ASFMRA AgNews - Vol. 13 Issues XXXII [August 7, 2018]

By ASFMRA Press posted 08-06-2018 19:03


U.S. Farmland Values Hit a Record Despite Trade Fears

While crop groups have sounded the alarm over U.S. trade wars, here’s one measure that shows part of the agricultural economy is still vibrant: U.S. farmland values just rose to a record.

Average farmland values nationwide have increased 1.9 percent to $3,140 an acre so far this year from 2017, according to a report released Thursday by the U.S. Department of Agriculture. The gain  signals that investors are focusing on farmland as a longer-term investment, and may consider the trade tensions to be short term.

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Senate Names Farm Bill Conferees

Last week the Senate named its farm bill conferees. There are nine and they will join the 47 House conferees to form the 2018 farm bill conference committee. Five of the nine are Republicans and four are Democrats. The Republicans, led by Senate Agriculture Committee Chairman Pat Roberts (R-KS) include Senators McConnell (R-KY), Boozman (R-AR), Hoeven (R-ND) and Ernst (R-IA). The Democrats, led by Senate Agriculture Committee Ranking Member Stabenow (D-MI) include Senators Leahy (D-VT), Brown (D-OH), and Heitkamp (D-ND). Basically, the 9 Senators are in order of seniority on the Senate Agriculture Committee with the exception of Senator Heitkamp. Senator Klobuchar (D-MN) gave up her seat on the conference for Senator Heitkamp because Heitkamp is in a tight re-election race against Congressman Cramer (R-ND). Representative Cramer was named as a farm bill conferee by the House, so the entire North Dakota delegation has been named to the farm bill conference.
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Net cash farm income forecast to be 38 percent lower

The U.S. Department of Agriculture-Economic Research Service reported that inflation-adjusted net cash farm income for the sector is forecast in 2018 to be 38 percent lower than its peak in 2012 and 7 percent below its 1970 to 2016 average.

In a feature in the July “Amber Waves” ERS reported that several factors are in play, including: a steep decline in agricultural commodity prices; a weaker market for farmland; and an uptick in interest rates.

Lower commodity prices in the near future could further reduce farm receipts, which could make it difficult for some farmers to meet loan obligations or pay for production expenses. Farmers with variable interest rate loans could face increasing loan service obligations. And those who largely invested in machinery or land when commodity prices and farm incomes were at their high points, could face plummeting liquidity or elevated risk of financial insolvency, the report continued.

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Leadership change at Allied Grape Growers

Nat DiBuduo is soft-spoken, with a heart for family and friends that’s larger than the industry he’s led for the past two decades.

Soft-spoken though he may be, when he talks, those in the wine grape industry and others in agriculture can’t stay away. In January each year, an international audience of over 10,000 people gathers at Sacramento, Calif., to hear his state of the wine grape industry address at the Unified Wine and Grape Symposium. Every July, he’s made much the same presentation to members of Allied Grape Growers at two California meetings — one in the Central Valley, another on the North Coast.

He makes similar presentations elsewhere, including at the annual meeting of the California chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA), on whose board he served from 2009-2015, including a year as board chairman.

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North Dakota Submits Appraisal Waiver Request to ASC

Last week the North Dakota Department of Financial Institutions and the North Dakota Bankers Association submitted an appraisal waiver request to the Appraisal Subcommittee. The request can be found here. The State is requesting to waive appraisal requirements (FRT only) for business or farm loans up to $1 million and residential real estate transactions up to $500,000. The ASC will now have to decide whether to initiate a hearing on the request.
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USDA Announces ARC/ PLC Sign-up for Cotton Growers

Last week USDA announced cotton growers can sign-up for the ARC and/ or PLC programs. Recall, the Bipartisan Budget Act of 2018, established seed cotton as a covered commodity for ALC and PLC. Farm owners with generic base acres and recent planting history of covered commodities have a one-time opportunity to allocate all of the generic base acres on their farm. Farms with generic base acres that were planted or approved as a prevented planted commodity during the 2009 through 2016 crop years, are eligible to allocate generic base acres. This includes upland cotton. There are several options on how to allocate generic base as well as a one-time opportunity to update yields. Read more here.
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Senate Passes FY 2019 Agriculture Appropriations Bill

