According to American Farm Bureau Chief Economist John Newton, National Agricultural Statistics Service data indicates that farm numbers in the United States decline by 4,400 farms in 2020. Colorado was one of five states that bucked the trend, gaining 100 farms last year. States that lost the most farms were located in the upper Midwest, with Michigan, Indiana Wisconsin and Minnesota each losing about 500 farms. Farm number peaked at almost 7 million in 1935, but had decline to just over 2 million farms by the mid 1970’s. The number of acres of land farmed has been fairly constant at about one billion acres since the 1920s, and over the past four decades the average farm size has remained at nearly440 acres.
Agriculture will be prominent on Capital hill this week. Secretary of Agriculture designate Tom Vilsack is expected to be confirmed by the Senate today, which may speed up distribution of billions of dollars in Covid relief to farmers, but a rebound in some agricultural commodity prices may encourage legislators to think that all is well in farm country and not be in a hurry to send any more cash to ag. Producers. The House Agriculture Committee is also expected to begin work on solving issues concerning climate change with a virtual hearing on Thursday to discuss how to begin working toward President Biden’s ambitious goal of helping the U.S farm sector to reach net-zero carbon emissions in the near future. One of the most discussed plans include developing a carbon bank that would pay farmers, foresters and ranchers to store carbon in the soil through regenerative agriculture and other climate-friendly practices. The plan would turn large areas of the U.S. into huge carbon sinks that could offset some of the 7,000 megatons of greenhouse gases the US emits each year.
Snow over the past weekend was sure welcome. We still need more to catch up, because it generally, it takes 10 inches of snow to get one inch of precipitation, but with temperatures in the mid thirties in the valleys of southwest Colorado for most of the day on Saturday, the water content may have been closer to 5 or 6 to one. Let it snow!
A recent report from the U.S. Department of Agriculture should be of interest to U.S. farmers and ranchers. The agency estimates that U.S. Farm farm income will be $111.4 billion this year, that’s 20% above the 10-year average. Economists point out the total farm income is a combination of sales of crops and livestock and direct government payments. Higher prices are expected for corn, soybeans, cattle and hogs, the major farm enterprises in the United States. But the total farm income will be $9.7 billion below last year’s farm income, because of a sharp decrease in federal payments, which the department expects will fall from a record $46 billion last year to about $25 billion in 2021. Sales of farm output is expected to boost farm receipts by $20.4 billion due to a $11.8 billion increase in crop sales plus an additional $8.6 billion in livestock receipts when compared to 2020. Some potential changes to farm income might include additional Covid-19 payments, and a USDA-backed carbon credit market that the Biden administration may create this year. However, these USDA projections seldom predict exactly how the year will turn out, since weather often impacts crop yields around the world, and in turn, affects farm gate prices.
Even though we’ve received several inches of snow over the past week, drought still concerns farmers, ranchers, and water managers in the Four Corners Region and the southwest. The U. S. Bureau of Reclamation recently reported that Lake Mead and Lake Powell, reservoirs, that store Colorado River water for 40 million users, are both approaching near-record-low levels, with Lake Powell at 42% of capacity and Lake Mead at 40%. From 2000 to 2020, inflows to Lake Powell were above average in only four of the past 19 years.
Is farm profitability in the United States untethered from the environment?
A common topic in agricultural publications is farm and ranch profitability, which may tie into some new research at the University of Wisconsin, Madison. The article, “Cropland expansion in the United States,” was published in the peer-reviewed journal, Nature Communications. This article reported that the U S is losing an average of more than1 million acres of grasslands, wetlands, and forests to cropland each year. However, the study points out that from 2008 to 2015, these conversions have produced marginal crop yields, while imposing significantly high costs to wildlife and insect populations. Researchers determined that when studied the land that was converted, they found that it disproportionately impacted the highest-quality habitat. For example, the conversions affected waterfowl nesting locations that had 40% greater duck accessibility. They also found that grasslands, which hosted three times as many monarch butterfly resources as typical land, were lost at a rate that was 10 times greater than had been previously estimated, and that this conversion continues to impact Monarch butterfly population recovery efforts.
As we begin to be comfortable with writing 2021 on our checks, ag economists are telling us that the farm economy apparently did quite well in 2020, with the projection for net farm income to be the highest since 2013. But the old devil in the details spins another story.First, the $900 billion coronavirus relief bill that was signed by President Trump on December 27th includes $13 billion in aid for farmers and ranchers. Under this legislation, farmers will receive $20 per planted acre for about 240 million acres of barley, corn, sorghum, soybeans, sunflowers, upland cotton, and wheat, which will account for about $5 billion. Other minor crops receiving the $20 per acre payments that are grown in the Four Corners region include alfalfa, canola, oats, and some specialty crops. Beef producers will also benefit from the aid, with payments of $25 for feeder cattle weighing more than 600 pounds, $7 per head for feeders under 600 pounds, $63 per head for fed cattle and payments for cattle that have been culled from herds. Small livestock producers may also benefit from a provision in this bill. About $60 million was earmarked for grants to small meat and poultry processors so they can upgrade facilities, qualify for federal inspection, and sell products across state lines.
The American Farm Bureau Federation usually holds their annual convention during the second week in January in some place that’s warm. But this year, it’s being held online due to concerns about the Covid-19 pandemic. During the opening session on Sunday, ABF president Zippy Duvall said that the incoming Biden administration will focus on climate change, and he encouraged farmers and ranchers to participate in discussions around climate change issues, because they have a great story to tell when it comes to protecting our environment. Duvall pointed out that about 40 million acres, or 219,000 square miles of farmland are enrolled in federal soil and water conservation programs and that biofuels “reduce greenhouse gas emissions by 71 million tonnes per year.” During the recent presidential election campaign, President-elect Biden described climate change as an existential threat to the well being of our country, and vowed to propose comprehensive legislation to slow global warming. Biden wants American agriculture to be the first in the world to achieve net-zero emissions of greenhouse gases, and he contends that farmers can earn money as part of this initiative by sequestering carbon in the soil. Other items on the ABF legislative agenda include resolving agricultural labor shortages, expanding farm exports, and increasing rural access to broadband internet connections.
As we move into the new year, the outlook for the agricultural economy looks pretty good. As I mentioned last week, government payments healed a lot of farmers and ranchers financial problems in 2020, and this year, higher commodity prices and low interest rates, should give astute producers a chance to catch up from the downturn caused by trade wars. However, it’s unlikely that the USDA will come up with any extraordinary payments for farmers in 2021. Corn, soybean and wheat prices are rebounding based on robust Chinese purchases and dry growing conditions in South America and the Black Sea Region, while the value of farmland is expected to remain stable this year.
In response to the Covid-19 outbreak, the USDA is ramping up two programs to assist farmers, ranchers and consumers. Last Saturday, President Trump announced that “Starting early next week, at my order, the USA will be purchasing, from our Farmers, Ranchers & Specialty Crop Growers, 3 Billion Dollars worth of Dairy, Meat & Produce for Food Lines & Kitchens. “FARMERS TO FAMILY FOOD BOX” Great news for all!” This program was first announced in late April, but details are still quite hazy about how all of the pieces will come together. According to the USDA, the agency will purchase up to $3 billion in fresh produce, dairy, and cooked meat to be distributed to families in need. Participating farmers are required to box-up and deliver their own products to distributors and wholesalers, who will in turn, send per-approved boxes of these products to food banks, community and faith based organizations and other non-profits who pass them along to people in need. USDA purchases will amount to about $300 million per month allocated at $100 million each of fresh fruits and vegetables, dairy products and meat.