ASFMRA Ag News - January 5, 2021

By ASFMRA Press posted 18 days ago


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The Positive Impact of Broadband on Farm Productivity

The FCC’s Office of Economics and Analytics released a new paper titled “Impact of Broadband Penetration on U.S. Farm Productivity.” This report finds that broadband availability has significant positive impacts on crop yields and other farm production metrics.

The working paper analyzes the impact of increased broadband availability in rural areas on the productivity of U.S. farms, drawing on both FCC data on broadband availability by census tract and U.S. Department of Agriculture data on agricultural productivity by county, for key row crops like corn, cotton, hay, and soybeans. The working paper finds statistically significant effects of increased broadband service, both in terms of lower costs (fertilizer, fuel, seed, etc.) and higher production (yield).

To cite one striking result, the analysis finds that a 1 percent increase in the number of 25 Mbps/3 Mbps or better broadband connections per 1,000 households is associated with a 3.6 percent increase in corn yields, as measured in bushels per acre.

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Wall Street Eyes Billions in the Colorado’s Water

In the last few years, a new force has emerged: From the Western Slope of the Rockies to Southern California, a proliferation of private investors like Greenstone have descended upon isolated communities, scouring the driest terrain in the United States to buy coveted water rights.

The most valuable of these rights were grandfathered in decades before the population explosion in desert cities like Phoenix and Las Vegas, and privilege water access to small, often family-owned farms in stressed communities. Rechanneling water from rural areas to thirsty growth spots like Queen Creek has long been handled by municipal water managers and utilities, but investors adept at sniffing out undervalued assets sense an opportunity.

As investor interest mounts, leaders of Southwestern states are gathering this month to decide the future of the Colorado River. The negotiations have the potential to redefine rules that for the last century have governed one of the most valuable economic resources in the United States.

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Iowa Farm Bankruptcies Continue to Rise, Despite Aid

For 25 years, Joel Kurtenbach managed a successful Jones County dairy farm and was featured in trade publications for progressive business decisions, such as buying a system in 1999 that could milk 120 cows in 90 minutes.

But milk prices fell in 2017 and 2018 and his contracts dried up. So he pivoted, selling his 500 dairy cows to a California family and converting his barns to feed cattle for beef.

“We raise them to 600 pounds and they go to feedlots in Nebraska and Colorado,” said Kurtenbach, 59, in early November. “We need one more investor worth $600,000 to keep the farm.”

But on Dec. 15, Kurtenbach watched silently as his nearly 700-acre farm near Wyoming was sold in bankruptcy court.

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This Modern Farmer Employs At-Risk Youth to Keep Them Off the Streets

Alfred Melbourne found a fresh start on an eighth of an acre of land. When the California resident was released from prison in 2016, he worked for a tech company installing phones and also operated a forklift. He found that he felt generally unfilled during that time.

Melbourne, who served 18 years for gun and assault charges, says this changed when he came across an overgrown and abandoned piece of land in Broderick, California. A friend and local activist, Francisco Gonzales, showed him the land in 2018 and told him a community garden used to occupy the space.

Melbourne thought he might tackle reviving the land into a garden as a side project. Over the course of three months, he removed 30 bags of garbage, installed water lines, tilled the soil, and planted seeds. When it was done, he knew the garden was something he wanted to take care of in the long run.

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Farmland Price Transparency

Every year, just 1% to 2% of agricultural land changes hands. What that land sells for can be public information or, in nondisclosure states such as Texas, sealed. Justin Bierschwale, an appraiser and president of the Texas chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA), says working in a nondisclosure state really underscores the value of relationships.

"In Texas, it's a tight group when you talk about who can disclose actual land prices," he says. As a general rule, though, Bierschwale says when it comes to agricultural land, listing prices are not usually too far out in left field. "A good rule of thumb is that 80% of that list price is the bottom of the sales price range for a property. You might not get it for that, but it gives you an understanding," he explains.

The rules are different when it comes to recreational land, though. Here, price variation can be wide, and the appraiser says purchases are more emotions-based. For that reason, recreation land starts higher and often stays on the market longer waiting for that perfect buyer.

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ASFMRA Government Relations Update

Georgia Senate Runoff Elections/ Electoral College Vote Certification

The first session of the 117th Congress began January 3rd, 2021. The speaker of the House, who presides over sessions of the chamber and is second in the line of presidential succession, is elected on the first day the new Congress convenes. Running unopposed, Nancy Pelosi was reelected House Speaker yesterday by a vote of 216 -209.

On Tuesday, Georgia’s two runoff elections for its Senators take place to determine which party will control the Senate. Democrats must win both races to force a 50/50 tie in the Senate with Vice-president elect Kamala Harris voting as tiebreaker to determine Senate control. Republicans currently hold a 50 – 48 seat majority. Both President Trump and President-elect Biden plan to campaign in Georgia on Monday before the election Tuesday. It is likely we won’t know the outcome of both races for several days as votes are counted.

On Wednesday, a joint session of Congress convenes to certify the electoral college vote count. Several Republican House members and Senators have indicated they will seek to block formal certification of President-elect Joe Biden. Ultimately the efforts to block the certification are expected to fail, both the House and Senate must agree in separate votes which is unlikely, but it will protract a normally short process. Inauguration Day is set for January 20th, 2021.

Agricultural Provisions in COVID Stimulus Bill

The $900 billion Coronavirus stimulus bill passed by Congress at the end of December and ultimately signed by President Trump includes $26 billion for nutrition assistance, agricultural and rural programs. Of the $26 billion, $13 billion was allocated for agriculture and rural programs and $13 billion for nutrition programs. None of the funding directly impacts crop insurance, although one of the provisions allows specialty crop growers to include crop insurance indemnities in their 2019 sales total for CFAP 2 payment calculation purposes.

The House Agriculture Committee provided a summary of the agricultural provisions here. And the American Farm Bureau Federation has provided a summary of the $13 billion in assistance for agriculture here.

FY 2021 Appropriations

The $1.4 trillion omnibus appropriation bill passed at the end of December funded the Department of Agriculture’s programs for the remaining of FY 2021 (started October 1, 2020, ends September 30, 2021). The Farm Service Agency (FSA) Salaries and expenses are funded at $1.450268 billion compare to $1.414214 billion in FY 2020 for a 2.5% increase.

The Risk Management Agency’s (RMA) Salaries and Expenses are funded at $60.131 million for FY 2021 compared to $58.361 million for FY 2020 or roughly a 3% increase. The Natural Resource Conservation Service (NRCS) is funded at $832.727 million compared to $829.628 million in FY 2020 for an increase of less than 1%.

The appropriators also included report language directing the RMA to study, in consultation with relevant stakeholders, and update com test weight discount tables to improve the accuracy of these discount factors. Additionally, RMA is directed to provide flexibility to producers wishing to hay or graze cover crops on prevented planting acreage before November 1. The appropriators direct RMA to study alternatives to a nationwide haying and grazing date in order to avoid primary nesting and the potential impact of eliminating penalties for haying and grazing after the primary nesting season. RMA is required to report the results of this study to the Appropriation Committees no later than 180 days after December 27, 2020.

Interestingly, the appropriations report language under the Farm Service Agency (FSA) notes that USDA's prioritization of ACRSI has been inadequate and therefore directs the Under Secretary for Farm Production and Conservation to allocate all necessary resources to identify the software options necessary to ensure that ACRSI technology is adopted and deployed by the RMA and the FSA within 120 days of enactment of this Act.

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