Thursday January 14 Ag News

Smaller Loans Limit Agricultural Lending
KC Federal Reserve

Smaller sized loans limited agricultural lending activity at the end of 2021. According to the Survey of Terms of Lending to Farmers, non-real estate agricultural loans at commercial banks decreased by 13% in the fourth quarter and the yearly average was the lowest since 2012. The decline was driven by a sharp drop in operating loans and lending at banks with the largest farm loan portfolios. Despite an increase in the number of all types of loans, the average size of all non-real estate and operating loans was more than 20% and 30% less than a year ago, respectively. Loan sizes decreased considerably at lenders of all sizes, but the number of loans increased notably at small and mid-sized lenders and decreased at banks with large agricultural portfolios.

Broadly, conditions in the agricultural economy remained strong through 2021 and continued to support farm finances. Despite intensifying concerns about rising input costs impacting producer returns in the coming year, commodity prices remained elevated and supported profit opportunities through the end of the year. Higher costs are likely to put upward pressure on demand for credit, but strong farm income and working capital could also supplement financing for some borrowers.

Farm lending activity dropped sharply at the end of 2021 and the average volume of non-real estate loans during the past 12 months nearly reached a ten-year low. Total non-real estate farm loans decreased about 13% from a year ago and, on a rolling four quarter basis, dropped to the lowest level since 2012. The decline in lending in the fourth quarter was driven by a sharp reduction in average size of loans that offset an increase in the number of loans.

The number of new loans at small and mid-sized lenders increased considerably while most of the decline in loan volumes was among large lenders. The number of loans made by banks with the smallest farm loan portfolios grew more than 35% from a year ago, but the average size of those loans was nearly 30% lower. The decline in loan size among the largest lenders was less pronounced, but those banks also made fewer loans and accounted for nearly all of the decline in total non-real estate lending.

The higher number of loans and smaller loan sizes was consistent across lending types, but farm operating loans drove most of the decline in lending volume. The number of loans for all major categories of lending increased by more than 10% while average loan sizes declined by at least 10%. The average size of operating loans was more than 30% less than a year ago and operating loans also accounted for most of the decrease in total non-real estate loan volumes.

The sharp drop in the size of operating loans was a notable contrast to the trend in recent years. Following several years of consistent increases and a record high for the fourth quarter in 2020, the average size of operating loans dropped to the lowest level for this time of year since 2016. The number of operating loans remained low compared with past years, but increased from the historic low for the fourth quarter reached last year.

With a higher number of smaller loans, the composition of lending shifted away from large loans. The volume of loans greater than $100,000 decreased nearly 20% from a year ago, while the volume of all other loans increased almost 15%. The shift in the distribution of lending towards smaller-sized loans was a noticeable swing from recent years.

The average interest rate charged on non-real estate loans also declined further, and remained lowest for the largest loans and at the largest agricultural banks. The average rate on loans greater than $100,000 remained about 140 basis points lower than rates on smaller loans and has declined slightly more from the same time in 2019. Similarly, the average rate at the largest farm banks remained lower than other lenders and has also declined slightly more from the same time in 2019.



Statement by Mark McHargue, President, Regarding Governor’s State of the State Address (Property Taxes, Broadband, and Water)

“Property tax relief remains the highest priority for Nebraskans and the members of Nebraska Farm Bureau. We greatly appreciate Governor Ricketts’ continued efforts to address this important issue. We strongly support LB 723, a bill introduced by Sen. Tom Briese of Albion, which would address the governor’s desire to put a floor under the $548 million dollars in annual property tax relief provided by LB 1107. But even with that floor, we would still be out of balance by $700 to $900 million dollars for all Nebraska property taxpayers. Good tax policy in Nebraska means balancing the three-legged stool. We look forward to working with the governor and members of the Legislature to build upon the historic amount of property tax relief provided during the last session.”

