ASFMRA AgNews - Vol 13 Issue XLXIV [December 26, 2018]

By ASFMRA Press posted 12-24-2018 10:30


Grassley Sees Farm Bill Pros and Cons

The 2018 farm bill is nearly official, having passed the House and Senate without the vote of one if its stalwart supporters. After playing a key role in development of the bill, Iowa Senator Charles Grassley voted “no” in the final tally.

“I don’t want it to sound like I think [Senator Pat] Roberts isn’t a good Ag Committee Chair or isn’t fighting hard enough for farmers. It’s a good farm bill, and he and Senator Debbie Stabenow, the Ranking Democrat on the Ag Committee, did a good job. It’s a bi-partisan bill and passed with a bi-partisan vote,” Grassley offered in his weekly Capitol Hill Report. “But there was an issue that was left out, and if I had voted for the bill, I wouldn’t have been taken seriously again.” For the past three Farm Bills, Grassley has advocated for caps on farm subsidies. In 2008, 2014, and again in 2018, he introduced amendments that would limit payments to $125,000 per year per person, $250,000 per couple, to be paid to one manager per farm – one that is actively engaged in the farming operation.

Learn more. 

Could Trump Build Border Wall From Help?

One million acres of hemp builds Trump’s wall and $700 million buys the hemp, a pittance compared to overall construction estimates ranging from $15 billion to $70 billion.

A southern hemp wall is far from reality, but the concept reflects the remarkable promise of a once-maligned crop emerging in the marketplace. After roughly 90 years of dormancy, a sleeping hemp giant is awakening, and the numbers involved in a southern hempcrete wall reveal a crop with a phenomenal range of utility.

If a 30’ tall and 2’ wide hempcrete (a mixture of hydrated lime and hurd, hemp’s woody core) wall was built for 1,954 miles along the southern border, the structure would translate to 619,027,200 cubic feet of space. Each cubic foot would require 17 lb. of hempcrete, extrapolated to a total output of 5,261,731 tons of hempcrete for the entire structure, according to Richard Rose, a long-time U.S. hemp pioneer and industry advocate: “The hempcrete could be poured into a form to make tilt panels, which would be trucked to the site and literally put in place, just like regular concrete panels.”

Find out more. 

Deep Sky Vineyards: Going Deep into Technology

Retired tech expert buys vineyards, get the "grape bug". While the debate continues about who actually made Arizona’s first wines, one fact rings true --- “Wines in Arizona have gotten much better than they used to be,” according to Phil Asmundson, owner of the contemporary precision agriculture Deep Sky Vineyards in Willcox.

Soil scientist Dr. Gordon Dutt is given credit for planting the first experimental vineyard on the Babocomari Ranch in Southern Arizona in the early 1970s, an experiment that evolved into Sonoita Vineyards where the first commercial crop was planted in 1979 and the winery opened in 1983. Avid historians say savoring the juice of sun-sweetened grapes goes back several centuries when Spanish conquistadors trekked across Arizona and discovered wild grapes growing along rivers and streams. It was less suitable for wine than the European species, but better than nothing until Mission grapes --- fruit grown in mission vineyards and used for the Holy Sacrament --- were cultivated in Southern Arizona’s rolling high country. By 1700, Jesuit priests were writing back to Rome that “We have good vineyards to make wine for the masses.”

Read more. 

Rural Economy Index Climbs But Bankers Ask For More Collateral

The Rural Mainstreet Index, a survey of community bank CEOs, shows economic growth increasing. The 10-state survey by Creighton University focuses on rural areas dependent on agriculture and or/energy.

The overall index rose to 54.2, where 50 equals growth neutral. This reflects growth over the November 49.9 reading. “Our surveys over the last several months indicate the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Banker confidence fell to 44.3, down from November’s 47.0, indicating pessimism among bankers. Hiring and employment is a healthy spot in the survey, at 57.1, though down slightly from November’s 66.7.

See the highlights from the survey. 

2019 Outlook: Ag Technology

Yield monitoring and precision ag technology have been on the farm for almost three decades. However, many industry voices say there are still huge strides to be gained in maximizing today’s technology as well as the gains that will come from future technologies used on the farm.