Before taking a two-week district work period (recess), the Senate passed the FY 2019 Agriculture Appropriations bill as part of a “mini-bus” package by a vote of 92-6 last week. The FY 2019 bill provides $74.8 million for the Risk Management Agency Salaries and Expense (S&E) Account. It also funds the Farm Service Agency S&E at $1.5 billion. None of the FY 2019 appropriations bills has been completed and signed by the President to date. More than likely, Congress will pass a continuing resolution (CR) before the end of September, when the Federal fiscal year ends, to keep the government from shutting down.
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Health Care Costs Linked To Ability To Repay Farm Loans

While the value of the U.S. dollar has gained strength, higher interest rates have increased farmers’ debt obligations on new loans despite stabilizing credit conditions. Meanwhile, supply outpaces demand across all sectors of agriculture, causing lower commodity prices and restricting cash flow. Liquidity has deteriorated while cost of living expenses move upward.

Health insurance is just one of the major expenses farmers are having to reevaluate. At the American Society of Farm Managers and Rural Appraisers workshop in Des Moines, Iowa, agricultural economist Cortney Cowley explained just how much of an impact higher health insurance expenses have on a farm family’s total cost of living.

“In line with some of the struggles farms have had with the farm business side, more recently there has been an uptick in household spending,” says Cowley, who works for the Omaha Branch of the Kansas City Federal Reserve. “Farm household health insurance expenses have doubled since 2001. In relatively a short period of time, health insurance costs, health care costs in general and childcare cost have increased.”

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Mexican Officials Optimistic About NAFTA News in coming Days

GENEVA/MEXICO CITY, July 31 (Reuters) - Mexican negotiators are optimistic about the possibility of getting a NAFTA deal and are hopeful of progress in coming days, the country’s deputy economy minister said ahead of a second ministerial meeting in Washington later this week.

“You are going to see hopefully news coming out of Washington in the next few days. There is optimism,” Juan Carlos Baker, deputy economy minister and member of the NAFTA negotiating team, said on Tuesday.

“I would say that we realized there might be conditions for getting a NAFTA deal,” he said in Geneva, where he met other trade allies to discuss possible responses to U.S. President Donald Trump’s threats to unilaterally impose tariffs on car imports.

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Over Half of U.S. Farms Lose Money, USDA Study Shows

U.S. farmers who are losing money are not alone, according to data collected by the USDA released Wednesday.

The study analyzed data from 2015. Over half of U.S. farm households report losses from their farm businesses each year, the USDA’s Economic Research Service reported in a press release.

There is a caveat. Because net farm income isn’t the total contributor to the financial well-being of farm families, tax-loss benefits and asset appreciation push the share of households with positive annual farm returns rises from 43% to 70%, according to the release.

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BASF Seals The Deal On Bayer Assets

On Wednesday, BASF closed its acquisition of assets from Bayer, thus adding seeds, additional herbicides and nematicide seed treatments to the company’s portfolio. The company says the products are a strategic complement to its own competencies.

To “reflect the expanded scope of its agriculture business,” BASF renamed its crop protection division Agricultural Solutions. It also established a new global business unit for seeds and traits.

BASF originally signed agreements to buy Bayer’s assets in October 2017 and April 2018. The all-cash purchase price was 7.6 billion euros. The company will gain about 4,500 employees plus Bayer’s global glufosinate-ammonium business; seeds businesses including traits, research and breeding capabilities and trademarks for key row crops in select markets. BASF also gets the Bayer vegetable seeds business; the research and development platform for hybrid wheat; seed treatment products; certain glyphosate herbicides in Europe; the digital farming platform xarvio; and non-selective herbicide and nematicide research projects. All transactions, with the exception of the vegetable seeds business that is expected to close in mid-August, are now complete.

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