“Governor Ricketts also laid out bold plans to address Nebraska’s water security, infrastructure, and quality through buildout of canals, reservoirs, and improvement projects. We look forward to working with the governor and the Legislature as they ensure Nebraska has quality water to support our way of life for decades and centuries to come.”

“Finally, Governor Ricketts pointed out that Nebraska has a budget surplus, not only in the General Fund, but through federal COVID aid, and federal infrastructure package dollars. This is a great opportunity to address needed issues such as rural broadband, road and bridge projects, and economic development opportunities that would positively impact rural Nebraska and the agricultural industry.”

“We appreciate Governor Ricketts’ efforts to include rural economic development in his suggested use of American Rescue Plan Act (ARPA) dollars specifically in the areas of workforce development, housing, business development, and expanding our opportunities in the meat processing sector. We agree that the governor has kept his promise to ‘Grow Nebraska,’ and we look forward to working with him and the Legislature on these bold proposals to ensure Nebraska agriculture continues to lead the way towards our state’s success.”



Center for Rural Affairs welcomes governor’s support for small meat processors

The Center for Rural Affairs is pleased to see Gov. Pete Ricketts’ support for small- and medium-sized meat processors, with the inclusion of $10 million to increase independent local processing capacity in his recommended state budget adjustments released Thursday.

“Gov. Ricketts recognizes that an investment in Main Street meat lockers doubles as an investment in Nebraska agriculture. This support will help local processors secure the space and equipment needed to keep up with the heightened demand caused by changing consumer preference and interruptions at regional packing plants,” said Johnathan Hladik, the Center’s policy director. “That is a win for the livestock producers who partner with these local facilities to develop a quality product we can all be proud of.”

The $10 million would provide funding for the Independent Processor Assistance Program (IPAP), established as part of Legislative Bill 324, which the governor signed into law last summer. Introduced by Sen. Tom Brandt, that bill did not include funding for the IPAP, as the senator and 19 cosponsors recognized it would be an ideal match for the federal relief dollars scheduled to be debated this legislative session. The $10 million appropriation recommended by the governor mirrors the request included in another bill introduced by Sen. Brandt, LB 755.



Nebraska Cattlemen Gala
    
You are invited to the Nebraska Cattlemen Gala on Saturday, February 12, 2022. The Gala will take place at The Barn in Clarkson, NE with activities beginning at 6:30 p.m.. All proceeds from this event benefit the Nebraska Cattlemen Political Action Committee. This allows them to support candidates that are champions of Nebraska’s Beef Cattle Industry.

You can plan on the evening being filled with great friends, food, and entertainment. The planning committee has been working hard on lining up exciting silent and live auction items.

Tickets are on sale now for $75 a piece! You can purchase your tickets now by calling the Nebraska Cattlemen office at 402-475-2333 or visiting our website https://nebraskacattlemen.org/event/nc-pac-gala/.



UNL Cow Calf College

Cow-Calf College is gearing up to be hosted January 25th at the Clay County Fairgrounds from 9:30 am to 3:00 pm in the Activities Building. Registration starts at 9:00 a.m. This year’s program will be offered in a hybrid format through zoom and in person attendance. The focus of the 2022 Cow-Calf College will start with an in-depth look at eastern redcedar control in the morning, an update by beef cow-calf specialist, Kacie McCarthy and a special presentation by Tom Field focusing on ways to engage youth in the beef industry.  

This year’s program provides plenty of flexibility, if you are only interested in learning about eastern redcedar control, come to the morning session and leave. If you are interested in bull management and strategies for transitioning the next generation of beef producers and professionals, you can attend the afternoon session. It will also be offered in-person and available via zoom.

A lunch will be provided to those who register and the program will conclude with a coffee shop panel where participants can ask questions directly to specialists as well as the opportunity to win a variety of door prizes.  

Pre-registration a week in advance is highly encouraged to allow for proper planning. Pre-registration can be made by calling the Fillmore County Extension Office at 402-759-3712 or Clay County Extension Office at 402-762-3644 or online at go.unl.edu/frcollege. To participate via zoom, register at go.unl.edu/onlinecowcalfcollege.



