O'Brien County's Bell-Times-Courier -

Clippings from Iowa State University Extension

2019 Ag Challenges

 

December 5, 2019

Gary Wright

by Gary Wright

Recently, I had the privilege of joining Dr. Steve Meyer and Former State Senator Steve Warnstadt to discuss agriculture challenges with a group at the Western Iowa Tech Community College Convocation. My remarks centered on three key points: (a) Trade; (b) 2019 Outlook; and (c) Financial Trends.

Trade: Regularly, we hear of progress (or lack thereof) on trade. As sure as I write this piece, this fast-moving topic will have changed, and will represent perhaps either more or less of a challenge; however, we know the following:

A modestly stronger U.S. dollar makes American agricultural exports more expensive to the various buyers;

The world population is approximately 7.7 billion, and is projected to increase to 11.2 billion by the year 2100; arable land (best-suited for tilling and can support the growing of crops) is not increasing and represents approximately 11 percent of the globe's total land surface; the U.S. population approximates 326 million (4.5 percent of the world), and U.S. arable land totals 10.5 percent of arable land;

Nearly 20 percent of U.S. agricultural production is exported, including one out of two rows of soybeans and slightly more than one out of five rows of corn;

U.S. exports have increased from near zero in 1970 to an estimated peak of approximately $152.3 billion in 2014 ($140 billion in 2018).

Outlook: The 2019 crop year had a little bit of something for everyone! The local Northwest Iowa corn and soybean harvest is winding down and both commodities are expected to fall below trendline yields, compared to historically high production three of the last four years. 2019 grain carryovers are generally projected market-neutral at equal (or slightly lower) bushels, following a reduction in demand following lower exports. Near-term USDA and Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI-MU) projections show little price movement during the next five years. The livestock sector is not as bleak, with total livestock production and prices estimated slightly higher, dominated largely by pork, on the world stage.

Financial Trends: Unlike three of the last four years of historically high yields, a combination of lower yields and prices have placed downward pressure on operating results. Only the 2019 government's market facilitation payments allowed a slight uptick to 2019 Net Farm and Net Cash Farm Income forecasts. Still overall the near-term financial outlook is rather tumultuous:

Farm debt continues to rise, now passing $180 billion; this adverse trend included the timeline through/since the "golden years" of 2011-12, when farm incomes were at record levels due to weather-impacted higher commodity prices;

The larger strain is short-term asset and liability measurements, where liquidity improvements are largely the result of re-financing adverse working capital levels with longer term debt, and not the positive cash flows from operating results;

Though slightly downward trends during each of the last five years, only a reasonably stable farmland valuation market keeps equity erosion at bay.

Weathering this storm requires careful scrutiny and analysis. The upcoming Farm Bill Educational Meetings in Northwest Iowa (see list below) will stress risk management practices built upon objective, research-based agricultural information. ISU Extension and Outreach, in partnership with the USDA, will host seven 2018 Farm Bill Education workshops across the region. All meetings are without charge, and will feature the same program with the difference being just date/time/location:

Dec. 3 - Rock Rapids (Frontier bank Basement); 9:00 a.m. to noon

Dec. 4 – Estherville (Iowa Lakes Community College Campus); 2:00 p.m. to 5:00 p.m.

Dec. 10 – Everly (Hap Ketelsen Community Center); 9:00 a.m. to noon

Dec. 11 – Emmetsburg (Iowa Lakes Community College Campus); 1:00 p.m. to 4:00 p.m.

Dec. 17 – Sheldon (Northwest Iowa Community College Campus); 5:00 p.m. to 8:00 p.m.

Dec. 18 – Storm Lake (Prairie Lakes AEA); 1:00 p.m. to 4:00 p.m.

Dec. 19 – Le Mars (ISU Extension and Outreach Plymouth County Office); 5:00 p.m. to 8:00 p.m.

Also, please remember that Ag Decision Maker (https://www.extension.iastate.edu/agdm/) is a key and free online resource.

As always, if you have any comments or questions about the contents of this article or items herein discussed, please don't hesitate to call me (Gary Wright, 712-223-1574).

 

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