Economy

As if farmers and the rural economy needed more economic stress — a recent analysis finds that steadily rising interest rates are creating more financial burdens among farmers and their communities. Federal Reserve Chairman Jerome Powell told lawmakers last week that the Fed’s policy, as expected, is one that will continue to raise interest rates.

Following years of historically low interest rates and “quantitative easing” programs, which
funneled money into the monetary system, the Federal Reserve began bumping interest rates upward in 2015. As the Fed continues on a new path of monetary tightening and rising interest rates, the cost of borrowing money will be added to the expense side of the ledger in rural America.

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Heat Wave Taking Toll on California Crops

A seemingly endless string of triple-digit afternoons in California’s inland valleys is beginning to take its toll on crops as growers try to minimize the damage.

Robert Mills, who grows peaches, apricots and other fruit in the northern Sacramento Valley, says the hot afternoons are only the latest headache after a winter freeze damaged some of his early-ripening fruit.

“The heat is definitely not helping,” says Mills, owner of R and K Orchards in Corning. He adds that humidity levels are increasing brown rot pressures. He’s also encountering excessive bird damage of fruit, which he says may be a result of the weather’s impact on food sources.

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IRS Final Rule Cites the Uniform Standards of Professional Appraisal Practice

For Immediate Release

July 30, 2018

Washington, DC– The Internal Revenue Service (IRS) has issued a new rule which governs how cash and noncash charitable contributions should be valued. The new rule specifically cites the Uniform Standards of Professional Appraisal Practice (USPAP) of The Appraisal Foundation.

Effective today, the new rule, entitled Substantiation and Reporting Requirements for Cash and Noncash Charitable Contribution Deductions, draws specific parameters around the term qualified appraisal. As stated in Section III (B) of the rule, appraisals are to be performed by a qualified appraiser according to the “substance and principles of the Uniform Standards of Professional Appraisal Practice [USPAP] as developed by the Appraisal Standards Board of the Appraisal Foundation.” This clarification pertains to charitable contributions of all property types. 

The Appraisal Foundation’s Appraisal Standards Board (ASB) is responsible for the development and promotion of USPAP, which are the generally accepted ethical and performance standards for the appraisal profession in the United States. Since being recognized by the US Congress in 1989 for real property valuation, USPAP has been widely embraced in numerous landmark court cases in all disciplines of valuation. 

 

President of The Appraisal Foundation David S. Bunton stated, “For the past three decades USPAP has become deeply embedded in our legal and regulatory system. This action by the IRS only underscores its importance and relevance to all valuation issues.”

 

Consumers wishing to make charitable contributions of property for tax deduction purposes will want to ensure that property appraisals for items worth $5,000 or more are performed by a qualified professional in accordance with USPAP. To learn more about USPAP, The Appraisal Foundation or for help finding an appraiser, visit www.appraisalfoundation.org

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