IFBF will work to protect property taxpayers and promote renewable fuels during the 2022 legislative session

Iowa Farm Bureau Federation (IFBF), the state’s largest grassroots farm organization, will advocate for its members' policies heading into the 2022 legislative session. Throughout the year, Farm Bureau members from every county provide input on policy important to Iowa agriculture. Among these key agricultural issues in 2022 are protecting property taxpayers, continued efforts to establish a biofuels standard in Iowa, promoting local meat processing and pursuing improvements in the management of Iowa’s deer herd, as well as working on other policies important to Iowa’s farmers.

IFBF President and Calhoun County farmer Brent Johnson notes property taxes will reach $6.4 billion in Iowa this fiscal year and have more than doubled over the past 18 years. “Our members from all over Iowa have clearly stated that protecting property taxpayers should again be a key focus during the 2022 legislative session,” he said. “It’s important that state obligations are not shifted to property taxpayers and that legislators continue to look for ways to ease the burden on property taxpayers, especially considering Iowa’s strong fiscal position.”

Farm Bureau members applaud Governor Reynolds for her commitment to supporting renewable fuel sources and plans to introduce new legislation to improve access to E15 and B20, and upgrade Iowa’s fuel infrastructure to offer higher blends as outlined in her Condition of the State address. Iowa Farm Bureau members are working to promote higher ethanol and biodiesel blends and invest in biofuel infrastructure in the state. While Iowa leads the nation in ethanol and biodiesel production, it lags in comparison to neighboring states in renewable fuel consumption.

“Iowa is the nation’s top producer of ethanol and biodiesel, so it just makes sense to take steps to increase the use of these clean-burning fuels in our state,” Johnson said. “Increased use of biofuels is good for the environment, creates jobs in rural communities and increases demand for crops and we appreciate Governor Reynolds’ support of this important issue.”

Farm Bureau will also build on recent momentum in small-scale meat processing to help broaden state programs to help these facilities expand, refurbish, establish new outlets, and sell directly to consumers.

Additionally, Farm Bureau members will focus on deer management, pursuing a smaller overall deer population to reduce crop damage and improve road safety, while balancing the public’s demand for hunting.

 Farm Bureau will also continue supporting programs that advance water quality and soil conservation efforts by farmers. “Iowa farmers have made conservation work a priority, and we continue to see significant progress through science-based conservation practices, such as planting 2 million cover crop acres, 200 times more than a decade ago and constructing 110 conservation wetlands with 40 more under construction to help protect water quality. To help farmers continue that progress, we need to have sensible state and federal cost-share programs,” Johnson said.       



Women in Ag Program to Provide Business Education Opportunities

The Women in Ag Program at Iowa State University Extension and Outreach is offering six different educational courses throughout the state, including Women Planning Ag Businesses, Managing for Today and Tomorrow: Farm Transition Planning, Women Managing Horses, Women Managing Crops, Annie’s Project farm business management, and Advanced Grain Marketing for Women.

The Iowa State University Extension and Outreach farm management team is leading courses in nine locations in Iowa this winter. The farm management team strives to improve the quality of life in Iowa by providing research-based educational programs that expand agricultural businesses, improve natural resource management, and support the community of women in agriculture. Courses are offered through a network of ISU Extension and Outreach educators, including statewide equine and other specialists as well as county based professionals.

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Women Planning Ag Businesses is a multi-session course for women interested in exploring, starting, or expanding a farm or rural business. Women will access valuable resources and support while writing their personal business plan. Registration is open for the classes in Edgewood beginning Jan. 25 and in Cresco beginning Feb. 2. Cost is $75.

Managing for Today and Tomorrow: Farm Transition Planning is a five-session course designed to help women learn about four components that create a successful transition – succession, business, estate and retirement planning. Participants will be provided with resources and activities to help make decisions for successful business transitions. Registration is open for the class in West Burlington and Mt. Pleasant beginning Jan. 27. Cost is $75.

