News Update
April 27, 2016
Beef Projections: Up and Down
Analysts at the University of Missouri Food and Agricultural Policy Research Institute (FAPRI) have released market outcome projections for 2017 through 2025, and beef projections are mixed.
The institute projects 2016 net returns per cow at more than $211 per head, declining to about $85 in 2017 and to more than just $9 in 2018. However, the projections show annual returns growing from $10.45 in 2021 to $98.32 in 2025.
Fed steer prices for all grades are projected to decline from an average of about $133 per hundredweight (cwt.) this year to a period low of almost $118 per cwt. in 2018. From there, prices are projected to increase to nearly $136 in 2025.
Learn more from the analysis on this week’s episode of The Angus Report. You can also watch the show on RFD-TV at 1:30 p.m. CST Saturday and 7:30 a.m. CST Monday morning.
Government Support, Not Opposition
Low commodity prices, tightening credit, expensive land and rising costs for expenses such as seed and fertilizer will lead to financial losses for many farmers and ranchers this year, Illinois Farm Bureau President Richard Guebert Jr. told a House subcommittee April 27.
Testifying on behalf of the American Farm Bureau Federation (AFBF) and the Illinois Farm Bureau, Guebert encouraged Congress to help farm and ranch families endure what observers agree will be a difficult year. He said Illinois farmers who produce row crops have been hit hard along with the rest of the farm economy.
“Over the last 18 months we have seen our working capital erode over 25%,” Guebert said. “Our equity is fading into the sunset. Indexed to inflation, the economic return for Illinois farmers after accounting for family expenses is currently at its lowest level since 1972. All of this has proven to be a very steep learning curve for a new generation of younger and less experienced farmers who entered the business when times were better.”
For more information, view the Farm Bureau news release online.
Managing Grass Through Grazing
Grass management is key for successful grazing. This requires knowledge of what grasses are present and how they grow. Producers should understand how grazing affects grass in both a positive and negative way.
“Grazing is the consumption of herbaceous plants by herbivores,” said Casey Matney, University of Alaska range management specialist. Grass is the most common and identifiable herbaceous plant, but with more than 10,000 grass species globally, producers must know what species they are managing.
“Describing and understanding the diversity of grasses on the rangelands of North America is not simple. While different species of grass may look similar from a distance in shape and general parts, they can range in height from a few inches to over 5 feet tall at maturity,” Matney said.
Despite the diversity, all grass species are classified as either warm- or cool-season. The distinction between the two is simple: cool-season grasses begin spring growth when soil temperature is about 40° F.
To continue reading, view the Angus Media news article online.
Investigating the Cattle Price Collapse
In response to R-CALF USA’s January request, the Senate Judiciary Committee last week requested the Comptroller General of the United States to use his agency, the Government Accountability Office (GAO), to initiate an investigation into the 2015 cattle price collapse. The GAO is asked to investigate the cause of the sudden 15.1% drop in fed cattle prices that occurred during the latter half of 2015.
“We are pleased the Judiciary Committee agrees that the evidence we provided regarding the dysfunctionality of our fed cattle market warrants a careful investigation into the current structure of our industry and our industry’s susceptibility to anticompetitive practices,” said R-CALF USA CEO Bill Bullard.
The Judiciary Committee’s letter specifically requested the GAO to conduct “a review of the structure of the market and of any possible anticompetitive conduct.”
For more information, view the R-CALF news release online.
Changing Dynamics of Farm Ownership, Ag Finance
The combination of strong non-farmer investor interest in agricultural resources and use of more diverse business organization tools by farmer landowners are changing the landscape of farmland ownership and tenure patterns.
Exploring the implications of these evolving trends is the focus of a workshop planned June 6-7 at the Brown Hotel, Louisville, Ky. Farm Foundation, NFP is organizing this workshop in collaboration with USDA’s Economic Research Service and Bank of America Merrill Lynch.
Investors outside the agricultural sector are buying farmland, including financial services firms and pension and mutual fund companies. Agriculture-only REITS are also now part of the farmland market. At the same time, other financial developments are also at play in the agricultural finance sector. Farmers seeking to keep their land, invest in capital assets, adapt to changing supply chains or expand operations are turning to a wide array of organizational tools, such as C- and S-corporations.
For more information, view the Farm Foundation news release online.
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