In a news release from Friday, House Ag Committee Member Annie Kuster (D., N.H.) indicated that, “Today, [Rep. Kuster] wrote to the House Appropriations Committee with 15 other members of Congress, calling for action to assist struggling American dairy producers. Over the past two years, dairy producers have experienced a significant drop in milk prices, increasing the challenges that many American dairy producers are facing.

“‘As you continue to work on appropriations legislation for Fiscal Year 2017, we write to request your assistance for American dairy producers who have been struggling with near-record low milk prices and unstable domestic and international market conditions,’ wrote Congresswoman Kuster. ‘Specifically, we request the Committee to explore reimbursement options for enrolled producers within the Margin Protection Program (MPP), remove a funding prohibition currently in place within the U.S. Department of Agriculture (USDA), and direct the National Agriculture Statistics Service (NASS) to conduct a survey of state average feed costs.'”

A copy of Rep. Kuster’s letter, which was also signed by several other members of the House, is available here.

Meanwhile, Jim Martin reported today at the Erie Times-News (Pa.) Online that, “Few places in Pennsylvania have seen a more dramatic decline than Erie County, where the number of dairy farms fell 57 percent between 2002 and 2012, sliding from 170 to just 73. That’s according to the 2012 Census of Agriculture, which provides the most recent numbers available.

“The loss of dairy farms in other parts of the country has been more gradual, but substantial. In 2002, Pennsylvania was home to 9,629 dairy farms. Ten years later, that number had fallen to 7,829 farms. In Crawford County, 217 dairy farms became 181.

“Low prices, coupled with drought conditions in New England, contributed to the loss of 19 of New Hampshire’s 120 dairy farmers in the past few months, according to The New York Times.”

Mr. Martin added that, “As recently as 2014, dairy farmers were collecting some of the highest prices in history, said James Dunn, professor of agricultural economics at Pennsylvania State University.

“Farmers, who sell milk not in gallons, but in 100-pound increments, were collecting an average of $25.64 per hundred pounds or the equivalent of about $2.98 a gallon in 2014, Dunn said. In 2015, that fell to $18.48 per hundred pounds or $2.14 a gallon. For the first six months of this year, he said, the price fell to $16.45 per hundred pounds, about $1.91 a gallon.”

Graph From USDA-NASS, Agricultural Prices

And the most recent Agricultural Prices report from USDA’s National Agricultural Statistics Service (NASS) stated that, “The September all milk price, at $17.30 per cwt, is up 20 cents from August but is down 20 cents from September 2015.”

Tom Meersman reported today at the Minneapolis Star Tribune Online that, “Ed McNamara sat in the driver’s seat of his John Deere combine recently, musing about crop prices as he mowed through six rows of corn at a time.

“Thousands of Minnesota farmers have withstood stubbornly low crop prices during the past 27 months, and farmers’ average net income has been dropping steadily for the past three years. McNamara, who has been farming just south of the Twin Cities near Goodhue since 1978, has seen the farm economy cycle up and down several times and knows the drill when profit margins are slim to none.

“‘Tighten your belt, cut back on inputs but don’t hurt your yield, run machinery a little bit longer, and try to get the best deal for supplies,’ he said, including seed, fertilizer and other chemicals.”

Today’s article indicated that, “As farmers cut back, the doldrums caused by lackluster prices for crops and livestock have started to ripple onto the main streets of rural Minnesota. When farmers have less money to spend, it affects anyone who is selling farm equipment, marketing fertilizer, or building new barns, bins and sheds.

“Low commodity prices also put a squeeze on cash rents for land that many retired farmers or their families depend on for income.”

Mr. Meersman explained that, “But David Preisler, executive director of the Minnesota Pork Producers Association, said the direct effects of weak crop and livestock prices show up quickly in many small towns.

“‘The first ripple effect you see is going to be any sort of capital purchases that are more discretionary in nature,’ he said.”

The Star Tribune article added that, “The average spending for machinery and equipment in 2012 and 2013, when crop prices peaked, was about $117,000 per farm. That plummeted to about $67,500 in 2014 and $48,000 in 2015. Farm building purchases such as grain bins and hog barns had a similar drop-off, from about $36,000 per farm in 2013 to $21,000 in 2014 and $16,000 in 2015.”

Today’s article noted that, “If low prices persist well into 2017, [Harold Wolle, president of the Minnesota Corn Growers Association] said farmers with equity and experience will tough it out, while beginning farmers or those who have aggressively expanded and paid high rents will be more vulnerable.

“Ag lenders have been working with producers already, he said, sometimes charging interest only on farmland loans or devising other ways to stretch out payments. Helping cash flows temporarily are the federal farm program payments that many producers received last month because of market downturns in 2015, Wolle said.”

