Earlier this week the American Bankers Association (ABA) indicated in a news release that, “Farm banks increased agricultural lending by 5.3 percent in 2016 and held $103.4 billion in farm loans at the end of the year, according to the American Bankers Association’s annual Farm Bank Performance Report.

“Asset quality remained healthy at the nation’s 1,912 farm banks as non-performing loans have fallen to a pre-recession level of 0.54 percent of total loans. ABA defines farm banks as banks whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average.”

Graph from, “2016 Farm Bank Performance Report.” American Bankers Association (May 3, 2017).

The update noted that, “Farm banks continued to build high-quality capital over the year. Equity capital at farm banks increased 3.7 percent to $48.4 billion in 2016, while Tier 1 capital increased by $2.6 billion to $45.9 billion. Farm banks have built strong high-quality capital reserves and are well-insulated from risks associated with the agricultural sector.”

The ABA news item added that, “Farm banks added more than 2,600 jobs, a 3 percent increase, and employed more than 91,000 rural Americans. Since 2007, employment at farm banks has risen 24.3 percent.”

Wyatt Bechtel reported this week at AgWeb Online that, “Producers are excited to have a Secretary of Agriculture who has first-hand experience working in agriculture and growing up on a farm.

“On April 28, three days after former Georgia Gov. Sonny Perdue was sworn in as Secretary of Agriculture he visited Kansas City, Mo. for his first official trip away from Washington D.C. representing the U.S. Department of Agriculture. Perdue spoke in front of a crowd of more than 450 people made up of farmers, ranchers, allied industry members, students and FFA members at the American Royal.”

Mr. Bechtel noted that, “The confirmation of Perdue as Secretary of Agriculture is exciting because there are common values shared by the leadership at USDA with farmers and ranchers, says Ramona, Kan. cattle rancher Tracy Brunner. Last year Brunner served as National Cattlemen’s Beef Association president.

“‘As a trained and practicing veterinarian, he brings so much understanding of the livestock industry to the office,’ Brunner says.”

The AgWeb update added that, “Perdue told the crowd about his communication with President Trump on getting U.S. beef into China. Trump even asked Perdue to make some remarks for a letter that will be addressed to the Chinese President in an effort to open up beef exports.

“He also believes Iowa Gov. Terry Branstad will be a major part in getting beef access to China once Branstad is confirmed as U.S. Ambassador to China.

“‘Gov. Branstad has done a good job selling Iowa soybeans. We want him to sell some Kansas, Missouri and Heartland beef over there,’ Perdue says of trade with China.”

A news release on Monday from the American Bankers Association (ABA) indicated that, “Nearly 90 percent of agricultural lenders have seen an overall decline in farm profitability in the last 12 months, according to a joint survey by the American Bankers Association and the Federal Agricultural Mortgage Corporation. The survey of more than 350 agricultural lenders representing institutions of all sizes across the country revealed that when it comes to their producer customers, lenders are most concerned about commodity prices, liquidity and farm income.”

“Winter 2016/2017 Agricultural Lender Survey Results.” American Bankers Association and the Federal Agricultural Mortgage Corporation (May 1, 2017).

The ABA update noted that, “Ninety-five percent of lenders indicated commodity prices — particularly grains, beef cattle and dairy — are a top concern. While concerns about commodity prices varied by region, overall, lenders are most concerned about grains (80 percent rated it a four or five on a scale of one to five) followed by beef cattle (63 percent), dairy (55 percent), swine (40 percent), poultry (21 percent), vegetables (20 percent), and fruits and nuts (17 percent).

James Mintert indicated on Monday at the farmdoc daily blog (“Weekly Outlook: NAFTA Trade Is Important for Meat Industry”) that, “The 2016 election cycle created a lot of confusion about the importance and benefits of trade in general. In particular, a good bit of the election year rhetoric focused on trade within the NAFTA trade bloc (U.S., Canada and Mexico).”

