U.S., China to Resume Trade Talks in Washington Amid Low Expectations
WASHINGTON, Aug 22 (Reuters) - U.S. and Chinese officials are set to resume contentious trade talks on Wednesday under the cloud of a prediction by U.S. President Donald Trump that there would be no real progress.
The discussions among mid-level officials could set a framework for further negotiations as each country prepares to hit the other with new tariffs on Thursday in a deepening dispute over China's economic policies.
Trump has threatened to impose duties on virtually all of the more than $500 billion of Chinese goods exported to the United States unless it meets his demands.
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USDA Prepares to Unveil Massive Trade Aid Package
The USDA appears to be on track to unveil on Friday details of a $12 billion assistance plan for farmers hurt by the international blowback from President Donald Trump’s trade battles with China, Mexico, the European Union, Turkey, and elsewhere.
The USDA is keeping implementation details for the program close to the vest, but Agri-Pulse has learned that the payment rate for soybean farmers has been preliminarily proposed at $1.65 per bushel and 1¢ per bushel for corn farmers, according to officials close to the decision-making process. Those officials stressed that these numbers could change under the White House Office of Management and Budget, where the package is currently being reviewed, so they may not reflect the final proposal. USDA would not confirm or deny these proposed payment rates.
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Steve Cubbage: Reduce Adoption Risks to Increase Technology
You might have heard this famous quote from John F. Kennedy: “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.”
The world has changed a lot since he said those words in 1960, but the inherit problem still plagues agriculture. We’ve put a man on the moon, but we still haven’t figured out how to put more profit into farmers’ pockets. In some ways it’s gotten worse.
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Landmark Vintage Expected as Wine Grape Harvest Begins
Harvest of wine grapes is under way in California’s prime growing region of Napa and Sonoma counties, and one organization says a “picture perfect growing season” has vintners optimistic about this year’s vintage.
Industry leaders and workers in the Napa Valley met in various vineyards recently for their traditional blessing of the grapes, kicking off a season of picking that is expected to last into October.
“It’s an exciting time of year,” says Viticulturist Patrick Riggs of Domaine Chandon, Youngville, Calif., in a Napa Valley Grapegrowers news release. “We’re expecting fantastic fruit character expression from these grapes being harvested.”
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Land Values and Cash Rents are Higher in 2018
The release of the Department of Agriculture's Land Value Survey earlier this month held relatively few surprises at the headline level. The total value of agricultural land, including buildings, was $2.7 trillion in 2018, up $59 billion, or 2 percent, from prior-year levels. Overall, average agricultural land values increased an average of 1.9 percent, up $60 per acre to $3,140 per acre. With the 2017 inflation rate running 2.1 percent, this would suggest the real price of agricultural land was unchanged for the year.
With agricultural land values rising in 2018, an increase in cash rents was not unanticipated. The national average rate moved from $136 per acre in 2017 to $138 per acre in 2018, again about the same rate as inflation. This was essentially the same rental rate as observed in 2013. While rates did bump up to a high of $144 per acre in 2015, land rent has been fairly static around this $135-to-$140-per-acre rate for the last six years. Figure 1 highlights U.S. average cash rents for cropland in 2018.
Taking the numbers apart, it is little surprise that California came in with the highest average rent – $340 per acre averaged across all land and $528 per acre for irrigated land. Corn Belt states – Nebraska, Iowa, Illinois and Indiana – all came in with rental rates near or above $200 per acre. These rates were up over the previous year's values, even with corn and soybean prices facing significant downside pressure over the last several months.
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Are Higher Land Values Positive or Negative?
Average farmland values increased 1.9% (so far in 2018) to $3,140 an acre, according to the most recent USDA Land Value Summary report. Recently, John Deere indicated an upbeat forecast for sales in the year ahead, citing the need for farmers to replenish older and worn equipment. Yet, most producers don’t feel their equipment is worth more, as they struggle to make a living due to subpar prices for the commodities they produce. Most are proud of the work they’ve done to create outstanding crops, yet in the end, large crops contribute to big supply and low prices. Over the last several years, price rallies for row crops have been slow in coming, and just when it looks like prices may take off, they get clobbered. Timely weather is usually the reason. This year, row crops experienced a triple whammy at the end of May, as managed money quickly moved out of long (buy) positions, weather for crop growth was near ideal, and untimely tariff news created a bearish environment.
