READ the NAFB’s National Ag News for Friday, February 10th

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READ the NAFB’s National Ag News for Friday, February 10th

Farmland Value Slump Continues

The Federal Reserve Bank of Kansas City’s Agricultural Survey shows a moderate decline in cash rents and farmland values in the fourth quarter of 2016. Tenth-District Bankers in seven states note that weakness in farm income is having a negative impact on farmland value. Nonirrigated and irrigated farmland value dropped six percent on average and ranchland values were seven percent lower over the same period. Cash rents for both irrigated and nonirrigated cropland dropped eight percent last year while ranchland cash rents were 12 percent lower in the fourth quarter of last year. Credit conditions also weakened because of lower farm income and bankers have responded by adopting some risk prevention measures. Some measures include increasing interest rates for all variable and fixed-rate farm loans. Over 30 percent of bankers reported increasing collateral requirements, which is the largest share in survey history. Although a credit shortage appears unlikely for now, marginal operations will find it harder to obtain credit at the same pace as when the farm economy was stronger.

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Organic Welfare Rule Delayed

The U.S. Department of Agriculture announced it is delaying implementation of a controversial new rule on animal welfare standards for organic livestock and poultry. The delay is due to President Trump’s order to delay implementation by 60 days any new regulations that haven’t gone into effect yet so they can be reviewed. Politico’s Morning Agriculture Report says opponents of the new rule see it as a sign that it may not be put into effect. “We’re pleased to see the Trump Administration re-examine this last-minute, misguided rule,” said Jim Byrum, President of the Michigan Agribusiness Association, which represents many ag organizations in the state that are against the rule. Byrum added that he’s confident that on further review, science will prevail over the political demands of special interest groups. However, the Organic Trade Association issued a statement saying, “the rule has received strong support throughout the organic chain and we urge the U.S.D.A. to allow the new effective date of May 19 stand as published.” It was originally supposed to go into effect on March 20.

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Tyson Foods Tied to Price-Fixing Lawsuit

Tyson Foods said this week it recently received a subpoena from federal investigators, likely tied to an investigation in which Tyson and other companies are alleged to have conspired to fix poultry prices. An AP report says the Arkansas-based meat producer said the investigation is in its early stages and that they are cooperating with investigators. Last September, a class-action lawsuit accused Tyson, Pilgrim’s Pride and other poultry producers conspired to fix and maintain poultry prices since 2008. The suit says their primary method of fixing prices at certain levels was “limiting their production.” The suit was filed by Mapleville Farms of New York, stating that methods of limiting production included the “unprecedented” destruction of breeder hens in 2008. The suit also says a second wave of coordinated productions cuts took place in 2011 and 2012. In addition, the suit said the companies exchanged competitively sensitive, nonpublic information about prices, sales volume, and demand. Several companies named in the lawsuit filed a motion last month to dismiss the suit, saying that chicken production grew during the time period named in the lawsuit.

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February WASDE Report Released This Week

The U.S. Department of Agriculture released its February World Ag Supply and Demand Estimate report this week. The 2016/17 U.S. corn outlook is for increasing food, seed, and industrial use, leading to reduced ending stocks, which are 35 million bushels lower than last month. Global coarse grain production is expected to rise 1.4 million tons. U.S. soybean supply and use projections are unchanged from last month, leaving ending stocks at 420 million bushels. Global oilseed estimates include lower production and ending stocks. U.S. wheat exports are expected to rise 50 million bushels while global wheat supplies are expected to drop 4.2 million tons due to decreased production in India and Kazakhstan. U.S. cotton supply and demand estimates show slightly higher exports and lower ending stocks relative to last month. The world cotton forecast includes slightly higher consumption and lower ending stocks. Total red meat production for 2017 is lower, largely from decreased pork and poultry forecasts, but beef production is expected to rise. The milk production forecast for 2017 is higher than it was last month, as milk output per cow is expected to keep rising.

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Ag Producer Confidence Continues to Rise

According to the newest Purdue University/CME Group Ag Economy Barometer, the rise in producer confidence that began after the elections last November has continued into the month of January. The monthly survey index was at 153 in January, a 21-point jump over the previous month and 61 points above October. The January index of 153 is the most optimistic producer outlook since the survey began in October of 2015. Producers’ future expectations are the biggest driver behind the jump in optimism. The Index of Future Expectations as well as the Index of Current Expectations both surged higher than the December numbers. However, the improvement in producer perception of current economic conditions was tempered by 58 percent of respondents saying their farms were in worse economic shape than at the same time last year. Looking ahead to the next 12 months, the rise in optimism since last October is noticeable. Back in October, only 17 percent of producers expected things to improve over the next year. As of last month, 39 percent of producers expect things to get better economically over the next 12 months. One of the other big drivers in optimism is less expected impact from government regulations.  

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Rural Hospitals Fear Cuts

Rural Hospital leaders told lawmakers this week that they are facing challenges to stay open for rural residents. Lawmakers said they are trying to find ways to protect and even expand health care into rural America. A DTN report says senators and representatives met with members of the National Rural Health Association, which is made up of hospital administrators and rural clinics, during the association’s policy conference, which is going on as Congress is getting set to repeal the Affordable Care Act. The administrators say there is no good way of eliminating the policy without causing millions of people to potentially lose their health care. Hospitals are typically the biggest employers in rural towns and can be a very important part of recruiting new businesses to their area. The loss of a hospital in a small town often leads to a reduction in property values in rural communities. Association leaders also are afraid the push to repeal the ACA will lead to cuts in Medicare for seniors and Medicaid for the poor, which would hit rural hospitals much harder than their urban counterparts.

SOURCE: NAFB News Service

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