READ the NAFB’s National Ag News for Monday, May 17th
Sponsored by the American Farm Bureau Federation
Trade Officials Begin USMCA Summit
Trade talks are underway between the U.S., Mexico and Canada, as part of a two-day summit regarding the United States-Mexico-Canada Agreement. The agreement is nearing its first anniversary, and there are a handful of issues of concern. Politico reports there are continuing labor concerns between the U.S. and Mexico and trade barriers in place by Mexico and Canada. Farm groups have concerns over recent policies by Mexico, including decisions against genetically modified corn and the use of glyphosate, along with concerns over a new Mexican food labeling law aimed at combating obesity. Regarding Canada, the U.S. dairy industry claims Canada is placing barriers to U.S. products and wants Canada to open markets more quickly. U.S. Trade Representative Katherine Tai told lawmakers last week those issues should be explored, because USMCA includes mechanisms to do so. However, Tai cautions, it’s too early to say if Canada has violated its dairy commitments included in the agreement.
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Dairy Groups Seek Broad Focus on Pricing Reform
Five Midwestern dairy groups evaluating solutions to federal milk pricing issues recently sent their comprehensive focus to Agriculture Secretary Tom Vilsack. The groups seek a broad scope of focus should there be a Federal Milk Marketing Orders emergency hearing about reform. In April, the groups announced a proposal called Class III Plus, aimed at creating long-term stability in fluid milk pricing and reducing the likelihood of negative producer price differentials. Class III Plus would tie the Class I price to the Class III skim milk price plus an adjuster and do away with advanced pricing. The letter states, “We believe in order reform, but we would prefer to tackle more than just Class I pricing if we are going to go to the trouble and effort of having a hearing with national scope.” The groups include the Dairy Business Association, Edge Dairy Farmer Cooperative, Minnesota Milk Producers Association, Nebraska State Dairy Association and South Dakota Dairy Producers.
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Land Values Near 2014 Peak
Average sales prices for high-quality land in many states are at or near the peak prices last seen in January 2014, according to Farmers National Company’s internal estimates to be released in June. Land values have taken a sizable jump the past six months, and the new levels reflect that move. For instance, the company says the June 2021 value for Illinois will be $12,300 per acre versus $12,500 per acre in January 2014. The estimated price per acre in Arkansas was $5,000 at the start of 2014 and is now $5,600. Ohio was $8,000 per acre and is now $8,150 per acre. Each January and June, Farmers National Company publishes its estimates of the average sales price for better quality cropland observed in each of eighteen states. The estimates are intended to show the trend in land sale prices in each state and not reflect individual sales that may be higher or lower.
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Farm Profit Projections Mixed Through 2030
The Department of Agriculture’s Economic Research service projections for farm profits are mixed through 2030. USDA ERS provides forecasts for net cash farm income and net farm income, two major profitability indicators of the agricultural sector. Net farm income is a broader measure of farm sector profitability that incorporates noncash items. Net cash farm income includes only gross cash income minus all cash expenses. For last year, ERS forecasts net farm income to be at $123 billion, which was $31 billion more than the 20-year average, and net farm income at $139 billion. Further projections estimate these profitability indicators to rise in 2022, then level off through 2030 because of a projected increase in production expenses. In 2030, both measures of farm income are projected to be lower than their 2020 forecasts. Net farm income is projected to remain slightly higher than the recent 20-year average, but net farm cash income is projected to be lower for 2021-30.
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NRECA Calls for Federal Clean Energy Tax Credit
The National Rural Electric Cooperative Association and other industry groups seek a federal clean energy tax credit. In a letter to lawmakers, the groups ask for support of tax policies that will allow public power and electric cooperatives to fully utilize direct pay for renewable and clean energy tax credits. President Joe Biden has set ambitious targets for reducing greenhouse gas emissions from power generation, transportation, and other sources. The groups say reaching the goals will be a daunting challenge for community-owned electric utilities. All the increased costs associated with reshaping their generation profile will burden customers and consumer-owners. The letter says allowing public power utilities and rural electric cooperatives to receive tax credits as direct payments for building clean energy infrastructure would ensure that all utilities serving Americans would have equal access to federal resources. The direct payments would be used to help offset project costs for public power utilities and rural electric cooperatives.
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Pipeline Outage Sparks National Average Gas Price Increase
For the fourth consecutive week, the national average price of gasoline increased, posting a 6.4 cent per gallon gain from a week ago to $3.03 per gallon. The national average now stands 16.8 cents higher than a month ago and $1.17 per gallon higher than a year ago. The national average price of diesel increased 6.3 cents in the last week and stands at $3.17 per gallon. The jump was largely attributed to the Colonial Pipeline shutdown. GasBuddy’s Patrick De Haan says, “With the pipeline now back in service, I expect prices to come down in the hardest-hit states.” De Haan says the drops should lead the national average to fall back under the $3 per gallon mark. But, he cautions, “prices may start to head higher in a few weeks should Memorial Day gasoline demand be red hot.” The most common U.S. gas price encountered by motorists was $2.89 per gallon, up 20 cents from last week.