Are land values overpriced and likely to collapse? It’s possible and not likely. Farmland values have held up well due to high-yielding crops. One good price rally, and all thoughts of overvalued land go out the window. Another reason land values have held up so well is that there’s a percentage of farmers who’ve managed their risk (and money) well. They’ve done a good job of producing crops and marketing through forward sales and hedging. While cash flow is not necessarily great for any producer these days, those farmers that have done well are prepared to bid aggressively when land close to home becomes available. They are the buyers of land.
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Varied Interests Protest California Plan That Strips Water Rights, Idles Farmlands
About 1,000 farmers, public school educators, farm employees and consumers from Tulare to Red Bluff descended on the State Capitol in Sacramento to protest State Water Resources Control Board (SCWRB) plans to force half the annual flows in several state rivers out to sea in a move purported to help declining fish populations in the Bay Delta region.
The protest on the Capitol steps was spearheaded by California Assemblyman Adam Gray, D-Merced, whose district covers Stanislaus and Merced counties and would be heavily impacted by the board’s decision.
About 1,000 farmers, public school educators, farm employees and consumers from Tulare to Red Bluff descended on the State Capitol in Sacramento to protest State Water Resources Control Board (SCWRB) plans to force half the annual flows in several state rivers out to sea in a move purported to help declining fish populations in the Bay Delta region.
The protest on the Capitol steps was spearheaded by California Assemblyman Adam Gray, D-Merced, whose district covers Stanislaus and Merced counties and would be heavily impacted by the board’s decision.
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On the Record: Optimism Fluctuates Among Tariff Concerns and Low Commodity Prices
In this episode we report on Deere & Co.’s third quarter earnings, which saw net sales increase 32%. In the Technology Corner, Jack Zemlicka discusses precision farming dealers’ 5-year investment projections. With uncertainty stemming from tariffs, trade and commodity prices we also look at how manufacturers, dealers and producers are responding. Finally, according to the Federal Reserve Bank of Minneapolis, farm income, capital spending and farmland values are all down.
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Why You Should Invest in Farmland Today
Get the tiller warmed up and break out the almanac — farmland might just be the next big cash crop for investors in the coming year.
In the past, investors have been dissuaded from the world of agriculture due to large initial cost, lack of know-how, or even long standing stigma. Farmland doesn’t have the same draw as it once did, nudged out of the spotlight by sleek 21st century aesthetic. However, while seemingly unglamorous from the outside, farms continue to be tried-and-true money makers, compounding ROI since the impetus of American entrepreneurship.
Here are a few reasons to sow your entrepreneurial seeds in agriculture and cultivate profits through investing in farmland.
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Bayer/Monsanto Integration: Don’t Expect Big Changes, Yet
After two long years of waiting, Bayer and Monsanto executives sit together at the table as one team. Until last week, the companies could not share business information as a condition of the Department of Justice requirements for the acquisition.
The $66 billion acquisition joins together two powerhouses: Bayer’s chemical portfolio and Monsanto’s seed and trait engine. The company divested more than $7 billion in assets, including the Bayer row crop and vegetable seeds business, glufosinate business, certain glyphosate businesses and several other assets to gain access to Monsanto.
“It’s been a long time coming [the full integration] but one advantage [is] we’re extremely well-prepared,” says Liam Condon, Bayer president of the Crop Sciences Division. “At the end of the day what we want to do is bring what we think is the most advanced technology platform together.”
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ASB Issues Second Exposure Draft - Single Reporting Option & Other Changes
The Appraisal Standards Board has issued a Second Exposure Draft of proposed changes for the 2020-21 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) on the following topics:
• STANDARDS
• SCOPE OF WORK RULE
• COMPETENCY RULE
• DEFINITIONS
• Other edits to improve clarity and enforceability of USPAP
The proposed changes to the Advisory Opinions will be exposed soon.
The written comment deadline is October 10, 2018. To submit comments on the proposals, please email ASBcomments@appraisalfoundation.org.
Send Your Comment!
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