READ the NAFB’s National Ag News for Monday, December 5th

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CLICK HERE to listen to TODAY’s BARN Morning Ag News with Brian Allmer…

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READ the NAFB’s National Ag News for Monday, December 5th

Farm Income Drops 17 Percent in 2016

U.S. farmers will see their net incomes drop in 2016 for the third consecutive year. The U.S. Department of Agriculture says weaker cash returns on livestock, poultry, and dairy farms will drive income down 17.2 percent to $66.9 billion this year. That forecast would be 46 percent lower than the record profits of $123.7 billion in 2013. An article on Dairy Herd dot com says if the forecast does pan out, that would be the lowest farm income level since 2009, signaling more pressure on the slumping farm economy. The slump isn’t just hitting on-the-farm producers, either. The weakened Ag economy is triggering cost-cutting measures and job layoffs at major farm input suppliers like Monsanto and John Deere, which have both lowered revenue forecasts for 2016. Meat processor Tyson Foods reported a steep drop in revenues over the last month and sees lower revenue numbers ahead in 2017. Cash receipts in dairy, beef, poultry, and eggs are projected to fall 12 percent to the lowest levels since 2011. Row crop receipts are forecast unchanged as stronger revenues for soybeans and cotton offset lower prices for corn and vegetables.

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Proposed Tax Regulation a Threat to Future Cattle Farms

The U.S. Treasury Department recently proposed a rule change that would lower or even eliminate valuation discounts on family-owned entities. The Internal Revenue Service hosted a forum to discuss the potential change this week. At the forum, National Cattlemen’s Beef Association Vice President Kevin Kester said that will discourage families from expanding and passing the business on to the next generation, or even continuing their operations in the future. Family-owned cattle farms are often small businesses that face the same challenges as other small businesses in different sectors, including making payroll, complying with numerous regulations, and paying bills. Kester says, “Ranching is a debt-intensive business, meaning operators work on an asset-rich, cash poor business model. That makes them vulnerable to the estate tax.” When a principal in a business passes away, assets often must be sold to meet the tax burden. Producers have used valuation discounts to help them shoulder some of the tax burden and keep operations in their family. Kester adds, “The proposed rule will upset expansion plans, halt future business growth, and require most operations to liquidate assets just to survive.”

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No GMO Wheat Found in Commercial Supplies

The USDA Plant and Animal Health Inspection Service closed its investigation into genetically engineered wheat showing up in a Washington state farm field. Back on July 29, the U.S. Ag Department confirmed that genetically engineered wheat was found by a Washington state farmer growing in an unplanted field. After an inspection, APHIS confirmed 22 plants were volunteering in an unplanted field. The wheat growing in the field was also confirmed to be glyphosate-resistant. APHIS worked to ensure that none of the genetically engineered wheat made it into commercial supply by testing the farmer’s entire wheat harvest. All samples were found to be without any G.E. material. The National Association of Wheat Growers and U.S. Wheat Associates issued a release thanking APHIS for their work on the incident. The organizations credited effective communication between APHIS, USDA’s Foreign Agricultural Service, farmer organizations, the grain trade, and customers to keep things moving in a positive direction. They also thanked overseas customers for their continued confidence in the quality of American wheat supplies.

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More Volatility Ahead for Cattle Markets

Cattlefax CEO Randy Blach (Block) recently spoke at the Kansas Livestock Convention about volatility in the cattle markets, including what’s causing the downturn and what to expect in the months ahead. Cattle producers have recently seen higher prices after a two-year price drop of more than 40 percent. An Ag Web dot com article says 750-800 pound steers brought $125.19 per hundredweight last month. Prices climbed to $134.38 last week. However, Blach said the rally may not last much longer. “This is not about cattle, but more part of a global slowdown,” he said. The bull market for commodities started in 2009 at the end of the global financial crisis. Crop farmers and livestock producers all raised their production efforts before things went in the negative direction starting in 2012. From August 2012-2016, corn prices dropped 60 percent and soybeans were 47 percent lower. Fed cattle prices followed crops lower, dropping 43 percent since November of 2014. The cattle industry has seen huge price swings from the highs in 2014 to this year’s low prices. Steer calves weighing 550 lb. averaged $911 in losses from the cycle high, with 750 lb. feeder steers falling $941. Blach adds, “Commodity cycles are a good reminder of how quickly things can change.”

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The Meat-Cancer Link Debate Heats Up Again

The Center for Science in the Public Interest restarted the debate this week over processed meats and a potential link to cancer. Politico’s Morning Agriculture report says the group petitioned the USDA’s Food Safety and Inspection Service to require cancer warning labels on foods like bacon, ham, hot dogs, and other products. Back in 2015, the World Health Organization’s International Agency for Research on Cancer issued an opinion that eating processed meats raises the risk of cancer. The meat industry immediately responded to that statement, calling it “unsubstantiated.” Some lawmakers even called into the question the funding provided to the IARC by the National Institute of Health. The North American Meat Institute responded to the petition this week, calling it “alarmist” and “sensational.” In a strongly worded response, the organization pointed to studies that showed no correlation between eating meat and cancer. CSPI Executive Director Michael Jacobson isn’t optimistic about the group’s chances after filing the petition, saying “We recognize that the chances of the Trump administration taking advantage of the opportunity to protect public health is slim. At CSPI, we’re used to taking the long view.”

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Dairy Exports to Increase by $500 Million in 2017

The U.S. Department of Agriculture is expecting exports to grow larger by $1 billion in 2017 with dairy exports taking up a big chunk of that growth. The latest USDA export projection report expects dairy to grow by $500 million dollars to $5.3 billion. Other dairy-exporting countries are expecting to reduce their outputs in 2017 which will lead to higher prices around the globe and higher U.S. exports. The $500 million gain in dairy exports will make up about half of the overall growth in U.S. exports next year. Overall, exports are expected to total $134 billion next year. The expected convergence of dairy prices in the U.S. and around the world will make American dairy products more competitive overseas. USDA does expect dairy imports into America to rise $200 million in the coming year. The top three U.S. agricultural trading partners are China, Canada, and Mexico. However, trade is uncertain going forward as the incoming Trump administration has vowed to renegotiate trade agreements with all three countries.

SOURCE: NAFB News Service

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