We have some fresh evidence of the continued strength of the U.S. farm economy. The average value of U.S. cropland jumped more than 8% this year, with several states such as Kansas and Nebraska seeing increases well in the double digits, according to USDA’s latest report on farmland values.
Average U.S. cropland values were relatively stagnant from 2014 through 2020, a period of relatively low commodity prices. Since then, the average value has risen by about 33% to $5,460 an acre. In Iowa, the average value topped $10,000 an acre this year.
Read our report on land values here.
New analysis compares plantings, base acres
Jonathan Coppess, a veteran farm policy analyst now with the University of Illinois, is out with a fresh look at the potential impact of an update of base acres in the next farm bill. Coppess, an administrator of the Farm Service Agency during the Obama administration who has also advised the Senate Ag Committee, compared USDA planting data to the base acres in each state.
Some results: Arkansas, home state of the Senate Ag Committee’s top Republican, John Boozman, could lose more than 647,000 base acres in a mandatory update, while neighboring Oklahoma could lose a net 1.3 million.
Other big losers in his analysis include Montana and North Dakota. Coppess cautions that he didn’t include prevent-plant acres in his calculations, which may explain the North Dakota result.
Why it matters: The main commodity programs, Agriculture Risk Coverage and Price Loss Coverage, provide payments only on base acres of a particular commodity regardless of how much acreage is actually planted to a particular commodity.
Keep in mind: Last week, we reported on a separate analysis by the Senate Ag Committee that looked at the impact of a mandatory base update on program payments. The results of the two studies aren’t comparable in part because of differences in payments for various commodities.
By the way: Coppess acknowledges the political challenges inherent in a mandatory base update, which is a non-starter for Boozman. But Coppess argues that there are issues of equity at play. For one thing, he argues that the historical patterns of base acreage may reflect the result of past discrimination by USDA.
Current policy also poses a challenge for young farmers, Coppess notes. A new farmer is “at a distinct disadvantage in competing with established farmers, if the beginning farmer lacks base acres but the established farmer has base acres and thereby receives payments,” Coppess writes.
Carbon project to reapply after ND rejection
Summit Carbon Solutions, which is building a major carbon sequestration pipeline for the ethanol industry, plans to reapply for a permit through North Dakota after the company’s initial application was rejected by the state’s Public Service Commission Friday.
The three-member commission says Summit failed to prove its route would have minimal adverse effects on the state. In addition to planning more than 300 miles of pipeline in the state, Summit also plans to store carbon dioxide in North Dakota.
Rural lenders ask Vilsack to guarantee more loans
USDA is facing a $1.36 billion backlog of business and industry guaranteed loans that may not get funded this year. In a letter to Agriculture Secretary Tom Vilsack, the executive director at the National Rural Lenders Roundtable, Bill Broydrick, asks USDA to use its authority to provide additional funding to meet the higher demand.
“Here’s a program where a borrower says, ‘I want to increase my economic activity in rural America,’ there’s a bank that says, ‘We will loan the money,’ yet the only thing missing is participation by USDA for providing a guarantee to set aside 2% of the loan,” Broydrick tells Agri-Pulse.
Broydrick has been discussing options with the top Democrat on the House Appropriations Agriculture Subcommittee ranking, Georgia Rep. Sanford Bishop. Last year, USDA responded to a shortfall by moving additional loan authority into the B&I category.
FSA ending grain storage applications
Citing high demand, the Farm Service Agency has increased funding for its Emergency Grain Storage Facility program from $20 million to $80 million. And the agency won’t be accepting applications after today.
The agency says it can’t fund all the eligible applications that it has already received.
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The program, which is being funded out of the Commodity Credit Corp., is open to “eligible grain producers who were affected by an eligible disaster event that damaged or destroyed local commercial grain elevators,” FSA says in today’s Federal Register.
Corteva reports increased sales for first half of 2023
Corteva Agriscience says its seed sales offset poor results for crop protection chemicals in the first half of this year. The company on Friday reported a 1% increase in net sales to nearly $11 billion for the first six months.
The company expects its Enlist E3 soybeans will capture 55% of the soybean market this season. The company says that’s “a notable accomplishment considering this technology has only been in the market for four seasons.”
Crop Protection net sales were down 9% in the first half. In the second quarter specifically, sales were $1.8 billion compared to $2.3 billion for 2022.
“We're seeing strong demand for biologicals and biofuels, and we're investing in those areas,” Corteva CEO Chuck Magro said. “Therefore, our overall view is that we will continue to see favorable farm income and demand for inputs.”
He said it. “There are good reasons for requiring a mandatory base acre update in a farm bill reauthorization. There are at least an equal number of reasons Congress would decide not to do so, some of them justifiable and others simply political or factional.” – Jonathan Coppess of the University of Illinois.
Steve Davies and Jacqui Fatka contributed to this report.
