READ the NAFB’s National Ag News for Thursday, December 26th

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Rural Mainstreet Index Rises Again

The Creighton University Rural Mainstreet Index remained above growth-neutral in December. It’s the fourth-straight month that’s happened and the tenth time in the past 12 months. The index is a monthly survey of bank CEOs in rural areas of a 10-state region that depends on agriculture and/or energy. While it’s still above growth-neutral, the index did drop from 54.2 in November to 50.2 in December. A Creighton University news release says, “Federal agriculture crop support payments and somewhat higher grain prices gave a boost to the Rural Mainstreet Index.” The index shows bank CEOs, on average, expect about 12 percent of grain farmers to experience financial losses in 2020. “However, this is down from last year at this time, when bankers expected about 15 percent of their grain farmers to have a negative cash flow during 2019,” says Dr. Ernie Goss of Creighton University. For example, Jeff Bonnett is president of the Havana National Bank in Illinois, who says, “If grain prices remain where they are today, we will have a small percentage of borrowers who will struggle with their cashflow.” There was some good news as the farmland and ranchland price index soared to 52.8 from a weak 40.4 in November.


Ag Lenders Talk Economic Conditions During DC Testimony

Agricultural lenders were on Capitol Hill this week to talk to legislators about the current credit conditions in farm country. An Agri-Pulse report says the lenders appeared before the House Agricultural Subcommittee on Commodity Exchanges, Energy, and Credit. Steve Handke of the First Option Bank in Kansas, says agricultural portfolios are remaining stable but showing signs of deterioration. “Many bankers are concerned about low commodity prices and their negative impact,” he said during testimony. “While credit is plentiful, competition for loans is intense as interest rates remain near historic lows. All that is beneficial to farmers.” However, what’s not beneficial is the fact that $22.4 billion of the total farm income in 2019 came from government payments, which is not sustainable income. Shan Hanes of Heartland Tri-State Bank in Kansas told legislators that net farm income dropped an average of 85 percent in just six years. “I dare say, many of us wouldn’t survive if our paychecks were cut 85 percent,” he said during testimony. Other bankers testified that working capital levels, the difference between current assets and current liabilities, have declined sharply since 2013. A North Dakota banker says it’s the cushion against tough times that just isn’t there anymore.


Israel is Latest Country to Chase a Trade Deal with China

A close ally of President Donald Trump and his biggest economic rival are looking at a possible trade relationship in 2020. Israel is another U.S. ally that’s now looking to conclude a free-trade agreement with China as early as next year. A senior Israeli official anonymously tipped off Bloomberg because the discussions aren’t public. The two countries first began talking back in 2016. The latest round of discussions is causing other countries to closely scrutinize the potential cooperation between a U.S. ally and adversary. The U.S. is pressuring Israel to be cautious when talking about China playing a role in its economy. From a trade perspective, it’s a balancing act for Israel, who faces a “more assertive China” as the United States takes a different military posture in the Middle East. Israeli and Chinese officials met about a month ago for their seventh round of talks. The official who spoke with Bloomberg says it’s still not yet a sure thing that Israel will be able to wrap up a deal next year. A political deadlock is preventing the establishment of a new government in Jerusalem.


U.S. Won’t Implement Steel, Aluminum Tariffs on Brazil Imports

The president of Brazil, Jair (Jayr) Bolsonaro (Bowl-soh-NAH-roh) said late last week that U.S. President Trump won’t implement a new tariff on Brazilian steel and aluminum imports as threatened earlier in December. “I had a phone conversation with President Trump,” Bolsonaro said during a Facebook Live session. “He was convinced by my arguments and I decided to tell all Brazilians that our steel and aluminum won’t be hit by additional tariffs.“ A U.S. source confirmed to Reuters that the administration won’t be implementing the tariffs talked about by Trump earlier this month. Trump announced the possibility of tariffs on Brazil and Argentina during a Tweet on December 2, accusing the two countries of devaluing their currencies, a move that hurts U.S. farmers by making their agricultural commodities more expensive on the world market when compared to those from Brazil and Argentina. The U.S. had originally exempted steel and aluminum imports from Brazil and Argentina from the sweeping metal tariffs implemented in March of 2018.


USDA Sends Livestock Dealer Trust Study to Congress

The USDA sent Congress details on a study to determine whether a Dealer Statutory Trust would improve the recovery of livestock sellers in cases of dealer payment defaults. The Hagstrom Report says the study, which was required under the 2018 Farm Bill, was undertaken by the Ag Marketing Service’s Packers and Stockyards Division. “Based on its analysis of industry data, public input, and experience with the livestock industry, USDA finds it would be feasible to implement a Livestock Dealer Statutory Trust,” says the Livestock Marketing Association in a news release. “Under current law, farmers, ranchers, and livestock auctions have been devastated when livestock dealers default on payments.” They say the sellers don’t often get the livestock back that they weren’t paid for. The producers also recover little from the dealer’s bond. The USDA report analyzes 83 dealer defaults that occurred between October of 2013 and June of 2019. The LMA says, “A Dealer Statutory Trust would give unpaid livestock sellers the legal right to reclaim the animals, or if they’ve been resold, proceeds from the livestock in the unfortunate event of a livestock dealer payment default.” The report found that existing statutory trusts in other segments of agriculture have been effective in improving financial recoveries and LMA says similar results could be expected in the livestock industry.


U.S. Hog Inventory Climbs Higher

As of December first, U.S. farms contained 77.3 million hogs and pigs. That’s a three percent jump from December of last year, but down slightly from September first of this year. Those were some of the numbers released in the Quarterly Hogs and Pigs report this week, published by the National Agricultural Statistics Service. Other key findings in the report said of those 77.3 million hogs and pigs, 70.9 were market hogs while 6.46 million were kept for breeding purposes. Between September and November of this year, 35.1 million pigs were weaned across U.S. farms, which is up two percent from the same time in 2018. From September through November, U.S. hog and pig farmers weaned an average of 11 pigs per littler. U.S. producers intend to have 3.13 million sows farrow between December of this year and February of 2020. They’ll also have another 3.15 million sows farrow between March and May of next year. Iowa has the largest inventory among the states, coming in at 24.8 million head. North Carolina and Minnesota tied for second, with each having 9.2 million head of hogs in inventory.

SOURCE: NAFB News Service


By Brian Allmer - The BARN

Brian Allmer & the BARN are members of the National Association of Farm Broadcasting (NAFB), the Colorado FFA Foundation, the Colorado 4H Foundation, the Colorado Farm Show Marketing Committee, 1867 Club Board Member, Denver Ag & Livestock Club Member, the Weld County Fair Board, the Briggsdale FFA Advisory Council, Briggsdale 4H Club Beef Leader & Founder / Coordinator of the Briggsdale Classic Open Jackpot Show.