Good morning! This is Bob Bragg. Welcome to the June 25th edition of Farm News and Views.
Last Friday, we celebrated the summer solstice, then, some of us in southwest Colorado had to cover our garden plants to protect them from frost Saturday night into Sunday morning. The National Weather Service recorded temperature near to or below freezing in the Montezuma Valley during the early morning hours on Sunday. Higher elevations escaped with temperatures in the mid 30’s to low 40’s, and there are no reports of crops fields being harmed by the low temps..
Hundreds of trade groups and businesses are pleading their cases with the Trump administration to exempt them from the president’s plan to impose up to a 25% on $300 billion dollars in Chinese goods in the near future, if there is no resolution in the trade war with China. More than 1,600 comments have been filed and 300 witnesses are expected to testify this week at United States Trade Representative public meeting concerning the proposed tariffs. Ken Strait, a vice president at Tractor Supply Company, said the company operates 1,800 stores in rural small towns, where their stores are often the only source of affordable farm and ranch products in those communities. He is concerned that new duties on Chinese products like log-splitters, steel-toe work boots and flashlights will adversely affect families that can’t afford to pay more for the items they need on a daily basis. The Tea Association of the USA asked the USTR to remove black and green teas, and instant tea and extracts, from the target list, noting that there’s virtually no tea grown in the U.S., and that there aren’t any farm-based jobs that would be protected by the duties.
Low commodity prices, which have resulted in low profits are of concern to both farmers and their lenders. The ag sector’s working capital has been on the decline since 2012. The most recent update by the Economic Research Service (ERS) indicates that the ag sector’s working capital has continued to decline and is now critically low. Working capital is a simple measure of the overall amount of liquidity available in the farm sector. It’s calculated by subtracting current liabilities from current assets. The larger the number, the more liquidity that is available in the sector. This is a good indication of the amount of cash that farmers have available to make purchases and repay their short-term debt obligations. Because the easiest way for farmers to generate liquidity or working capital is to earn profits, working capital tends to decline as profitability declines. Today, the level of working capital available in the farm sector stands at $38 billion. This is by far the lowest level seen since ERS started directly reporting the ratio in 2009, and it is projected to fall by 25% from 2018 to 2019.
A welcome surge of melting snow is pouring out of the Rocky Mountains and into the drought-stricken rivers of the southwestern U. S. According to Greg Smith, a hydrologist with Colorado Basin River Forecast Center, although the flows are helping to end a water shortage, they are threatening to push rivers over their banks in may areas. But Smith believes that the flows couldn’t have come at a better time this year, because the region is rebounding from the drought conditions of last year.
The thought for today comes from poet Carl Sandburg” He said “Nearly all the best things that came to me in life have been unexpected, unplanned by me.”
Until next week. I’m Bob Bragg.