September 2018
Ag Insight

Ag Insight

USDA Changes Procedures on Releasing Key Reports

The U.S. Department of Agriculture (USDA) has implemented new procedures for releasing market-affecting crop and livestock reports from the National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) to ensure that everyone has access to the information at the same time. 

Under current "lockup" procedures, information is released to the public at 12:00 p.m. (Eastern), though the news media are allowed access approximately 90 minutes earlier, with their reports embargoed until the noon release time. 

Prompted by inquiries from the public, USDA examined the procedures and determined that technological advancements have afforded recipients of customized media reports a market advantage not enjoyed by members of the general public. 

As a result, as of Aug. 1, USDA began providing media the same access to the NASS and WAOB reports as the public, with the information becoming available to all at 12:00 p.m. on days the reports are released.

It takes USDA data roughly 2 seconds to be transmitted and posted for the public to read. Meanwhile, press organizations have access to high-speed fiber optic lines out of the USDA lockup and advertise paid services to clients that offer "ultra-low latency" data transmission speed. 

News media have approximately 90 minutes to distill the reports down to their clients’ needs.

Evidence suggests there is significant trading activity worth millions of dollars in the one- to two-second period immediately following 12:00 p.m., which could not be based on the public reading of USDA data.  The inference is that private agents are paying the news agencies for faster data transmission to get a jump on the market.

 

 

Continued Downward Trend Predicted
in Net Cash Farm Income

USDA’s Economic Research Service is forecasting net cash farm income in 2018 will be 7 percent below the average from 1970-2016. 

Farm sector net cash farm income is a measure of the profitability of farming and hence, the ability of farmers to meet loan obligations, invest in new machinery, remain in production, expand their operations and provide for family living expenses.

Beginning in 2010, inflation-adjusted farm sector net cash income rose to near record highs, peaking in 2012. Much of this growth was due to commodity cash receipts, which increased by $113.2 billion from 2009 to 2014.

Between 2012 and 2016, however, farm sector net cash income fell 33 percent to $97.3 billion. This is the largest multiyear decline since the 1970s in both absolute and percentage terms.

Slowing global demand, a strengthening dollar, and large inventories depressed crop, as well as animal and animal product, prices and contributed to the decline.

Although the decline is large, net cash farm income has returned near levels seen before the record growth from 2010 to 2013 when viewed over a longer time horizon.

 

Farm Labor Housing Eligibility Changed

USDA has released guidance on changes made to farm labor housing eligibility.

The Consolidated Appropriations Act of 2018 amended a section of the Housing Act of 1949 to extend the Farm Labor Housing tenant eligibility to agricultural workers legally admitted to the United States and authorized to work in agriculture.

Due to the rule change, domestic farm laborers legally admitted into the country under an H-2A work visa are now eligible for this state-inspected housing.

Noting that seasonal workers coming to the United States do "tremendous work for American agriculture," USDA Secretary Sonny Perdue said he is pleased that USDA programs now can better assist farmers needing to provide housing for the workers while they’re here.

 

 

Burgers for Cookout Costing More

If cheeseburgers are on your Labor Day weekend cookout menu, they will cost you 20 percent more than their inflation-adjusted cost from 20 years ago. And that greater cost is due to higher ground beef prices.

In 2018, the ingredients for a home-prepared, quarter-pound cheeseburger total $1.69, with ground beef making up the largest cost at $0.92. This same cheeseburger would have cost $0.91 to prepare in 1998, the equivalent of $1.40 in 2018 dollars, with ground beef accounting for $0.55 in 2018 dollars.

Today’s higher ground beef prices in grocery stores likely reflect cattle supply disruptions in the early 2000s and early 2010s, resulting in higher-than-average increases in retail ground beef prices during those years. Although U.S. beef production has since increased, prices are slower to retreat at the retail level.

In contrast, efficiencies throughout the food supply chain helped lower prices for the other cheeseburger ingredients. Inflation-adjusted retail bread prices between 1998 and 2018 fell by 2.8 percent, tomato prices by 12.3 percent, lettuce prices by 27.9 percent, and cheddar cheese prices by 5.7 percent. 

 

Programs to Battle Opioid Problem Highlighted in Interactive Map

A new feature on the USDA’s rural opioid misuse webpage enables visitors to use an interactive map to learn about, access or replicate actions rural leaders are taking in small towns across the country to address the opioid epidemic.

The map, which includes prevention, treatment and recovery strategies, can be viewed at www.usda.gov/topics/opioids/resources-map.

USDA collected model practices displayed on the interactive map from regional opioid misuse roundtables and through the "What’s working in your town?" form on the USDA opioid misuse webpage.

The agency invites others to share effective actions taken in response to the opioid epidemic in rural communities by filling out the "What’s working in your town?" form.

 

California Leads Nation in Food, Beverage Processing Plants

Not surprisingly, California leads the nation in its share of the 35,457 food and beverage processing plants located throughout the United States, according to a recent count.

Thanks to its favorable climate for growing a variety of crops and other factors, such as its large ports and other infrastructure, the state had 5,639 food and beverage processing operations, followed by New York’s 2,578 and Texas with 2,252.

These states were also the top three in number of total manufacturing plants and were among the four most populated. California and Texas also ranked among the top four states in agricultural production.

California holds an important national position in several food processing industries, including fruit and vegetables, sugar, wine, and coffee. The state also has numerous dairy processing plants to serve its large population and those of other states.

In New York, bakery manufacturing accounted for the most food and beverage processing plants, followed by wineries and breweries.

Bakery manufacturing and animal slaughter and processing industries accounted for 40 percent of Texan food and beverage processing plants.

Employment at food and beverage processing operations nationwide totaled more than 1.5 million.

 

Agricultural Free Trade Group Battles Administration’s Tariff Plans

National farm organizations are collaborating in a campaign to inform the public about the impact of steps by the Trump Administration to increase tariffs on goods exported to the United States by a number of other nations.

Among the sponsors of Farmers for Free Trade are the National Corn Growers Association, National Pork Producers Association, National Association of Wheat Growers, CropLife America and the Farm Bureau.

In a series of television ads, news releases and other communications, the organization describes the broad economic impact the Administration’s trade measures will have. That impact includes not only the loss of U.S. agricultural sales abroad as targeted nations retaliate with higher tariffs on U.S. products but also the loss of jobs in other businesses dependent on the farming industry and overseas sales and higher consumer prices on imported goods.

A number of nations whose products have been targeted with higher tariffs already have announced higher duties on U.S. goods. American farm products are among those that will be hit hard.

 

 

Livestock Slaughter Weights Increasing

Regardless of species, livestock and poultry animals are being slaughtered at heavier weights than in the past.

Aside from the availability of relatively cheap feed ingredients (corn/soy) since 2014, improved feed efficiency has contributed to faster growth and higher animal weights.

The longer-term trend marked by sustained growth in dressed (butchered) weights and live weights is due, in large part, to changes in animal genetics through selective breeding and the implementation of modern and improved production systems.

On a dressed-weight basis, cattle have increased 73 pounds on average since 2000, a gain of 10 percent. At the same time, hogs have increased 18 pounds, or 9 percent.

Poultry also has become larger since 2000. On a live-weight basis, turkeys are 5.3 pounds (20.5 percent) larger on average, while broilers are 1.2 pounds (23.9 percent) larger.