Women Managing Horses is a four-session course focusing on equine management decisions. Sessions cover feed, labor, facility and risk protection decisions. In addition, managing land, water and manure resources will be discussed. Women will discuss the challenges in bringing horses to market and calculate the true costs of production. Registration is open for the class in Cherokee beginning Jan. 27. Cost is $75.

Women Managing Crops is a four-session course designed for women of all ages and experience levels who want to know more about the key agronomic decisions for corn and soybean production. The sessions take a seasonal approach and cover the decision making for soil and tillage management, seed selection and planting considerations, pesticide management, and machinery, harvesting and storage considerations. Registration is open for the class in Nora Springs beginning Feb. 3. Cost is $75.

Advanced Grain Marketing for Women is a multi-session course offering insight into options trading for grain and livestock producers. Women will benefit from understanding the role farmer-owned cooperatives, grain merchandisers, and brokers have and the services they offer related to options trading. Participants will learn how and why options are traded for commodity grain as well as the pros and cons of different marketing strategies. Registration will open soon for the class in Oskaloosa beginning Feb. 15. Cost is $75.

Annie’s Project: Farm Business Management is a six-session course designed to help women develop their management and decision-making skills. Participants learn about the five areas of agriculture risk management: financial, human resources, legal, marketing and production. Registration is open for classes in Newton beginning Feb. 8, Tabor beginning Feb. 16 and Oelwein beginning Feb. 28. Cost is $75.

Cost for the courses includes meals and course materials. To find a course near you, visit the Women in Ag Program Online. Select the class location for details and registration. Advance registration is required and space is limited.



Nigeria Opens Market to Some U.S. Pork

The United States now can export sausage and similar products to Nigeria, which yesterday announced it is partially opening its market to U.S. pork. The National Pork Producers Council welcomed the move by the West African nation.

“Nigeria has the largest GDP of any African country, with a population of just over 211 million, we are excited to be the first U.S. protein to be allowed access to the Nigerian market,” said NPPC President Jen Sorenson. “NPPC thanks the U.S. Department of Agriculture and the government of the Federal Republic of Nigeria for their efforts to reach an agreement that allows the U.S. pork industry to provide affordable, wholesome and nutritious products to Nigerian consumers.”

While other U.S. pork products – and beef and poultry – remain ineligible to be exported to Nigeria, NPPC is optimistic that the country’s partial opening will lead to more access for the U.S. pork industry.

The U.S. pork industry in 2021 (through November) exported more than $7.5 billion of product to more than 100 countries.



Increased Mobility Improves Ethanol Trade As Policies Drive Long Term Demand

U.S. ethanol exports for the first quarter of the 2021/2022 marketing year (MY) landed five percent higher than the previous year, totaling 330 million gallons. Increased mobility and reduced COVID-19 restrictions have spurred a near global recovery in ethanol trade. Gains were seen in Brazil, and policy developments signal long term increased demand in Canada, the United Kingdom (UK), the European Union (EU), Colombia and India.

In Brazil, U.S. fuel ethanol exports saw a boost in the first quarter of this marketing year, totaling 32 million gallons, over six times more than the first period of the previous year. Following the implementation of a 20 percent tariff in December 2020, U.S. ethanol exports to Brazil remained near-zero for the remainder of the marketing year, ending MY 2020/2021 with a 200-million-gallon shortfall compared to the previous year. After a challenging crop year, Brazil is beginning to re-enter the market for U.S. ethanol to meet its blending mandates.

"Trade is the mechanism for countries to meet their policies, so this uptick is encouraging in this first quarter,” said Isabelle Ausdal, U.S. Grains Council (USGC) manager of ethanol trade policy and economics. “The removal of this and all tariffs remains a priority globally."

