Farm prices dropping

Thursday, August 2, 2018

Already farmers are feeling the difference in income as commodity prices drop. There are several reasons.

According to farmprogess.com , USDA Economist Robert Johansson spoke at the agency's 2018 Agricultural Economic and Outlook Foreign Trade Forum held in Arlington, Va., over the weekend (Feb. 22-25).

The theme for this year's Outlook Forum was "The Roots of Prosperity."

"The ag sector does continue to face economic stress. Debt is increasing as farm income continues to fall," said Johansson, who is also USDA's undersecretary for farm production and conservation.

The outlook for livestock and dairy is more encouraging than crop production, noting record meat and dairy production is expected to continue. Johansson noted that meat and poultry production will hit nearly 104 billion pounds in 2018, as production of beef, pork and broilers all increase. Milk production is projected to be at a record level in 2018. But he warned that expansion in meat production is expected to depress prices, a trend that has been ongoing since record highs in 2014.

Adding to the problems for farm income, Johansson noted it may take a number of years for farmers to see any notable improvement.

"Falling net farm income is largely the result of falling commodity prices [and] productivity is outpacing population growth and food demand," he reported. "Looking forward, net farm income is expected to remain flat over the next ten years, and when accounting for inflation, to fall in real terms."

He said the most recent outlook for 2018 indicates expectations are lower than last year's net farm income. USDA projects farm income will fall 6.7 percent in 2018, down to $59.5 billion. That’s less than half of the farm income levels in 2013.

Johansson noted that while USDA projects parity this year for corn and soybeans, long-term trade expansion in soybeans will put pressure on corn acreage, but also other crop areas in the future.

He pointed out that real farm prices, when indexed for inflation, have fallen sharply since 1960. Increased production has been significant, 400 percent for corn production and nearly a thousand percent production increase for soybeans. That effectively has caused a 60 percent drop in the price of corn when figuring in inflation, and 47 percent for soybeans considering the inflation rate since 1960.

Susan Beug of Red Lodge, a member of Carbon County Resource Council, said, “I agree with the WORC (Western Organization of Rural Counties) assessment which supports a Farm Bill platform. The platform includes developing and expanding local and regional food systems; restoring fair and competitive markets; protecting and improving conservation; defending families’ access to healthy nutrition; ensuring fair access to credit and crop insurance and instituting sound supply-management policies.

WORC states, “Unfortunately, the Senate bill, asis, makes no progress on competitive markets, even as just four companies control 84 percent of American cattle processing, or two companies control three-quarters of the corn seed market. Nor does it make improvements on supply management, even as U.S. dairy farmers sell at an average of $6 per hundredweight  below cost  while their supplycontrolled Canadian neighbors sell for nearly double that rate.”

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  • Monday, November 19, 2018 - 7:00pm
    Joliet Group meets at the Community Center Monday at 7 p.m.
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The Carbon County News

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