Sponsored by the American Farm Bureau Federation
READ the NAFB’s National Ag News for Tuesday, January 22nd
As Rates Tick Up, Growth in Operating Loans Boosts Farm Lending
The volume of non-real estate farm debt continued to increase in the fourth quarter of 2018, according to the Federal Reserve’s Agricultural Finance Databook. Total non-real estate farm loans were up nearly eight percent from a year ago, which was the seventh consecutive quarter of annual growth in loan volumes. In a news release, the Federal Reserve said the increase in farm financing continued to be driven by lending to fund current operating expenses. The volume of operating loans reached a historical high for the fourth quarter, increasing more than $10 billion, or 22 percent year over year. Rounding out a year characterized by lower farm incomes, uncertainties about agricultural trade and the growth of lending volumes, interest rates on agricultural loans trended higher. The combination of increased lending needs and higher interest rates has continued to raise the cost of financing at a modest pace. However, despite mounting pressure on the farm sector and limited profit opportunities, the value of farm real estate has continued to provide ongoing support for farmers.
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Vilsack: Shutdown Impacts Could Last Years
The government shutdown could cause a ripple effect across the federal government for years, according to former Agriculture Secretary Tom Vilsack. Vilsack recently told Politico that the effects could take years to realize, like the ramifications of pausing some Forest Service efforts to reduce fire hazards. Specifically, Vilsack said, “You may not see the consequences of this until August of next year, when there is a worse fire than we would have had.” The shutdown is prompting many sectors of the U.S. economy, from real estate to agriculture, to brace for years of setbacks that include the pause in government loans and permitting processes. Vilsack served as Agriculture Secretary from 2009 to 2017 under the Obama administration. He now serves as President and CEO of the U.S. Dairy Export Council. The Department of Agriculture last week opened select Farm Service Agency offices for three days to serve farmers. However, the offices were reported to be near overwhelmed from the workload.
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Trade War Shifting Feed Demand Amid Ethanol Production Cuts
The trade war is causing U.S. ethanol production to decline, thus raising the costs of distillers dried grains, a byproduct of the ethanol process that is used for animal feed. Reuters reports cuts to ethanol production are tightening supplies of DDGs and raising prices paid by livestock farmers. Many are turning to other feeds including soybean meal, the price of which eased as China halted imports of American soybeans. The shift in distillers’ grain demand is causing further harm to the ethanol industry, which is facing the lowest ethanol prices in over a decade. Distillers’ grains have previously helped the struggling sector, by providing solid demand for the byproduct. But, that support is eroding as production is being limited. Ethanol makers were forced to limit production rates over the last year due to the low price, in an effort to deal with negative profit margins. The shift to soybean meal from DDGs is largely seen in the hog sector. Meanwhile, China, the top importer of U.S. DDGs, stopped buying the product last year due to the trade war.
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China, U.S. Swine Industries Gather to Address African Swine Fever
Despite ongoing trade challenges between their two countries, members of the swine industries in the United States and China gathered in mid-January to seek possible solutions for the growing number of African swine fever outbreaks in China. The 7th U.S.-China Swine Industry Symposium, held earlier this month, was co-organized by the U.S. Grains Council and the U.S. Meat Export Federation, along with others. Roughly 200 industry professionals gathered in Beijing for the event that focused on animal disease prevention. The swine industries in China and the United States are closely connected through trade in meat and feed products, and issues that affect the two industries have significant implications for global markets, according to USGC. Bryan Lohman of USGC, referring to diseases such as African swine fever, says, “Fortunately, a large share of China’s pork production comes from modern operations with strict biosecurity protocols, and that will help spare much of China’s production.” He adds that learning more about the disease will help in expanding biosecurity measures to contain the outbreak for the global pork industry over the next few years.
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Rep. Marshall Urges Trump to Continue Fighting for Farmers in Trade
U.S. Representative Roger Marshal urged President Trump to continue to fight for farmers in trade negotiations. In a Washington Examiner opinion piece, the Kansas Republican says lawmakers were disappointed to hear the European Union say talks between the U.S. and EU “cannot include agriculture,” because it would “make it a very long and complicated negotiation.” According to the U.S. Trade Representative, the U.S. domestic exports of agricultural products to the EU totaled $11.5 billion in 2016. Marshall says that means the EU countries together would rank fourth as an agricultural export market for the United States. He urged the Trump administration to “stay firm” and to “go on the offense for American producers” who are suffering from an agriculture economic downturn. Marshall added, “If agriculture isn’t in this deal, however, I and many of my colleagues will not consider it or support it.”
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Scientist Studying How to Help Plants Adapt to Temperature Changes
The University of California-Riverside is studying ways to help plants deal with rising temperatures. While not immune to changing climate, plants respond to the rising mercury in different ways. Temperature affects the distribution of plants around the planet. It also affects the flowering time, crop yield, and even resistance to disease. One of the researchers says, “It is important to understand how plants respond to temperature to predict not only future food availability but also develop new technologies to help plants cope with increasing temperature.” Scientists are keenly interested in figuring out how plants experience temperature during the day, but until recently this mechanism has remained elusive. The research team is exploring the role of phytochrome B, a molecular signaling pathway that may play a pivotal role in how plants respond to temperature.