Beef

Mintert noted that, “Looking at the individual country data from USDA indicates that about 12 percent (308 million pounds) of all U.S. beef exports were shipped to Canada in 2016. The U.S. shipped even more beef to Mexico than Canada as beef exports to Mexico totaled 394 million pounds, about 15 percent of all U.S. beef exports, in 2016. Combined, the two NAFTA trading partners absorbed 27 percent of all U.S. beef exports in 2016. Looking at rankings of U.S. beef export customers, Japan (26 percent) was the largest beef export customer and South Korea (18 percent) was the second largest. Mexico and Canada were the third and fourth largest U.S. beef export customers, respectively, in 2016.”

Pork

The farmdoc update added that, “By 2016 U.S. pork exports were more than 40 times as large as in 1985, reaching a total of 5.2 billion pounds (Figure 1).”

Mintert, J. “Weekly Outlook: NAFTA Trade Is Important for Meat Industry.” farmdoc daily (7):79, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 1, 2017.

Monday’s update also pointed out that, “Looking at the individual country data, the largest single customer for U.S. pork in 2016 was Mexico. U.S. pork exports to Mexico totaled 1.6 billion pounds during 2016, which was almost 31 percent of U.S. pork exports. Pork exports to Canada in 2016 totaled 537 million pounds, approximately 10 percent of U.S pork exports. On a combined basis, Mexico and Canada absorbed approximately 41 percent of U.S. pork exports. In comparison, the next largest U.S. pork customer, Japan, received 23 percent of U.S. pork shipments in 2016.”

The farmdoc item also stated that, “[T]his review does make clear how important meat trade has become to U.S. animal agriculture producers and the potential impact a disruption in trade with NAFTA partners Canada and Mexico would have on the U.S. animal agriculture sector and, in turn, producers of feed grains and oilseeds.”

A recent update from the Montana State University College of Agriculture indicated that, “Honey is probably not one of the primary agricultural products that most people associate with Montana, but in fact, Montana was the third largest honey producing state in 2016. Montana produced over 12 million pounds of honey in 2016, and it ranked fifth in the country for number of honey bee colonies.”

The update explained that, “The number of commercial honey bee operations in the United States has grown in recent years, partly in response to agricultural demands for pollinators during bloom.

“Many larger-scale producers transport honey bees from crop-to-crop throughout the winter and spring, returning the bees to northern states like Montana to produce honey in the summer. Montana summers, with their long days, cool nights, and wide variety of flowering plants, provide a good environment for honey production.

“Commercial pollination season begins in February in the flowering almond groves of California. Cross-pollination is vital to almond production. Every almond farm has at least two varieties of almond trees, but bees are needed to transfer pollen from one variety to the other. During almond blossom, the bee colonies work in a state of energy deficit, producing no excess honey. After the almond blossom, beekeepers begin moving their bees north again, leasing the bees to pollinate various crops along the way. The beekeepers retain rights to the honey as the bees pollinate, but honey production and flavor vary across crops. Fees paid for pollination are lower for crops that yield more marketable honey (Rucker, Thurman, and Bugett, 2012).”

The Montana State article added that, “After an intense season of pollinating almonds and other crops, beekeepers usually allow the bees to rest and produce honey. Figure 4 [below] plots honey production in Montana over time, both in pounds and value of honey production. The figure indicates that honey production has risen over the past 3 decades. Figure 5 [below] shows a simultaneous rise in the number of honey producers and bee colonies in Montana since 1997. (Note that some beekeepers keep their bees in Montana year-round, using the bees only for honey production). These figures suggest that honey production is an important and growing industry in Montana, and it is closely linked with crop production in other states.”

Graph from, “Montana: A Honey State” by Diane Charlton. Montana State University (May 1, 2017).

Graph from, “Montana: A Honey State” by Diane Charlton. Montana State University (May 1, 2017).

Peter Whoriskey reported on the front page of today’s Washington Post that, “The High Plains dairy complex reflects the new scale of the U.S. organic industry: It is big.

“Stretching across miles of pastures and feedlots north of Greeley, Colo., the complex is home to more than 15,000 cows, making it more than 100 times the size of a typical organic herd. It is the main facility of Aurora Organic Dairy, a company that produces enough milk to supply the house brands of Walmart, Costco and other major retailers.”

Front page of today’s Washington Post.

