Pat Westhoff ([email protected]), Director Food and...
Transcript of Pat Westhoff ([email protected]), Director Food and...
Pat Westhoff ([email protected]), Director
Food and Agricultural Policy Research Institute
University of Missouri
www.fapri.missouri.edu
Agricultural Lender seminars
Dexter and Sikeston, MO
November 21, 2017
Farm income, land markets, budget costs
Macro setting
Market situation
Tax bill, farm bill and other policy issues
0
20
40
60
80
100
120
140
160
2006 2008 2010 2012 2014 2016 2018 2020 2022
Bill
ion d
olla
rs
Net cash income
Net farm income
Source: FAPRI-MU baseline update, August 2017; history from USDA ERS
0
1
2
3
4
5
6
2006 2008 2010 2012 2014 2016
Bill
ion d
olla
rs
Crop receipts
Net farm income
Gov't payments
Source: USDA ERS, August 2017
0
20
40
60
80
100
120
140
160
2007 2010 2013 2016 2019 2022
Dolla
rs p
er
acre
Cropland rental rates
U.S. MO
Source: FAPRI-MU baseline, August 2017; history from USDA NASS
0
500
1000
1500
2000
2500
3000
3500
4000
2007 2010 2013 2016 2019 2022
Do
llars
pe
r a
cre
Farm real estate values
U.S. MO
0
5
10
15
20
25
1980 1986 1992 1998 2004 2010 2016 2022
Perc
ent
Source: FAPRI-MU baseline update, August 2017; history from USDA ERS
Source: page 64 of 2017 U.S. Baseline Briefing Book, March 2017
0
5
10
15
20
25
30
2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 2 0 1 9 2 0 2 1 2 0 2 3 2 0 2 5 2 0 2 7
Bill
ion
do
llars
Fiscal year
Net CCC Crop insurance NRCS conservation Other
2010-15
average 2016 2017 2018
World 3.0 2.5 3.1 3.2
U.S. 2.2 1.5 2.2 2.4
China 8.3 6.7 6.8 6.5
European Union 1.3 1.9 2.2 1.9
Canada 2.3 1.5 3.1 2.3
Mexico 3.2 2.0 2.2 2.3
Japan 1.5 1.0 1.6 1.1
S. Korea 3.6 2.8 2.9 3.0
Source: IHS Markit, October 2017
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Euro
per
dolla
r
Euro area
IHS, Oct. Dec. futures
0
1
2
3
4
5
6
7
8
9
Yuan p
er
dolla
r
China
IHS, Oct. Current
Source: IHS Markit, October 2017; Euro futures and Yuan/$ rate, November 17, 2017
-1
0
1
2
3
4
5
6
7
8
9
2006 2008 2010 2012 2014 2016 2018 2020 2022
Perc
ent
Prime rate
CPI inflation
0
20
40
60
80
100
120
Dolla
rs p
er
barr
el
W. TX Intermediate oil
IHS, Oct. June futures
0
1
2
3
4
5
6
7
8
9
10
Dolla
rs p
er
mill
ion B
TU
Henry Hub natural gas
IHS, July June futures
Sources: IHS Markit; June WTI oil and natural gas futures, November 17, 2017
0
20
40
60
80
100
120
140
2006 2008 2010 2012 2014 2016 2018 2020 2022
2011=
100
Fertilzer
Fuel
0
500
1,000
1,500
2,000
2,500
3,000
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17Est.
Mill
ion m
etr
ic tons
Corn Wheat Rice Soybeans
Source: USDA PSD Online, November 2017
World production of these four major crops increased by 918
million tons (52%) between 2002 and 2016; November 2017
USDA estimates show a 40 million ton (1.5%) decline in 2017.
2016/17
(USDA
Nov.)
2017/18
(USDA
Nov.)
2017/18
(FAPRI
Nov.)
2018/19
(FAPRI,
Nov.)
Area planted (mil. acres) 94.0 90.4 90.4 90.7
Yield (bu./harvested acre) 174.6 175.4 175.4 171.0
Production (mil. bu.) 15,148 14,578 14,578 14,244
Feed and residual use (mil. bu.) 5,463 5,575 5,623 5,492
Ethanol and coproduct use 5,439 5,475 5,470 5,490
Other domestic use 1,452 1,460 1,468 1,485
Exports 2,293 1,925 1,939 2,121
Ending stocks 2,295 2,487 2,422 2,128
Marketing yr. avg. price ($/bu.) 3.36 2.80-3.60 3.20 3.55
Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.
