USDA Updates 2021 Farm Income Forecast

USDA’s Economic Research Service updated farm sector profit projections Wednesday, which are expected to increase in 2021. ERS forecasts inflation-adjusted net cash farm income, which is gross cash income minus cash expenses, to increase $12.6 billion to $133 billion. U.S. net farm income is forecast to increase by $18.4 billion from 2020 to $116.8 billion in 2021. Net farm income is a broader measure of farm sector profitability that incorporates noncash items, including changes in inventories, economic depreciation, and gross rental income. At that level, net farm income would be 24.2 percent above its 2000–2020 average of $94 billion and the highest since 2013. Inflation-adjusted net cash farm income would be 16.9 percent above its 2000–2020 average of $113.8 billion and the highest since 2014. Production expenses are expected to grow by $16.3 billion during the same period, somewhat moderating income growth. Additionally, direct government payments to farmers are projected to fall by $20.2 billion in 2021.

Limited Demand for Farm Loans, But Strong Profits for Ag Banks

Agricultural lending at commercial banks continued to decline but showed some signs of stabilizing in the third quarter. Data reported by the Kansas City Federal Reserve Bank Wednesday shows farm debt decreased at the slowest pace in two years. Non-real estate debt declined substantially slower than in recent quarters, and farm real estate loans increased slightly for the first time since mid-2019. Performance on agricultural loans also continued to improve, leading to a five-year low in delinquency rates. With support from stronger loan performance and lower interest expense, profitability for farm lenders remained near historic highs. Prospects for farm income in 2021 remained strong heading into year-end alongside continued strength in commodity markets. Elevated commodity prices have boosted revenues for producers and supported a swift improvement in agricultural credit conditions and a surge in farmland values. However, rising input costs are likely to increase credit needs and stress profit margins going forward.

USDA Updates Crop Insurance to Support Conservation and Climate Mitigation Efforts

The Department of Agriculture Wednesday announced updates to crop insurance. USDA says the updates are a response to the needs of farmers, including organic producers, and support conservation of natural resources on agricultural land. Specifically, USDA's Risk Management Agency is making permanent a new provision that allows producers to hay, graze or chop cover crops and still receive a full prevented planting payment. To accommodate the different farming practices across the country, RMA is also increasing flexibility related to the prevented planting "1 in 4" requirement and aligning crop insurance definitions with USDA's National Organic Program. RMA is revising four organic definitions to be consistent with USDA's National Organic Program. RMA also made other changes to Common Crop Insurance Policy Basic Provisions, Area Risk Protection Insurance Regulations, Coarse Grains Crop Insurance Provisions, and other insurance provisions. Producers are encouraged to contact their local USDA Service Center to learn more about the changes.

NPPC Hires New Chief Executive Officer

The National Pork Producers Council Wednesday announced Bryan Humphreys as the organization's new chief executive officer. Humphreys will take the position on December 21, following the retirement of Neil Dierks. NPPC says Humphreys brings years of experience in the pork industry, including as a former NPPC employee, state association executive and National Pork Board senior vice president, and outside the industry as a campaign operative, lobbyist and business owner. Humphreys says, “I look forward to working alongside producers, stakeholders, state associations and the entire team at NPPC to make a lasting impact for farmers across the country.” Humphreys is originally from Columbus Junction, Iowa, where he grew up on his family farm. The announcement comes as NPPC members are pressing Congress on preventing foreign animal diseases, addressing labor shortages, and reauthorizing a livestock price reporting law. NPPC is hosting its Legislative Action Conference in Washington, D.C., this week, meeting with lawmakers on Capitol Hill.

USDA Announces Micro Farm Insurance Policy

Agricultural producers with small-scale farms who sell locally can now get simplified insurance coverage through a new policy designed. The Department of Agriculture developed the new Micro Farm policy, which simplifies recordkeeping and covers post-production costs like washing and value-added products. Micro Farm is offered through Whole-Farm Revenue Protection and is geared to local producers. The coverage is available to producers who have a farm operation that earns an average allowable revenue of $100,000 or less, or for carryover insureds, an average allowable revenue of $125,000 or less. The increase in allowable revenue for a carry-over insured will allow for some farm growth in subsequent years before they become ineligible for the program. RMA’s research shows 85 percent of producers who sell locally reported they made less than $75,000 in gross sales. Micro Farm is available for the 2022 crop year. Producers with crops insured under another crop insurance policy or a vertically integrated operation will not be eligible.

2022 National Ag Day Activities Announced

The Agriculture Council of America this week announced National Agriculture Day on March 22, 2022. This will mark the 49th anniversary of National Ag Day, which is celebrated in classrooms and communities across the country. The theme for National Ag Day 2022 is "Growing a Climate for Tomorrow." On March 22, 2022, ACA will host a virtual Ag Day event and other events in Washington, DC. Additionally, the organization will bring college students to Washington "virtually" to deliver the message of Ag Day to Capitol Hill. A core leadership team of college students will attend in-person events. Another feature of Ag Day 2022 is the Celebration of Modern Agriculture on the Mall. The events honor National Agriculture Day and mark a nationwide effort to tell the story of American agriculture. Many agricultural associations, corporations, students and government organizations involved in agriculture are expected to participate. Learn more about the events online at www.agday.org.

Thursday Watch List

Markets

USDA's export sales report is due out at 7:30 a.m. CST, along with weekly U.S. jobless claims and an update of the U.S. Drought Monitor. The U.S. Energy Department's weekly report of natural gas supplies is set for 9:30 a.m. Traders are increasingly interested in South American weather forecasts and will watch for any news of an export sale.

Weather

With the main storm track up in Canada through the day, temperatures will be very warm across the country, and near record-breaking in portions of the Plains. Low temperatures this morning are above normal highs in some places. A system will move from Canada into the Plains and Upper Midwest tonight and may produce some light precipitation across the northern tier.