Cameron McWhirter reported in Saturday’s Wall Street Journal that, “Severe drought is hitting parts of the South, even as North Carolina and Louisiana experienced historic flooding this year.

“Although the drought has spared some major agricultural sectors, including the area’s large poultry industry, it has left livestock and hay producers scrambling.

“Ranchers raising more than 2.35 million cattle and calves in Alabama and Georgia, out of about 92 milllion nationwide, expect major losses. Hay production, valued in 2015 at about $369 million in those two states, could drop significantly.”

The Journal article noted that, “The drought—covering parts of Tennessee, Mississippi and the Carolinas in addition to Georgia and Alabama—has scorched pasture land, hurting cattle herds and farms across the region.”

Graph From The Wall Street Journal

“Some cattle ranchers here, including 58-year-old David Bailey, are selling off herds to cut expenses. ‘I have never been so stressed and aged,’ said Mr. Bailey, who also raises chickens.”

Saturday’s article added that, “Cotton, peanuts and other row crops have seen lower yields in drought areas, especially on nonirrigated land, said Jeffrey Harvey, the Georgia Farm Bureau’s legislative director.”

Financial Times writer Gregory Meyer reported yesterday that, “If trade has fallen into disrepute this US election season, no one bothered to tell the grain market.

Ships laden with millions of tonnes of US-grown wheat, corn and soyabeans have been leaving ports for destinations across the globe. Soyabean exports have been heavy enough to propel economic growth in the third quarter.

“For US farmers it is a welcome change from year ago, when the effects of a strong dollar and ample supplies elsewhere trapped some crops inside the country. Since the US consistently grows more food than it needs, exports are a crucial outlet.”

Graph From The Financial Times

The FT article explained that, “The exports come at an ugly time for US agriculture. Grain prices are depressed and farm income is the lowest since the global financial crisis. “

The Iowa State University Extension Service recently published a short overview paper titled, “Transferring Business Ownership.”

The Extension item indicated that, “Once the younger party has made a long-term commitment to farming, the parties should consider how to transfer control and ownership of farm assets. In many two-generation farming arrangements, the younger party begins by working for a fixed wage. Eventually, however, the younger party will want to become an operator, not just an employee. Achieving this requires that control and ownership of part or all of the farm assets are transferred to the younger party.”

The Iowa State University article went on to outline general principles for consideration with respect to transferring assets such as: machinery, breeding stock, ownership in grain and market livestock, and land.

The article also touched on strategic objectives and the different potential methods that could be implemented to transfer assets and noted that, “So a business transfer strategy must be developed before choosing a method for transferring ownership.

“The planning horizon for transferring farm business assets from the older party to the younger party is an important consideration when developing an ownership transfer strategy. It usually corresponds to the length of time the parties intend to farm together. Fast strategies transfer the business from the older party to the younger party quickly or at one point in time. Gradual strategies transfer the business over a period of years and are used when the two parties plan to farm together for an extended period of time.”

More specifically, the Iowa State article indicated that, “With a gradual business transfer strategy, the two parties farm together for a period of years. The younger party may join the business and form a multi-person arrangement or the younger person may spin off and develop a separate business but still jointly own machinery and/or livestock with the older party. The transfer of machinery and breeding and market livestock occurs gradually over this period of time. Methods for accomplishing this include a gradual sale, lease with option to buy, gradual sale with lease, gradual sale with gift, and others.”

DTN writer Marcia Taylor reported yesterday at the Minding’s Ag Business Blog that, “Some last-minute flurries in corn and soybean prices this October will put a damper on 2016 crop revenue insurance claims. Federal crop insurance’s 2016 harvest price guarantees settled at $3.49 per bu. for corn and $9.75 per bushel for soybeans when markets closed today, although the Risk Management Agency won’t make that official until tomorrow. The spring guarantees for those crops were $3.86 and $8.85 respectively.

“For corn, that’s just enough to put most growers with slightly below normal yields in ‘no-man’s land’–still paying premiums but with revenue losses too low to trigger an indemnity. On revenue products with the harvest option included, federal crop guarantees use the higher of the spring or the fall price when determining revenue calculations. When fall prices are significantly lower than spring prices, as they were in 2013, it means growers need less–or sometimes minor–yield damage to collect revenue claims.”

The DTN update noted that, “In most of the country, yield reports of 10% to 30% above growers’ Actual Production Histories also make crop insurance payouts largely moot this year. According to the Risk Management Agency, indemnities claimed as of mid-September totaled only $911 million nationwide, less than half the claims of a year ago and about 10% of 2014 levels.”