Today the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

* Fifth District- Richmond– “Agricultural activity picked up slightly. Weather conditions improved recently, which allowed farmers to begin harvesting corn and peanut crops. The dry summer, however, delayed the maturation of cotton crops, leading to some harvesting delays. According to a South Carolina farmer, the financial loss from last year’s flood was suppressing capital investments this year. No changes to input prices were reported. Prices of beef, corn, and soybeans declined.”

* Sixth District- Atlanta– “Agriculture conditions across the District were mixed. Drought conditions persisted throughout much of the District, ranging from abnormally dry conditions to areas of extreme drought. The USDA designated many counties in Alabama, Georgia, Mississippi, and Tennessee as natural disaster areas due to damages and losses attributed to drought conditions, while several counties in Louisiana were designated as natural disaster areas due to damages and losses attributed to severe storms and flooding. On a year-over-year basis, prices paid to farmers for rice, soybeans, and broilers increased, while corn, cotton, beef, and egg prices decreased. However, on a month-over-month basis, prices paid to farmers for cotton, rice, and eggs were up, while prices for corn, beef, and broilers were down.

* Seventh District- Chicago– “Low expectations for farm incomes continued over the reporting period. The consensus among contacts was that for most farms a profitable soybean harvest would not be enough to offset an unprofitable corn harvest. Corn prices were unchanged and lower than last year; while soybean prices moved down again, they remained higher than last year. Both the corn and soybean crops were still on track to set records for the District, although problems with disease lowered yield expectations for corn a bit. Even though crops were more mature than normal in late September, harvesting was behind its typical pace because above-average precipitation slowed field work. Milk prices were up some, but only enough to ‘slow the bleeding’ for most producers. Hog and cattle prices were lower once again, as meat supplies have continued to build.

* Eighth District – St. Louis– “Contacts expect yields of corn, cotton, and soybean crops to be at record levels across the District as a result of timely rains during the growing season. Meanwhile, rice yields are projected to increase only slightly. Sorghum is the only major District crop that is expected to have a production decline, but this stemmed largely from reduced plantings because of pest issues and lower prices in 2015. While the general outlook for the fall crops is strong, one contact has noted that some areas in the District have recently experienced flooding that may reduce yields and production by more than expectations.”

* Ninth District- Minneapolis– “District agricultural conditions weakened since the last report. Harvests of corn and soybeans were on schedule overall in much of the District, though heavy rains delayed progress in some areas. Wheat and small grain production for 2016 was generally down in many areas from a year earlier in spite of strong yields due to farmers planting fewer acres. Contacts reported that the extended period of low crop prices continued to put pressure on farm incomes and that this was beginning to spill over to rural areas more broadly. Prices received by farmers decreased in August from a year earlier for corn, soybeans, wheat, hay, cattle, hogs, chickens, eggs, and turkeys; prices for milk increased from a year earlier.”

* Tenth District- Kansas City– “District farm income remained subdued as low crop and livestock prices weighed on revenue expectations. Inventories of wheat remained high, and expectations of a strong corn harvest held grain prices below the previous year. Soybean production was also expected to be at or above record levels, but relatively steady demand has kept prices slightly above a year ago. Crop production costs have decreased modestly, but at a slower pace than crop prices, keeping profit margins relatively weak. In the livestock sector, both cattle and hog prices decreased in September, and were lower than a year ago, primarily due to strong production. Persistently weak farm income and reduced cash flow in both the crop sector and livestock sector have continued to reduce borrower liquidity and has continued to drive demand for agricultural production loans.”

* Eleventh District- Dallas– “Crop production prospects for 2016 remained strong across the district, with increases over 2015 production expected for most crops. Ample rainfall provided favorable pasture conditions and abundant forage, although it hampered the cotton crop in some areas. Already-low crop prices generally fell over the reporting period, and cattle prices dropped as well. Contacts continued to note that farmers were concerned about their finances and their ability to get adequate financing for next year.

* Twelfth District- San Francisco– “Activity in the agricultural sector expanded at a moderate pace. Harvest yields of pistachios, almonds, and walnuts are expected to reach record levels. Contacts reported that both yields and quality of this year’s grain harvest were high. Potato producers noted average yields and flat to slightly decreasing demand for processed potato products. Profitability improved slightly in the dairy industry, although feedlot owners face challenges. On balance, the elevated dollar continued to slow most exports, particularly for raisins, where global inventories remain elevated.”

Hembree Brandon reported recently at the Delta Farm Press Online that, “While many in agriculture are still trying to fathom the complexities of the 2014 farm bill and its implementation, members of Congress and ag sector leaders are already laying preliminary groundwork for the 2019 farm bill.