In Canada, fuel ethanol was slightly higher than last year, as drivers continued to return to the road. Policies such as the national Clean Fuel Standard (CFS) and provincial policies including Quebec's low carbon fuel standard and E15 in Ontario are expected to drive further demand for ethanol in that market. Final CFS legislation is expected to be published in Spring 2022. Quebec’s new standard will require 10 percent renewable content in gasoline by 2023 and 15 percent by 2030 in alignment with Quebec's 2030 Plan for a Green Economy. Ontario will require 15 percent ethanol blending in gasoline by 2030 and will directly increase blending in Canada's most populous province. The two provinces account for roughly 55 percent of fuel demand in Canada.

"According to the U.S. Department of Agriculture (USDA), U.S. ethanol on average decreases greenhouse gas (GHG) emissions by over 50 percent compared to traditional gasoline and provides countries with tangible progress toward their GHG reduction goals,” Ausdal said.

Exports to the EU and UK totaled 58 million gallons for the first quarter of the 2021/2022 marketing year as drivers also returned to the road in those markets. In the UK, the Renewable Fuel Transport Obligation (RTFO) officially came into force on Jan. 1, 2022, boosting the national blend mandate implemented in September 2021 and providing additional GHG reductions. Implementation of the RTFO may increase the national blending average to eight percent. In the EU, member states are beginning to incorporate the requirements of the RED II Directive into their national legislation, requiring at least 14 percent renewable energy in the transport sector by 2030. This includes increased blending of biofuels such as ethanol. The launch of E10 in Sweden and higher blending rates in France and Germany are also expected to increase EU demand in 2022.

In Colombia, the reinstatement of Colombia's E10 mandate was postponed for a second time and is now expected to occur in August 2022. As a result, demand was down more than 50 percent in the first quarter of this marketing year compared to the last year.

Industrial ethanol exports to South Korea in the first three months of this marketing year experienced a notable boost, totaling 35 million gallons, two times higher than last year. Exports to India remained nearly equal, with the bulk of exports occurring in the last two months.

“The Council is encouraged by this uptick in global ethanol trade,” said Brian Healy, USGC director of global ethanol market development. “Our offices are hard at work with local partners in demonstrating the ongoing value of using globally available, low carbon ethanol to meet their policy goals.”



House Members Call for Action Against India’s Wheat and Rice Subsidies

Today, 28 Members of the U.S. House of Representatives sent a letter to U.S. Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Katherine Tai requesting the administration pursue a World Trade Organization (WTO) case against India’s domestic support for rice and wheat production. The United States has previously highlighted India’s non-compliance through counter-notifications at the WTO Committee on Agriculture.

Last month, Senator Boozman (R-AR), the Ranking Member of the Senate Agriculture Committee, led a parallel letter in the Senate. That letter included 18 U.S. Senators.

“Wheat and rice farmers rely on open markets and fair trade to facilitate trade, which plays a vital role in supporting our growers and jobs in rural America. NAWG appreciates U.S. Representative Tracey Mann (R-KS) and Rick Crawford (R-AR) for leading these efforts outlining the importance of open markets,” said NAWG CEO Chandler Goule. “It is important that as a WTO member, India adhere to international commitments and not continue to create unfair advantages for its domestic production and distort world trade. We appreciate the Representatives for bringing the issue to the attention of the Administration and will continue to work with the USDA and USTR in enhancing the competitiveness of U.S. wheat in the world.”

The letter states: “Trade distorting domestic support has always been a major challenge for farmers, and WTO rules were created to limit these practices.  For the most part, the system has been successful, but there are repeat offenders, like China and India, where enforcement is necessary.  Your teams have continually pressed India at the WTO to reform its price support program, but to no avail.”



USDA to Invest up to $225 Million in Partner-Driven Conservation on Agricultural and Forest Land

The U.S. Department of Agriculture today announced up to $225 million in available funding for conservation partners through the Regional Conservation Partnership Program (RCPP). RCPP is a partner-driven program that leverages collective resources to find solutions to address natural resource challenges on agricultural land. This year’s funding announcements include opportunities for projects that address climate change, benefit historically underserved producers and support urban agriculture.