0
100
200
300
400
500
600
1992 1996 2000 2004 2008 2012 2016
Mill
ion
bu
sh
els
Calendar year 2016 data mil. bu.
U.S. corn exports to
Mexico
548
U.S. corn exports 2,204
Mexico imports as share
of total U.S. corn exports
25%
U.S. corn production 15,148
Mexico imports as share
of total U.S. corn
production
3.6%
Source: USDA FAS GATS database
0
50
100
150
200
250
1992 1996 2000 2004 2008 2012 2016
Mill
ion
me
tric
to
ns
Feed Other use Production
China’s corn use and production of corn have both increased sharply
Uncertainties include
Livestock sector growth
Ethanol expansion (10% blends by 2020?)
Production
Stock policy (now trying to reduce large stocks)
Source: USDA FAS PSD Online, Nov. 2017
3.00
3.20
3.40
3.60
3.80
4.00
4.20
4.40
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Dolla
rs p
er
bushel
Farm price: FAPRI-MU Farm price: USDA December futures
Sources: FAPRI-MU, November 2017; USDA WASDE, November 2017; December CME futures
contracts, November 17, 2017
0
1
2
3
4
5
6
7
8
06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21
Dolla
rs p
er
bushel
Actual/average #11 #490
Source: FAPRI-MU stochastic baseline, March 2017
0
1
2
3
4
5
6
7
8
06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21
Dolla
rs p
er
bushel
Actual/average 90th percentile 10th percentile
Source: FAPRI-MU stochastic baseline, March 2017
2016/17
(USDA
Nov.)
2017/18
(USDA
Nov.)
2017/18
(FAPRI
Nov.)
2018/19
(FAPRI
Nov.)
Area planted (mil. acres) 83.4 90.2 90.2 89.1
Yield (bu./harvested acre) 52.0 49.5 49.5 47.9
Production (mil. bu.) 4,296 4,425 4,425 4,228
Crush (mil. bu.) 1,899 1,940 1,952 1,957
Other domestic use 141 136 137 132
Exports 2,174 2,250 2,267 2,213
Ending stocks 301 425 396 346
Marketing yr. avg. price ($/bu.) 9.47 8.45-10.15 9.30 9.56
Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.
0
200
400
600
800
1000
1200
1400
1992 1996 2000 2004 2008 2012 2016
Mill
ion
bu
sh
els
Calendar year 2016 data mil. bu.
U.S. soybean exports to
China
1,317
U.S. soybean exports 2,118
China imports as share of
total U.S. soybean exports
62%
U.S. soybean production 4,307
China imports as share of
total U.S. soybean
production
31%
Source: USDA FAS GATS database
0
10
20
30
40
50
60
70
80
90
US 15 US 16 US 17 Brz 15 Brz 16 Brz 17 Arg 15 Arg 16 Arg 17
Mill
ion m
etr
ic tons
Soybeans Soymeal Soyoil
Source: USDA PSD Online, November 2017
8.00
8.50
9.00
9.50
10.00
10.50
11.00
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Dolla
rs p
er
bushel
Farm price: FAPRI Farm price: USDA November futures
Sources: FAPRI-MU, November 2017; USDA WASDE, November 2017; November CME futures
contracts, November 17, 2017
0
2
4
6
8
10
12
14
16
06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21
Dolla
rs p
er
bushel
Actual/average 90th percentile 10th percentile
Source: FAPRI-MU stochastic baseline, March 2017
2016/17
(USDA
Nov.)
2017/18
(USDA
Nov.)
2017/18
(FAPRI
Nov.)
2018/19
(FAPRI
Nov.)
Area planted (mil. acres) 50.1 46.0 46.0 47.6
Yield (bu./harvested acre) 52.7 46.3 46.3 46.8
Production (mil. bu.) 2,309 1,741 1,741 1,879
Feed and residual (mil. bu.) 156 120 119 119
Food and other domestic use 1,010 1,016 1,015 1,021
Exports 1,055 1,000 997 920
Ending stocks 1,181 935 939 899
Marketing yr. avg. price ($/bu.) 3.89 4.40-4.80 4.65 4.87
Sources: USDA WASDE, November 2017 and FAPRI-MU baseline, November 2017.