“With a dramatic drop in net farm income from the highs of 2013, and projections that outlays for the current legislation will be billions over budget, it’s expected that debate on the next bill will be contentious.”

Mr. Brandon noted that, “In an article in the latest issue of Choices, the magazine of the American Agricultural Economics Association, G.A. Barnaby and Levi A. Russell say the focus on crop insurance — the foundation of the 2014 legislation — will likely continue, with three potential options likely to be proposed in the debate over the next bill: replacing crop insurance with a free, area-based disaster program; making modifications to existing policy, which would significantly reduce support to farmers and jeopardize the private delivery system; and complete elimination of the safety net. Their article summarizes the political factors and their interaction with the economic effects of these proposals.”

The Delta Farm Press item added that, “To that end, Agriculture Secretary Tom Vilsack, speaking a while back to the National Farmers Union, said, ‘I just have one bit of advice on the (next) farm bill: Please, please, please don’t let folks on the Hill start the conversation like they did last time … which was, ‘Golly, let’s see how much money we can save.'”

“He described lawmakers’ approach to the 2014 farm bill as an effort to spend as little as possible, as opposed to creating programs to truly help farmers and rural America.”

Bloomberg writer Mario Parker reported yesterday that, “U.S. corn farmers are proving themselves to be quick learners.

“Growers producing the grain on big plots — those bigger than 2,900 acres — are using precision-agriculture methods at twice the rate of the nation’s farmers overall, a U.S. Department of Agriculture study released Tuesday said. Their savvy could be paying off. The agency estimates that the new technologies are helping to increase profits.”

The Bloomberg article noted that, “A three-year slump in grain prices has eroded agriculture incomes, sparking more farmers to adopt the so-called precision-agriculture methods to help increase efficiency. Companies including Deere & Co. are joining the race to create new products for the market that Goldman Sachs Group Inc. estimates could be worth $240 billion by 2050. The technologies encompass everything from GPS-guided tractors that reduces human error and fatigue to granular data analysis that enhances planting decisions.

“‘Precision-agriculture technologies require a significant investment of capital and time, but may offer cost savings and higher yields through more precise management of inputs,’ David Schimmelpfennig, an agricultural economist at the USDA in Washington, wrote in the report.”

The Bloomberg article added that, “Average size U.S. corn farms using GPS mapping see about a 3 percent increase in operating profit and the gain for net returns is almost 2 percent, the agency said. Guidance systems boost operating profit by 2.5 percent, and variable-rate technology raises it by about 1.1 percent, the study showed. The USDA said it used data over a 17-year span, starting in 1996, for its study.”

Neil Hume, David Sheppard and Emiko Terazono reported yesterday at The Financial Times Online that, “Some of the world’s biggest traders of agricultural commodities are seeking new alliances and joint ventures as they battle tough market conditions brought on by the end of a decade-long boom for the industry.

“In interviews with the Financial Times senior executives at Cargill and Louis Dreyfus Company said they were looking to join forces with both big producers and consumers after struggling to increase profits in recent years.”

The FT article noted that, “Bumper harvests, overflowing stocks and violent price swings have cut into earnings for the handful of companies that dominate global flows of crops and staple foods.

“At the same time customers in fast-growing markets such as China and Asia are consolidating and using their size to buy directly from producers in the Americas and other regions.”

The FT writers added that, “Crop failures had boosted prices further between 2008 and 2012, sparking fears of food shortages in the poorest countries. But investments, technological advances and increased productivity made during this period has led to surpluses.

“The global agricultural industry has also been shaken by the emergence of new players such Cofco, China’s state-owned grains trader.”

A news release yesterday from Sen. Jon Tester (D., Mont.) indicated that, “[Sen. Tester] today kicked off his Barnstormin’ Farm Bill Listening Tour today with an event in Billings.

“Farmers and ranchers from across Montana attended Tester’s listening session that focused primarily on livestock, pulse, and grain production.

“‘Agriculture is still the backbone of Montana’s economy, and it is critical that Montana farmers and ranchers have a say in the next Farm Bill,’ Tester said. ‘We need to construct a Farm Bill that works for folks on the ground and strengthens family production agriculture. I look forward to hosting more listening sessions across the state in the coming weeks.'”

The release added that, “Tester’s listening session today was open to the public and was the first in a series of events he will be hosting across the state in the coming weeks and months. The additional listening sessions will focus on other aspects of the Farm Bill, which include conservation and forest management, food safety initiatives, and specialty crops.

“Tester is the only active farmer in the U.S. Senate, and he and his wife still farm the land his grandparents homesteaded over a century ago.”

