State of the Ag Economy

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1 State of the Ag Economy June 10, 2017 Chad Hart Associate Professor/Crop Marketing Specialist

2 Ag Productivity and Usage Using corn as an example Source: USDA

3 Ag Prices Using corn as an example Source: USDA

4 Net Farm Income Source: USDA

5 Farm Debt Source: Federal Reserve

6 Ag Economic Summary Agricultural production and consumption has grown rapidly over the past several years. But when production exceeds consumption, prices fall. Crop revenues peaked in , while livestock revenues crested in , leading to record farm incomes. Since then net farm income has been cut in half. While the percentage loss in substantial, net farm income remains above levels from the early 2000 s. Farmers and ranchers have partially compensated for the loss in income by taking on higher debt loads. Farm and ranch balance sheets are eroding and financial stress is building for some producers, but the financial issues are not as severe as during the 1980 s. If agricultural prices slowly improve (as projected), the squeeze on farm finances will improve as well. But for some producers, the squeeze may be too much.

7 Land Value ($ per acre) AVERAGE VALUES all farmland Iowa Nominal and Inflation-adjusted Farmland Values $7,183 As of Nov % Nominal value Inflation-adjusted value (2015 dollars)

8 Annual Percentage Change (%) % % Change in Nominal Iowa Farmland Values % 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0%

9 A replay of 1920s or 1980s farm crisis? Source: USDA-ERS, Ag DM C2-70, Zhang and Beek (2016) Farm Policy Journal

10 President s Budget Request Source: OMB, 2018 Budget

11 USDA s Budget Source: USDA 2017 Budget

12 Proposed Adjustments in Farm Policy Source: OMB, 2018 Budget

13 U.S. Meat Production & Prices Source: USDA-WAOB

14 U.S. Meat Trade Million pounds Source: USDA-WAOB

15

16

17 U.S. Corn Supply and Use Area Planted (mil. acres) Yield (bu./acre) Production (mil. bu.) 13,829 14,216 13,602 15,148 14,065 Beg. Stocks (mil. bu.) 821 1,232 1,731 1,737 2,295 Imports (mil. bu.) Total Supply (mil. bu.) 14,686 15,479 15,401 16,940 16,410 Feed & Residual (mil. bu.) 5,040 5,280 5,120 5,500 5,425 Ethanol (mil. bu.) 5,124 5,200 5,224 5,450 5,500 Food, Seed, & Other (mil. bu.) 1,369 1,401 1,422 1,470 1,500 Exports (mil. bu.) 1,920 1,867 1,898 2,225 1,875 Total Use (mil. bu.) 13,454 13,748 13,664 14,645 14,300 Ending Stocks (mil. bu.) 1,232 1,731 1,737 2,295 2,110 Season-Average Price ($/bu.) Source: USDA-WAOB

18 U.S. Soybean Supply and Use Area Planted (mil. acres) Yield (bu./acre) Production (mil. bu.) 3,358 3,927 3,926 4,307 4,255 Beg. Stocks (mil. bu.) Imports (mil. bu.) Total Supply (mil. bu.) 3,570 4,052 4,140 4,528 4,730 Crush (mil. bu.) 1,734 1,873 1,886 1,910 1,950 Seed & Residual (mil. bu.) Exports (mil. bu.) 1,638 1,842 1,936 2,050 2,150 Total Use (mil. bu.) 3,478 3,862 3,944 4,078 4,235 Ending Stocks (mil. bu.) Season-Average Price ($/bu.) Source: USDA-WAOB

19 World Corn Production Source: USDA-WAOB

20 World Soybean Production Source: USDA-WAOB

21 Corn Export Sales Source: USDA-FAS

22 Soybean Export Sales Source: USDA-FAS

23 Corn Grind for Ethanol

24 Current Corn Futures Source: CME Group, 6/9/2017

25 Current Soybean Futures Source: CME Group, 6/9/2017

26 Iowa Corn Prices vs. Costs

27 Iowa Soybean Prices vs. Costs

28 Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker:

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