0
200
400
600
800
1000
1200
1993 1997 2001 2005 2009 2013 2017
Mill
ion
me
tric
to
ns
Production Beg. Stocks Use
World wheat production has exceeded use 5 straight years
Stocks have built: 256 million metric tons
at start of this year, up from under 200 mt in 2014
35% of expected use, up from 28% in 2014
Source: USDA FAS PSD Online, Nov. 2017
2016/17
(USDA
Nov.)
201718
(USDA
Nov.)
2017/18
(FAPRI
Nov.)
2018/19
(USDA
Nov.)
Area planted (mil. acres) 3.15 2.49 2.49 2.73
Yield (lbs./harvested acre) 7,237 7,461 7,461 7,760
Production (mil. cwt) 224.1 178.4 178.4 206.2
Domestic use, residual 131.4 115.0 116.0 118.3
Exports 116.7 104.0 102.9 109.4
Ending stocks 46.0 29.9 30.2 33.0
All rice MYA price ($/cwt) 10.40 12.50-13.50 12.55 11.69
Long grain MYA price ($/cwt) 9.64 11.80-12.80 11.85 10.84
Sources: USDA WASDE, Nov. 2017 and FAPRI-MU, Nov. 2017
8
10
12
14
16
18
20
22
24
26
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Do
llars
per
cw
t
Southern milled Thai 100% B Long grain farm
Sources: USDA ERS Rice Outlook, Nov. 2017; FAPRI-MU baseline, Nov. 2017
8
9
10
11
12
13
14
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Do
llars
per
cw
t
All rice Long grain Jan. futures
Sources: FAPRI-MU baseline, Nov. 2017; Jan. rough rice futures contracts, Nov. 17, 2017.
2016/17
(USDA
Sep.)
2017/18
(USDA
Nov.)
2017/18
(FAPRI
Nov.)
2017/18
(USDA
Nov.)
Area planted (mil. acres) 9.88 12.37 12.37 11.39
Yield (lbs./harvested acre) 855 888 888 838
Production (mil. bales) 16.60 20.65 20.65 17.02
Domestic mill use 3.22 3.32 3.34 3.40
Exports 14.30 13.85 13.83 14.18
Ending stocks 2.69 5.99 6.03 5.33
Marketing year average
price (cents/lb.)
68.0 60-66 62.2 62.8
Sources: USDA WASDE, November 2017 and FAPRI-MU, November 2017
40
45
50
55
60
65
70
75
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Cents
per
pound
Farm price: FAPRI Dec. futures USDA
Sources: FAPRI-MU baseline, November 2017; USDA WASDE, November 2017; December
futures contracts, November 17, 2017.
5
6
7
8
9
10
11
12
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Cents
per
pound
Farm price: FAPRI USDA
Sources: FAPRI-MU baseline, November 2017; USDA ERS Oil Crops Outlook, Nov. 2017.
2016
(USDA Nov.)
2017
(USDA Nov.)
2018
(USDA, Nov.)
Production (bil. lbs.) 25.29 26.47 27.69
Imports 3.02 2.97 3.03
Domestic disappearance 25.67 26.78 27.40
Exports 2.56 2.86 2.97
Ending stocks 0.76 0.70 0.72
5-area direct steers ($/cwt) 120.86 121.80 113-122
Sources: USDA WASDE, November 2017.
2016
(USDA Nov.)
2017
(USDA Nov.)
2018
(USDA Nov.)
Production (bil. lbs.) 24.96 25.76 26.94
Imports 1.09 1.11 1.00
Domestic disappearance 20.89 21.16 22.01
Exports 5.24 5.59 5.90
Ending stocks 0.51 0.63 0.66
Barrows & gilts, 51-52% lean
($/cwt)
46.16 49.01 43-47
Sources: USDA WASDE, November 2017.
2016
(USDA Nov.)
2017
(USDA Nov.)
2018
(USDA Nov.)
Production (bil. lbs.) 40.26 41.10 41.82
Imports 0.13 0.12 0.13
Domestic disappearance 33.80 34.50 35.04
Exports 6.64 6.71 6.91
Ending stocks 0.78 0.78 0.78
National composite wholesale
broilers (cents/lb.)
84.3 93.8 85-92
Sources: USDA WASDE, November 2017.
185
190
195
200
205
210
215
220
225
2006 2008 2010 2012 2014 2016 2018 2020
Poun
ds
Beef, pork, chicken and turkey
Drop from 2007-2012: 9%Increase from 2012-2017: 8%
Source: AMAP baseline, November 2017
2016
(USDA Nov.)
2017
(USDA Nov.)
2018
(USDA Nov.)
