Agriculture News

Agricultural Credit Market Update

The continued "margin squeeze" faced by crop producers across the Midwest has led to a drastic reduction in working capital buffers. As a result, many grain farmers may seek additional debt capital to carry out marketing and production plans, to finance their capital base, or to provide short-run liquidity. From the lender's perspective, the continued margin squeeze also signals increasing risk for farm loan repayment, and as a result, farms should expect increased scrutiny in securing new or renewed lines of credit.  Agricultural credit market data provide modest signals of increasing credit risk. Farm loan data provided by the Federal Reserve indicate that farm loan delinquencies have increased in recent quarters from recent record lows. In addition, overall risk ratings for agricultural loans are also on the rise. Surveys of agricultural bankers conducted by the two Federal Reserve Districts that serve Illinois, Chicago and St. Louis, both demonstrate deteriorating credit conditions over the last few years. A growing share of lenders report increasing loan repayment concerns coupled with an increase in requests for loan renegotiations. In addition, the surveys also suggest agricultural bankers are facing increased agricultural loan demands. Finally, both Federal Reserve banks report modest increases in the cost of borrowing for both operating and real estate farm loans. In addition, the Federal Reserve continues to signal a likely interest rate increase in the near term. While inflation remains below the Fed's long run policy target of 2%, unemployment is currently at or near target levels. Finally, many macroeconomists fear that the current low interest rate environment severely limits the Fed's ability to respond to a potential economic recession in the future. In sum, the current economic climate suggests that interest rates are likely to increase in the near future. This would have direct repercussions for farm borrowing, as agricultural interest rates are highly correlated with the federal funds rate.

Feds investigating $2.6MM in missing Okla. Checkoff funds: report

The U.S. Attorney’s office in Oklahoma City reportedly is investigating the alleged embezzlement of $2.6 million by a former employee of the Oklahoma Beef Council. The council, responsible for the state’s beef checkoff investments, has filed a civil lawsuit in state court against its former accounting and compliance manager, Melissa Morton. StateImpact Oklahoma reported that an independent audit indicated Morton had allegedly forged checks dating back to 2009. 

Bill would codify landmark water rights victory in Idaho law

Idaho lawmakers in 2017 will again attempt to introduce a bill that codifies in state law a 2007 Idaho Supreme Court decision over who owns in-stream stock watering rights on federal land.  Rep. Judy Boyle, a Republican rancher from Midvale who tried unsuccessfully to introduce the bill last year, said she will introduce a similar bill this year that addresses concerns about the proposed legislation that arose in 2016. Southern Idaho ranchers and the U.S. Bureau of Land Management filed thousands of overlapping claims to in-stream stock watering rights on BLM land during Idaho’s Snake River Basin Adjudication. All but two of the ranchers — Paul Nettleton and Tim Lowry of Owyhee County — backed off when they realized fighting the BLM in court would cost a lot of money. After more than a decade of court battles, the Idaho Supreme Court ruled in the Owyhee County ranchers’ favor in 2007. The court said the BLM could not own the watering rights because it doesn’t own livestock and therefore can’t put the water to beneficial use.

Why Going Organic Just Got Easier For Farmers

[For farmers looking to switch to organic production, there has always been a catch.] You'd have to follow the organic rules, renouncing synthetic pesticides and fertilizer, for three entire years before any of your crops could be sold as organic. For those three "transition" years, you'd have the worst of all worlds: Low organic yields and low conventional prices.

The Organic Trade Association, which represents America's biggest organic food companies, wants to make it easier for farmers to get over this hurdle. And its proposal has just been approved by the U.S. Department of Agriculture. It's a new certification for food grown during this transition period. This certification, the OTA hopes, will put money in farmers' pockets and encourage them to take the leap into organic certification.