Jacob Bunge reported this week at The Wall Street Journal Online that, “U.S. farmers, bogged down in one of their toughest patches in years, are looking for a little magic—in seeds.

“Some are returning to the old-fashioned variety, bred without genetic engineering, and back in fashion as farmers strive to save money following three straight years of falling prices for major crops like corn and soybeans.

“Others, meanwhile, are joining new subscriber-based services that collect seed and other detailed crop-related data from their farmer members, who then use the data to determine which seeds and pesticides will work best on their fields and at the fairest price.”

Mr. Bunge explained that, “The plunge in crop prices—corn has roughly halved since the start of 2013, while soybeans have fallen by one-third—has chipped away at farmers’ financial cushions and led many to re-examine their costs across the board.”

The Journal article added that, “Many farmers already have found ways to stretch the fertilizer applied to their fields and have switched to generic versions of popular pesticides.

“Now, they’re scrutinizing seeds—often the most expensive component in raising a crop each year. Seeds have multiplied in variety, complexity and cost in recent decades. As genetic engineering has enabled plants to survive herbicides and fend off pests, corn-seed costs have nearly quadrupled over the past 20 years, and soybean seed costs have soared as well, according to data from the U.S. Agriculture Department.”

Washington Post writer Christopher Ingraham reported recently that, “You’ve probably heard the bad news, by now, that bees were recently added to the endangered species list for the first time. But if you’re part of the 60 percent of people who share stories without actually reading them, you might have missed an important detail: namely, that the newly-endangered bees are a handful of relatively obscure species who live only in Hawaii.

“The bees you’re more familiar with — the ones that buzz around your yard dipping into flowers, making honey, pollinating crops and generally keeping the world’s food supply from collapsing? Those bees are doing just fine, according to data released by the USDA this year.

“In 2015, there were 2.66 million commercial honey-producing bee colonies in the United States. That’s down slightly from the 2.74 million colonies in 2014, which represented a two-decade high. The number of commercial bee colonies is still significantly higher than it was in 2006, when colony collapse disorder — the mass die-offs that began afflicting U.S. honeybee colonies — was first documented.”

Mr. Ingraham explained that, “Those 2.66 million colonies represent a greater number than just about any year since the late 1990s. How’s that possible, considering all the die-offs we’ve been hearing about?

“America’s beekeepers are busy at work managing their colonies and replacing the ones that die off. Beekeepers have a number of ways to replenish their stock: They can split one healthy colony into two. They can also breed their own queen bees, which can be sold to other keepers in need of a queen to start a new colony.

“For the 2017 season, 3 pounds of bees plus a queen will set you back about $100 or so.”

The article pointed out that, “The thing is, all of this colony-splitting and queen-breeding takes time, money and effort. It means that the main effects of colony collapse disorder aren’t being felt by the bees themselves, but by the people who breed and manage them. Beekeeping is a business, after all.”

Mr. Ingraham added that, “The cost of those losses are currently getting passed on to the consumer. The average retail price of honey has roughly doubled since 2006, according to the National Honey Board. And pollination services, where keepers drive semi-trucks full of bees from farm to farm to pollinate crops, are getting more expensive too.”

A recent update from the Association of Equipment Manufacturers (AEM) indicated that, “U.S. retail sales of tractors under 40HP and 40-100HP continued to lead the way in September, and while sales of larger tractors rebounded from last month, year-to-date sales were still down, according to the latest data from the [AEM], the leading trade group for off-road equipment manufacturers and suppliers.

“U.S. retail sales for 2WD tractors under 40HP gained 16.8 percent in September (compared to last year), with year-to-date sales up 11.7 percent. September sales of 2WD tractors 40-100HP were up 3.9 percent year-over-year, but year-to-date sales were still down – minus 4.3 percent.”

The AEM update noted that, “U.S. combine sales declined 34.6 percent for September and recorded a 24.2-percent drop for September year-to-date sales.”

The Associated Press reported today that, “New York’s organic farming has grown over the past several years, led by milk sales, with agricultural land federally certified organic expanding to 934 operating farms last year, according to the state comptroller’s office.

“The report Friday shows sales of organic farm products rose from 2008 to 2014 statewide by 56 percent to $164 million. Sales jumped another 35 percent last year to $221 million, according to another federal report.”

The AP article added that, “‘Any time you can see growth in the agricultural economy, that’s beneficial to our farmers,’ said Steve Ammerman of the New York Farm Bureau. ‘What this demonstrates is there’s opportunity to farmers looking to diversify or take advantage of new consumer trends.’

“The state is also seeing beginning farmers seeking the certification because of their lifestyle values and to be part of a local food movement, he said.”