READ the NAFB’s National Ag News for Wednesday, June 2nd
Sponsored by the American Farm Bureau Federation
May Ag Economy Barometer Tumbles
The Purdue University/CME Group Ag Economy Barometer tumbled significantly in May, dropping 20 points to an index reading of 158. It marks the lowest point for the survey since September of 2020. Producers were less optimistic about both the current conditions and the future of the agricultural economy. The potential for changing tax rules and rising input costs appeared to be top of mind for producers this month and were the primary causes for the barometer’s decline. Of the total number of respondents, 78 percent said they are very concerned that the changes in tax policy being considered will make passing their farm on to the next generation more difficult. Also, 83 percent of producers expect capital gains tax rates to rise over the next five years, and 71 percent are very concerned about the potential loss of the step-up in costs basis for inherited estates. Producers expressed less optimism about their farm’s financial performance this month. The Farm Financial Performance Index declined to 126 from a record high of 138 in April. During May, more producers said they expected to reduce their machinery purchases and construction plans for the upcoming year. One place that farmers remain bullish is farmland values.
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NCBA Pushing Congress to Address Areas of Concern
The National Cattlemen’s Beef Association led a letter supported by 37 affiliate state cattle associations, urging Congress to address critical areas of concern in the cattle and beef industries. They’re asking leaders of both the Senate and House Agriculture Committees to consider swift Congressional action in several areas, such as expanding beef processing capacity. They also want to broaden labor policies to strengthen the beef processing workforce, increase transparency in cattle markets by reauthorizing Livestock Mandatory Reporting, and they want Congress to support industry efforts to reform “Product of the USA” generic labeling. They also want Congress to ensure proper oversight of cattle market players by concluding the ongoing U.S. Justice Department’s investigation into the meatpacking sector. “Cattle producers across the country are frustrated, and with good reason,” says NCBA President Jerry Bohn. “In sale barns and state meetings across the country, we’re hearing the same story of sky-high input costs and intense market volatility.” As much of the country comes out of COVID-19 restrictions, consumer demand for U.S. beef remains strong, and producers have enough cattle to meet the demand. The profits from high boxed beef prices are not being passed on to the producers who supply the live cattle.
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USCA Responds to “Beef Market Myths” Report on Capitol Hill
A report titled “Common Beef Marketing Myths and Facts” from the North American Meat Institute is being circulated on Capitol Hill. U.S. Cattlemen’s Association President Brooke Miller says the organization appreciates the commitment of U.S. livestock groups to expanding the capacity of the nation’s meat processing facilities. “However, it would be helpful if the meatpacking lobby, too, focused their attention on that goal,” Miller says. “We need proactive solutions at this time, such as research and development of markets for offal and hides, working with trade schools and colleges to recruit skilled labor into the industry, and to address the underlying challenges driving the critical labor shortage across the U.S.,” Miller says the report is neither “proactive nor solutions-oriented.” USCA also says it will continue to champion true price discovery and competition in the cattle marketplace. “We’ll continue to support the Department of Justice in its investigation of the U.S. meatpacking sector,” Miller adds. “In the meantime, we would greatly appreciate the opportunity to work with NAMI on solutions that support a sustainable future for U.S. cattle producers.”
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Vilsack Highlights Ag in President’s Budget Proposal
Late last week, the White House released President Biden’s proposed budget for the fiscal year 2022, calling for $6 trillion in spending as well as controversial tax provisions. The Hagstrom Report says the president’s budget calls for USDA discretionary spending at $27.9 billion, a 16 percent increase over the previous year. Ag Secretary Tom Vilsack says the proposal calls for $700 million requested for the Reconnect Program to provide access to quality broadband for rural residents. The proposal would invest in critical research and development capacity for farmers. Vilsack says American farmers must be able to compete in world markets to thrive, all while protecting the health of America’s soil and water. The budget request would provide $4 billion for USDA’s research, education, and outreach programs focused on making investments in agricultural research to put science and data-driven tools and American technologies in the hands of farmers. The budget also increases funding for climate-smart agriculture, climate resilience, and clean energy by almost $1.5 billion. House Ag Committee Chair David Scott says he applauds the focus in the budget on important investments in rural America and food systems, particularly in rural broadband.
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Crop Insurance Pays Out Premium Benefit for Cover Crops
Agricultural producers who have coverage under most crop insurance policies are eligible for a premium benefit from the USDA if they planted cover crops during this crop year. The Pandemic Cover Crop Program, offered by USDA’s Risk Management Agency, helps farmers maintain their cover crop systems despite the financial challenges caused by COVID-19. “Cultivating cover crops requires a sustained, long-term investment, and the economic challenges caused by COVID-19 made it financially challenging for many producers to maintain cover crop systems,” says RMA Acting Administrator Richard Flournoy. “Producers use cover crops to improve soil health and gain other agronomic benefits, and this program will reduce producers’ overall premium bill to help ensure producers can continue this climate-smart agricultural practice.” The program provides premium support to producers who insured their spring crop with most insurance policies and planted a qualifying cover crop during the 2021 crop year. The premium support is $5 per acre, but no more than the full premium owed. All cover crops reportable to FSA are eligible and include cereals and other grasses, legumes, non-legume broadleaves, as well as mixtures of two or more cover crop species planted at the same time.
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New Market for U.S. Soybeans Emerging in Africa
The U.S. Soybean Export Council is continuing its work to develop new markets for U.S. soy. One of those new regions is Sub-Saharan Africa, the area south of the Sahara Desert consisting of more than 50 countries. USSEC says the region demonstrates a lot of factors that make it a valuable potential soy market. There’s a growing population that exceeds one billion, and it’s expected to double in size by 2050. That makes Sub-Saharan Africa one of the most substantial “frontier markets” in the world. The economic conditions in the region are getting stronger, with the annual GDP growth rates between 2 and 6.5 percent. Projections for the recovery and growth in the region are positive coming out of COVID-19 during 2020. People in the region are also taking steps to address protein deficiency as awareness, knowledge, and investment to combat the shortage continue to grow. USSEC says the African Development Bank Group is working to increase livestock ownership to help fill in dietary gaps and make an impact on nutrition in the region. Soybeans will play a key role in helping produce protein sources like milk, eggs, and fish.
