September 2017
Ag Insight

Ag Insight

Ag Careers Partnership Between USDA, FFA Announced

U.S. Secretary of Agriculture Sonny Perdue has announced a new partnership with FFA to help support youth and prepare the workforce of tomorrow for unique careers in agriculture.

The announcement came during the alumni breakfast at the 2017 National FFA Organization’s State Presidents’ Conference at U.S. Department of Agriculture headquarters in Washington. National FFA CEO Mark Poeschl joined with Perdue in making the announcement.

Under a newly signed memorandum of understanding, USDA and National FFA will collaborate on both short- and long-term initiatives to motivate and prepare young people, connect them with opportunities in agriculture, food and natural resources systems, and build appreciation for the reach and importance of agriculture.

 

NAP Participation Shows Large Increase

 

Applications for Noninsured Crop Disaster Assistance Program more than doubled between 2014 and 2015, the latest period for which complete figures are available.

The USDA’s Farm Service Agency, which administers the program, says applications went from 66,000 to 138,000 from 2014 to 2015, the first year NAP Buy-Up was offered.

NAP participants can choose from a basic option providing catastrophic coverage for only a service fee or they can pay a premium for higher coverage with the buy-up program. Some 16 percent of applicants purchased the buy-up coverage, the majority being for specialty crops such as vegetables, fruits and tree nuts.

USDA operates a number of federal crop insurance and disaster aid programs to mitigate the downside risks inherent to agricultural production (e.g., damaging weather, price or yield disruptions).

However, crop insurance is only available to certain commodities in specified areas. Producers have been able to enroll in NAP since 1994. This program insures producers in situations when federal crop insurance is unavailable to them due to their crop or location.

 

Agriculture and Rural Task Force Pushes Toward Goal

Members of the Agriculture and Rural Prosperity Task Force are continuing their efforts to meet a 180-day deadline for issuing recommendations on the quality of life in rural America, the rural workforce, innovation, technology, and data and economic development.

The task force was created in late April by an executive order from President Trump with the goal of making a final report by late October. Perdue chairs the group.

The report is expected to include statutes to be enacted or repealed; regulations to be promulgated, amended or eliminated; and programs and policies to be implemented, streamlined or discarded.

Four working groups are gathering recommendations on issues to be addressed in the task force’s report.

At a recent breakfast meeting at USDA headquarters, participants discussed, among other issues, access to broadband, community infrastructure, community mental and physical health, workforce training and veterans’ employment, agricultural research, regulatory reform, improved access to capital and increased local control of decision-making.

 

Farm Real Estate Values Show Slight Decline

 
   

Since 2014, farm real estate values in many regions have leveled off and, in 2016, the national average per-acre value declined slightly, according to USDA’s Economic Research Service.

In recent years, farm real estate (including farmland and buildings) has accounted for about 80 percent of the value of U.S. farm assets, amounting to about $2.4 trillion in 2015. Strong farm earnings and historically low interest rates have supported the increase in farmland values since 2009.

The recent slowdown and national decline are partially responses to the decline in farm income that may temper expectations of future farm earning potential. In addition, the 2016 USDA 10-year commodity outlooks suggest prices of major commodities will stabilize or grow modestly from their current price levels, significantly lower than those in 2011.

Expectations of interest rate increases, which have been noted in some U.S. farm regions, also put downward pressure on land values.

Given that farm real estate makes up such a significant portion of the balance sheet of U.S. farms, changes in its value can affect the financial well-being of individual farms and the farm sector.

 

U.S., China Agree on Rice Imports

USDA has reached agreement with Chinese officials on final details of a protocol to allow the United States to begin exporting rice to China for the first time ever.

"This is another great day for U.S. agriculture and, in particular, for our rice growers and millers, who can now look forward to gaining access to the Chinese market. This market represents an exceptional opportunity today, with enormous potential for growth in the future," said Sonny Perdue, who added the agreement has been in the works for more than a decade.

China is the world’s largest producer and consumer of rice. Since 2013, it has also been the largest importer, with imports reaching nearly 5 million tons last year. When the new rice protocol is fully implemented, the U.S. rice industry will have access to this critical market, significantly expanding export opportunities. U.S. rice exports can begin following the completion of an audit of U.S. rice facilities by China’s General Administration of Quality Supervision, Inspection and Quarantine.

 

Soybean Domestic Use Exports Vary Widely

While the majority of soybean production in Argentina, Bolivia, Brazil and Paraguay is consumed elsewhere, especially in China, the rest of Asia and the European Union, the United States consumes 50 percent of its output and exports 44 percent of production outside of North America.

Brazil and Argentina, the largest Latin American producers, exported an average of 67 percent of their soy production outside of South America.

The soy product exported varied with the country. For example, Argentina exported about 8 million tons of soybeans and 22 million tons of soybean meal. By comparison, Brazil exported about 43 million tons of soybeans and 13 million tons of soybean meal, according to USDA’s Economic Research Service.

 

Price Swings Vary at Different Food Chain Levels

Favorable weather conditions as well as droughts and floods can lead to changes in production levels of farm commodities and, in turn, swings in their prices.

Volatility in farm commodity prices – measured by the Producer Price Index for Farm Products and by the PPI for Processed Foodstuff and Feedstuff for intermediate foods – is often greater than price volatility in grocery stores and restaurants.

Intermediate foods such as vegetable oils and refined sugar are used to produce final foods like cookies and bread. Prices at each stage generally move in the same direction, but the magnitude of the price changes varies. For instance, in 2016 the Farm Products PPI declined by 9.7 percent, the Processed Foodstuff and Feedstuff PPI fell by 2.7 percent, while the Consumer Price Index for all food (foods purchased in stores and eating places) rose slightly by 0.3 percent.

Price fluctuations for intermediate foods and final foods are muted relative to that of farm products, because foods at later stages of production include less volatile costs for processing, transportation, packaging, and other wholesale and retail overhead costs.

According to ERS’s Food Dollar Series, farm and agribusiness costs represented only 10.8 cents of every dollar spent on domestically produced food in 2015.

 

Rural Population Decline Masks Wide Variations

 

Population in rural counties continued to decline slightly for a sixth straight year in 2015-16, according to census bureau estimates.

The number of people living in rural (nonmetro) counties stood at 46.1 million in July 2016, representing 14 percent of U.S. residents.

Rural population loss has been relatively small – 192,000 fewer people in 2016 compared with 2010, a decline of just 0.4 percent. However, this overall trend masks substantial regional and local variation.

Population declined by 790,000 people in the 1,350 rural counties that have lost population since 2010. Extensive population-loss regions are evident throughout the Eastern United States.

On the other hand, 466 rural counties grew at moderate rates (below the national average of 4.5 percent) and added 245,000 people. Many of these counties are located in recreation or retirement destinations such as in the Intermountain West or southern Appalachia.

The remaining 160 rural counties that increased at rates above 4.5 percent added 353,000 people. The highest rates of growth during 2010-16 occurred in rural counties with booming energy sectors such as those centered in western North Dakota’s Williston Basin. However, these counties experienced a considerable population slowdown in 2015-16, in line with declines in oil and gas production.