Midwest and Mid-South: Farm Income Down, Farmland Values UpMidwest and Mid-South: Farm Income Down, Farmland Values Up
Farmers continue to face declining farm income in the Midwest and Mid-South regions, according to the latest report from the Federal Reserve Bank of St. Louis. Yet, values for quality farmland, ranchland and pastureland all rose.
The Federal Reserve Bank of St. Louis, which is the Eight District, includes all or parts of seven Midwest and Mid-South states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
Lenders continue to report declines in farm income relative to a year earlier. The current index value marks the 20th consecutive quarter with a value below 100. Based on a diffusion index methodology with a base of 100, the fourth-quarter index value for farm income was 41. Expectations for farm income in the first quarter of 2019 were only slightly better with an index value of 48.
“We have heard rumors of large farmers filing for bankruptcy. Farmers in our area still have crops in the field,” according to a Missouri lender.
Read About the Values
Budget Deal Reached
Last week President Trump reluctantly signed the Fiscal Year 2019 appropriation bills funding the remaining parts of the government, including USDA, for the rest of FY 2019, thus avoiding further government shutdowns. The President has also announced he will seek additional emergency funding for a border wall since the package of appropriation bills did not provide the level he sought. The House and Senate passed the bill last Thursday by votes of 300-128 and 83-16 respectively. You can see how your members of Congress voted by clicking on the respective vote tallies.
The FY 2019 appropriation for the Risk Management Agency (RMA) is $58.361 million compared to $74.829 million for FY 2018 -- a 22% reduction. However, some of the RMA Administrative functions are now shifted to the Farm Production and Conservation Business Center (FPAC Business Center). The FPAC Business Center was funded at $1.028 million for FY 2018 and in FY 2019 it is funded at $216.350 million. The Farm Service Agency (FSA) Salaries and Expenses are funded at $1.399 billion for FY 2019 compared to $1.517 billion for FY 2018, a reduction of $118 million or 8%. Some NRCS functions are also covered by the FPAC Business Center.
USDA Announces 2018 Farm Bill Listening Session
The original USDA plan was to hold several listening sessions across the country as it begins to implement the 2018 Farm Bill. Because of the lost time from the shutdown, that is no longer possible. So, USDA announced last week that it will hold one public listening on February 26th in Washington D.C. If you’d like to submit written comments or attend the public session, you can follow the appropriate links
here.
EPA Releases New Draft WOTUS Rule
The Environmental Protection Agency (EPA) published a rule in Federal Register last week to define the scope of waters federally regulated under the Clean Water Act. The proposed Waters of the U.S. (WOTUS) definition comment period is open for a 60-day period. An EPA hearing on the new rule will be held February 27 and 28 in Kansas City. Read specifics on the new rule, which generally excludes ditches,
here.
President Trump’s FY 2020 Budget Request Delayed until March
Normally, the President’s Budget request to Congress for the upcoming Fiscal Year (FY) s released in February. Because FY 2019 is not completed for some parts of the government and because of the shutdown, the President’s Budget request is delayed until the middle of March (possibly March 11). I’m told the budget will be released in two parts.
Initially a “skinny” budget will be sent to the hill with top line budget requests. It will be followed by the detailed budget appendix request, probably in April. Crop insurance, like it has been in past budget requests, will be requested to be cut in this budget request. As in the past, you can expect the budget request to be “dead-on-arrival” in Congress – more so than in the past two years since Congress is divided with the House controlled by Democrats and the Senate by Republicans.
House Agriculture Committee Announces Subcommittee Rosters
House Agriculture Committee Chairman Collin Peterson (D-MN) and Ranking Member Mike Conaway (R-TX) announced their full subcommittee rosters last week. Chairman Peterson indicated to the press that he has had a difficult time filling the seats for the General Farm and Risk Management Subcommittee and the number of Democrats on the Subcommittee with jurisdiction over commodity programs and crop insurance is equal to the number of Republicans, an unusual situation. The Democrats are: Chairman Filemon Vela (D-TX), Angie Craig (D-MN), David Scott (D-GA), Al Lawson Jr. (D-FL), and Jeff Van Drew (D-NJ).
The Republicans on the Subcommittee are: Ranking Member Glenn Thompson (R-PA), Austin Scott (R-GA), Rick Crawford (R-AR), Rick Allen (R-GA), and Ralph Abraham (R-LA).
6 Trends Shaping the Future of Farming and Ranching
Farmers and ranchers have long been known for adapting and innovating, but new research challenges whether they are looking deep enough over the horizon to really win in the future.
“There are six forces of change in the industry that are pretty compelling,” says Brett Sciotto, CEO of Aimpoint Research, a global marketing research firm that has done extensive work analyzing current agricultural trends and identifying the “Farmer of the Future.”
“If you look at them collectively, it’s pretty indicative that we are going through a transformative period that’s only accelerating.”
Consider the six trends
Net Farm Income To Rebound In 2019 As Farmers Pare Expenses
After hitting a pothole in 2018, U.S. net farm income will recover this year under the combined effects of financial belt-tightening and rising crop prices, said the USDA on Thursday. It projected net farm income of $77.6 billion in 2019, which would be the highest total since the commodity boom collapsed in 2014.
USDA economists project that income will fluctuate slightly in coming years, never dropping below $75.5 billion but not topping $80 billion annually in the decade ending in 2028. Net farm income is a measure of wealth and includes the value of commodities held in storage.
Read the Projections
Farming’s Next Generation Has Nowhere to Grow
The farmland clearinghouse ads read a bit like listings on a dating site, but way more practical:
Ernst Weissing is seeking to rent 20+ acres of tillable farmland in southeastern Minnesota. Land with a barn or pole shed and access to water is preferred; no house is required.
Kelly Schaefer is seeking to rent 20 acres of farmland in Minnesota, Arkansas, Oklahoma or Kentucky. Land with pasture, fencing, water, power, outbuildings and a house is preferred.
Landowners post, too, advertising farmland for rent or sale:
Ellen Parker has for sale 9.2 acres of farmland in east-central Minnesota’s McLeod County. The land consists of 3 pasture acres, 3 tillable acres and 3 forest acres.
The listings demonstrate, in part, a rapid occurrence of land transition across the United States. The National Young Farmers Coalition estimates that more than two-thirds of America’s farmland will change hands in the next two decades. But as the older generation ages out of the industry, young farmers struggle to access affordable farmland.
Get to Know the Generations