“RCPP is public-private partnership at its best,” said Natural Resources Conservation Service (NRCS) Chief Terry Cosby. “We’re harnessing the power of partnership to create lasting solutions to global challenges, like climate change, and support producers and communities who have been underserved in the past.”

There are two types of funding opportunities under RCPP: RCPP Classic and RCPP Alternative Funding Arrangements (AFA). RCPP Classic projects are implemented using NRCS contracts and easements with producers, landowners and communities, in collaboration with project partners. Through RCPP AFA, partners have more flexibility in working directly with agricultural producers to support the development of new conservation structures and approaches that would not otherwise be available under RCPP Classic. Project types that may be suited to AFA, as highlighted by the 2018 Farm Bill include:
    Projects that use innovative approaches to leverage the federal investment in conservation.
    Projects that deploy a pay-for-performance conservation approach.
    Projects that seek large-scale infrastructure investment that generate conservation benefits for agricultural producers and nonindustrial private forest owners.

USDA is accepting project proposals for both components of RCPP through 11:59 p.m. on April 13, 2022. View the funding opportunity on grants.gov for RCPP Classic and RCPP AFA.

Additionally, a webinar with general program information for RCPP applicants is scheduled for 3-4:30 p.m. ET on Jan. 20, 2022. Visit the RCPP website for information on how to participate.

Funding is open to agriculture and silviculture associations, non-government organizations, Indian tribes, state and local governments, conservation districts and universities, among others.

Partners are expected to offer value-added contributions to amplify the impact of RCPP funding in an amount equal to or greater than the NRCS investment.

Private landowners can apply to participate in an RCPP project in their region through awarded partners or at their local USDA service center.



AGRI Developments Expands into the Protein Market with new Pork Venture

AGRI Developments today announced it has entered the global pork protein market with its latest venture in the Philippines. The venture, in partnership with one of the country's leading emerging pig farm operators, addresses the pork crisis that is ravaging across the Philippines due to African Swine Fever (ASF). AGRI Developments will be expanding the operators existing production capacity immediately in response to the pork supply crisis across the country. The already operational farm based in Luzon is a specialty breeder, that breeds and sells premium pure line pig varieties to other farms, pork producers and distributors.

"Our expansion into pork makes sense at a time like this. African Swine Fever has devastated the Philippines and has highlighted the importance of food security and sustainable means of production," stated Mr. van Egeraat, CEO of AGRI Developments. He added that "Strict biosecurity measures are in place on the farm for safety and it specializes on breeding genetically pure premium pork varieties ensuring high quality lean pork." He stressed that pork production is extremely underdeveloped in the Philippines and the crisis has indicated drastic change is needed.

The Philippines has been one of the most drastically impacted countries in the world due to ASF, with 40% of its total pig population dying since 2019. The crisis has been devastating resulting in production levels dropping to levels last seen 20 years ago. Supply shortages have resulted in domestic pork prices spiralling upwards and has impacted the daily life of all Filipinos. The Philippines is one of the largest consumers of pork in the world, and accounts for 60% of all domestic meat consumption.

AGRI Developments added that the situation in the Philippines has been further devastated due to its lack of agricultural import safety controls.  It is one of the world's only countries of its size lacking such controls, which ensures agricultural imports are legal and safe.

While other countries have been able to replenish pork supply through imports the Philippines has been unable to do so as it is incapable of testing to see if ASF is present in imports. The government in response has begun work on the construction of its first Agricultural Commodity Examination Area (ACEA), however it will take years to build.

Although ASF does not spread to humans it is fully lethal in pigs and easily transmitted through water and feed. Since no ASF vaccine exists, the only way to prevent transmission once a case is detected is mass slaughter.

The existing ASF outbreak was first detected in China in late 2018 and has been one of the most devastating in human history. The Asian Development Bank estimates that ASF cost the industry as much $130 USD billion last year alone. Unlike China who has recovered from the outbreak rapidly, limited financial resources and imports restrictions hinder the ability of the Philippines to quickly recover.