“Agriculture needs technology, but technology needs agriculture because it can showcase the opportunities of technology,” said Josh Henretig, senior director of Microsoft’s AI For Earth at the 2018 Farm Journal AgTech Expo. According to AgFunder, in 2017 there was $2.6 billion invested in agtech. Henretig went on to say that we are collecting, creating, using, and storing data in ways like we never have before, which are all catalysts for how artificial intelligence (AI) can be used.

“There are four ways AI is empowering decisions: descriptive analytics (what happened), diagnostic analytics (why it happened); predictive analytics (what might happen); and prescriptive analytics (what can I do based on available resources),” he explains.

Potential for AI? Read more. 

Iowa Land Value Dip, But are Still 63 Percent Higher Than 10 Years Ago

Iowa's average farmland value declined 0.8% to $7,264 per acre from 2017 to 2018, according to the Iowa State University Land Value Survey. The survey attributes the decline to lower commodity prices, higher interest rates and trade disruptions, particularly with China.

With these types of surveys, I've always found some of the most interesting nuggets don't make it into the press releases. The real take-aways are buried deep in academic text. The top line of the survey -- a less than 1% decline in values -- makes headlines. But what I find more interesting is the perspective the author, Wendong Zhang, includes seven pages into the report.

"To put this recent, modest drop in Iowa land values into perspective, the current value of $7,264 per acre is still eight percent higher than 2011 values, and 63 percent higher than 10 years ago. Considering the downward pressures from both the declining farm income and rising interest rates, the farmland values in Iowa and across the Midwest are still remarkably stable," he wrote.

Why are land value holding steady? 

NDSU Experts Paint Longterm Farming Financial Picture

Whether it’s world politics, weakening commodity prices or weeds, farmers heard little good news at a recent meeting in Wildrose.

The NDSU Extension Service hosted several speakers who provided updates on the current agriculture economy, ongoing trade wars and weed and insect management. “Buckle up now and get ready,” said Frayne Olson, NDSU’s crop marketing specialist, “because it’s going to be rough.”

Bryon Parman, an economist with the NDSU Dept. of Agriculture Business and Applied Economics, agreed. He expects interest rates to rise, as well as input costs, machinery and land prices while commodity prices will remain flat. “The debt to income ratio is moving up,” he said. “Farmers are having more trouble meeting payment obligations.”

He presented a graph showing net cash farm income since 1960. The number was average or above average 21 years (good years included 1973-1975 and 2012-2014). The graph showed 38 years below average, and 2017 began the current dip below the average margin. “We’re not in a recession,” Parman said of the data. “We’re in where farming has been most of the time.”

See the graph. 

Ag Barometer Shows Some Optimism

The latest Ag Barometer shows things might be looking up for producers. The Purdue University October barometer, released in November, has a reading of 136. That’s 22 points higher than in September, which holds the lowest reading for the survey since 2016.

The index of current conditions rose 19 points, and expectations rose 24 points. James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture says: “The bigger story there is the fact that although the index of current conditions rebounded, it still remains well below where it was last spring before the trade wars erupted. The index of future expectations has increased to the point where it’s now pretty comparable to where it was late winter and early spring, so producers are much more optimistic about the future than they are about current conditions.”

See the charts. 

World Leaders Policy Actions Define 2019 Market Outlook

An “engineered” global slowdown is underway, weakening the near-term global demand for commodities. I do not expect a serious recession for several more years; what we are currently experiencing could be characterized as a controlled mini-recession or a corrective realignment.

These corrective realignments will appear periodically to deflate asset bubbles. The most obvious current category of assets showing overvaluation (bubble tendencies) are global equities. Presently, governments and central banks are realigning global currency, bond, equity and commodity markets, so U.S. and global economic momentum can possibly be maintained for several years. The current ongoing realignment may last well into the second quarter of 2019.

Given the extended length of the U.S. business cycle (which is the second longest in U.S. history), global economic, political and policy uncertainties and market fundamentals, “world leaders” will define the market structure and character of the U.S. and global currency, bond, equity, and commodity markets in 2019.

Every market analyst and participant must continually consider the potential market impact of global governmental stimulus-driven intervention, while their peripheral market vision must always focus on activities of multinational firms, hedge funds and other speculators.

Read more.