The Post article noted that, “But a closer look at Aurora and other large operations highlights critical weaknesses in the unorthodox inspection system that the Agriculture Department uses to ensure that ‘organic’ food is really organic.

“The U.S. organic market now counts more than $40 billion in annual sales and includes products imported from about 100 countries. To enforce the organic rules across this vast industry, the USDA allows farmers to hire and pay their own inspectors to certify them as ‘USDA Organic.’ Industry defenders say enforcement is robust.

“But the problems at an entity such as Aurora suggest that even large, prominent players can fall short of standards without detection.”

Today’s article explained that, “With milk, the critical issue is grazing. Organic dairies are required to allow the cows to graze daily throughout the growing season — that is, the cows are supposed to be grass-fed, not confined to barns and feedlots. This method is considered more natural and alters the constituents of the cows’ milk in ways consumers deem beneficial.

“But during visits by The Washington Post to Aurora’s High Plains complex across eight days last year, signs of grazing were sparse, at best. Aurora said its animals were out on pasture day and night, but during most Post visits the number of cows seen on pasture numbered only in the hundreds. At no point was any more than 10 percent of the herd out. A high-resolution satellite photo taken in mid-July by Digital Globe, a space imagery vendor, shows a typical situation — only a few hundred on pasture.”

The Post article added that, “If organic farms violate organic rules, consumers are being misled and overcharged.

“In the case of milk, consumers pay extra — often double — when the carton says “USDA Organic,” in the belief they are getting something different. Organic dairy sales amounted to $6 billion last year in the United States.”

“The failure to comply with organic standards also harms other farms, many of them small. Following the rules costs extra because grazing requires more land and because cows that dine on grass typically produce less milk,” today’s article said.

Gary Schnitkey, Kathy Baylis, and Jonathan Coppess indicated on Friday at the farmdoc daily blog that, “Recent news from the Trump Administration has sowed confusion about the President’s intentions with respect to the North American Free Trade Agreement (NAFTA). Early this week, President Trump suggested that the United States would pull out of NAFTA. Later in the week, he said the US will stay in NAFTA, but that the agreement would be reopened for renegotiations. NAFTA is a trade agreement between the Canada, Mexico, and the United States and was put in place in 1994. For Midwest farmers, renegotiating NAFTA is a concern because Canada and Mexico import significant amounts of corn and soybeans.”

The update explained that, “Mexico is a substantially larger market for corn than Canada. From 1991 to 1993, Mexico imported 67 million bushels of corn. Similar to Canada, Mexico’s imports of corn increased after 1994. From 2014 to 2016, Mexico imported an average 513 million bushels of corn per year.”

Schnitkey, G., K. Baylis, and J. Coppess. “A Reminder on NAFTA and Agriculture.” farmdoc daily (7):78, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 28, 2017.

The farmdoc item noted that, “Similar to corn, soybean imports into Canada and Mexico have substantially increased since the passage of NAFTA in 1994.”

Schnitkey, G., K. Baylis, and J. Coppess. “A Reminder on NAFTA and Agriculture.” farmdoc daily (7):78, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 28, 2017.

Schnitkey, Baylis, and Coppess explained that, “Exports are important sources of use of corn and soybeans, and particularly so for soybeans. Mexico and Canada are important customers of U.S. products. Potential disruptions in the movements of grains could have negative impacts on prices.

“The importance of export to domestic agriculture is likely to grow in the future. Technological changes will continue to occur in the United States, leading to higher yields and more corn and soybean supply. At this point, one of the areas of continued growth in use of U.S. corn and soybeans is likely to be exports. If exports do not grow, negative impacts can be anticipated for corn and soybean prices.

“Being a reliable supplier is an important characteristic of agricultural exporters. If an exporter is not viewed as reliable, other countries may look elsewhere for grain supplies. Some reactions along these lines have taken place because of trade discussions coming from the U.S. Early in 2017. For example, Mexico has threatened to place a tax on U.S. corn imports in response to the President’s comments about NAFTA and has also begun to buy corn from Argentina and Brazil. Whether these efforts have long term negative impacts on U.S. agricultural trade remains to be seen.”