Trade has been the main attraction in agricultural news over the past week. Negotiations over the U. S. Mexico-Canada trade agreement is apparently heading down the home stretch. The nine-member USMCA working group has sent the White House a counteroffer concerning changes to the agreement that address Democrats’ concerns about labor, enforcement, drug pricing and environmental provisions. However, rank-and-file House Democrats are largely out of the loop on the trade talks with the Trump administration, and they’re starting to get restless as a potential vote comes closer.
Organic commodity farmers will harvest a record number of acres across the U. S. this year, according to the Annual Acreage Report, released by Mercaris, the nation’s largest market data and trading organization for organic and non-GMO markets. U. S. Farmers will harvest over three million acres of land certified for organic field crop production, which is a 7% increase over 2018. This increase is driven in large part by a surge in new certified organic field crop operations across the U. S. The West and High Plains regions saw the largest jump in harvested organic field crop acres this year, even though organic corn and soybean farmers have faced the same challenges to production that conventional farmers have had. Overall total organic acres of pasture, rangeland, and organic crop areas has grown to 8.3 million acres, with over 8,000 U. S. farm operations certified as compliant with the USDA National Organic Program standards in 2019.
Searching for information to include in this report over the past several weeks, I keep getting an image of an Ace Reid cartoon, where a geek in a suit is standing in Jake’s ramshackle farmyard telling him, I’m from the government and I’m here to help. Even though our quote “patriotic” farmers and ranchers have born the brunt of trade disputes around the world. They’ve been assured that they’ll soon benefit from an unprecedented demand for the crops and meat that has filled grain bins, warehouses and cold storage for over a year, while competitors have filled the void left by U.S. farmers. At this stage, with the level of surplus corn and soybeans in storage, it will take a polar vortex, cold snap to hit the corn belt this fall to offer any hope that corn and soybean prices will gain even a modest level of profitability for the next couple years, even with an immediate end to the trade wars. But the government has added to the problem by granting waivers to 31 oil refiners who don’t have to blend ethanol into their fuel, thereby cutting 300 million bushels of corn from this year’s demand. Another example of government lack of support is Dairy Management Inc., a nonprofit that’s tasked with promoting milk, cheese and other dairy products. It’s a federally mandated checkoff program supposedly overseen by the USDA. In 2017, It paid 10 executives a combined $8 million, the same year that 1,600 dairy farms closed across the country.
There is increasing evidence that farmers and ranchers are undergoing financial stress this year. For example, a Federal Reserve Bank of Kansas City survey of 181 banks revealed that 30% of the banks in its service area reported that farm repayments are lower and have they have had repayment problems with their agricultural loan portfolios. Several years of Working Capital and Carryover Debt have increased the need for Debt Restructuring. About 75% of these banks have denied new farm applications, and nearly 18% of the banks reported that they had denied 10% of Operating Loan requests. A Creighton University survey of 200 bankers in ten states revealed that 10% of 2018’s Operating Loans were not repaid and were rolled into 2019’s loans, which is significant because this practice was common before the farm debt crisis of the 1980s began.
About three months ago, farmers and ranchers in the Four Corners region were tallying the benefits and drawback of a wet winter and spring. Wet fields made it tough to plant spring grains and dry beans, and the heavy snow pack kept cattle and sheep off mountain ranges for a few weeks. But by mid-June, the Region was drought free according to the U.S. Drought monitor, with the exception of a small part of San Juan County New Mexico. Southwest Colorado and Southeast Utah were also free of abnormally dry conditions. Fast forward to the end of August, and drought is making a comeback. The whole region is registering abnormally dry on the Drought Monitor Map and Moderate drought has made a comeback along much of far western New Mexico. Even farmers with irrigation water are commenting that they could use some help through a good rainstorm. The long-range National Weather Service forecast for the next three weeks is showing higher than normal temperatures and normal precipitation for this time of year.
The much anticipated USDA August Crop Production report that came out yesterday had a rather dramatic impact on wheat and corn prices, trimming about 20 cents per bushel from September wheat prices, while knocking off a quarter on September corn. Soybeans also lost a dime. Now for the rest of the story. When the July crop production report came out, USDA economists had reported that there was more wheat, corn and soybean acres than what market gurus had reported. Grain company experts had predicted that wet fields, poor growing conditions and export demand would cause prices to climb to $8 per bushel for corn and $12 to $14 for soybeans, which caused a market rally in early July before the July USDA report was published on July 11th. After the report, commodity prices settled into the $4 corn and $8 soybean prices that farmers had watched during May and June. Grain traders cried foul, and called for heads to roll at the USDA because the inaccurate information published by the USDA ruined the rally that started in late June. Well, the August report verified that the July USDA estimates of planted acres and potential yields was about right.
Vesicular Stomatitis, often called VSV, continues to infect horses and other livestock in the Four Corners Region. So far, outbreaks are confirmed in Montezuma and La Plata counties, and San Juan County New Mexico. VSV is a contagious disease that afflicts horses, livestock, wildlife and even humans. It’s caused by a virus thatis rarely life threatening but can have a financial impact on the livestock industry. Because the disease is thought to be spread by insects, VSV usually does not carry on into the late Fall.