Production (bil. lbs.) 212.4 215.8 219.7
Exports
Fat basis 8.4 9.1 9.4
Skim solids basis 39.0 39.9 41.7
All milk price ($/cwt) 16.30 17.65-17.75 16.90-17.80
Sources: USDA WASDE, November 2017.
FAPRI and CBO baselines assume a
continuation of current farm programs
Following slides show average expected
payments under current policies
We use this baseline as a starting point for
analysis of alternative policies
3
59
60
77
679
0 100 200 300 400 500 600 700 800
All other
Commodity programs
Conservation
Crop insurance
Nutrition
Net outlays from FY 2018 to FY 2027, billion dollars
Nutrition programs (primarily
SNAP) account for 77% of
projected mandatory farm bill
spending over the next ten years
if the current farm bill is extended.
Source: CBO estimates, June 29, 2017
0
200
400
600
800
1000
1200
2002 2006 2010 2014 2018 2022 2026
Do
llars
pe
r a
cre Crop ins. net indem.
ARC/base a.
DCP/base a.
Market loan+ACRE
Market
Source: FAPRI-
MU 2017 baseline,
March 2017
0
200
400
600
800
1000
1200
2002 2006 2010 2014 2018 2022 2026
Do
llars
pe
r a
cre Crop ins. net indem.
PLC/base a.
DCP/base a.
Market loan+ACRE
Market
Source: FAPRI-
MU 2017 baseline,
March 2017
0
100
200
300
400
500
600
700
2002 2006 2010 2014 2018 2022 2026
Do
llars
pe
r a
cre Crop ins. net indem.
ARC/base a.
DCP/base a.
Market loan+ACRE
Market
Source: FAPRI-
MU 2017 baseline,
March 2017
Corn PLC payments
Occur if national season-
average prices are less
than the $3.70/bu.
reference price
At FAPRI projected
prices:
No payment for 2014/15
Payments in other years,
with biggest (potential)
payment for 2017/180
1
2
3
4
5
6
7
8
2012 2014 2016 2018
Do
lla
rs p
er
bu
sh
el
Corn prices
FAPRIfarm
Reference
Sources:
Agricultural Act of
2014, FAPRI-MU
November 2017
baseline
Soybean PLC payments Occur if national season-
average prices are less than the $8.40/bu. reference price
At FAPRI projected prices, no payments occur
Few soybean base acres are in PLC
0
2
4
6
8
10
12
14
16
2012 2014 2016 2018
Do
llars
per
bu
sh
el
Soybean prices
FAPRIfarm
Reference
Sources:
Agricultural Act of
2014, FAPRI-MU
November 2017
baseline
Wheat PLC payments
Occur if national season-
average prices are less
than the $5.50/bu.
reference price
At FAPRI projected
prices:
Payments occur every
year from 2015-18
Largest payment
($1.61/bu.) in 2016/170
1
2
3
4
5
6
7
8
9
2012 2014 2016 2018
Do
lla
rs p
er
bu
sh
el
Wheat prices
FAPRIfarm
Reference
Sources:
Agricultural Act of
2014, FAPRI-MU
November 2017
baseline
Long grain rice PLC payments Occur if national season-
average prices are less than the $14/cwt reference price
At FAPRI projected prices: Payments occur every
year from 2014-18
Largest payment in 2016/17 ($4.36/cwt)
0
2
4
6
8
10
12
14
16
18
2012 2014 2016 2018
Do
lla
rs p
er
cw
t
Long grain rice prices
FAPRIfarm
Reference
Sources:
Agricultural Act of
2014, FAPRI-MU
November 2017
baseline
0
100
200
300
400
500
600
700
800
900
1,000
08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19
Dolla
rs p
er
acre
Actual revenue 86% of benchmark
Source: Author calculations using Oct. 2017 actual and projected prices and yields per
harvested acre. In reality, these calculations would be different in every county.
0
100
200
300
400
500
600
700
800
08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19
Dolla
rs p
er
acre
Actual revenue 86% of benchmark
Source: Author calculations using Oct. 2017 actual and projected prices and yields per
harvested acre. In reality, these calculations would be different in every county.
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
$0$1 - $20$21 - $40$41 - $60$61 - $80Insufficient data Source: Map by FAPRI-MU analyst Peter Zimmel,
based on FSA-reported data, Oct. 2017
$0$1 - $20$21 - $40$41 - $60$61 - $80Insufficient data
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
Source: Map by FAPRI-MU analyst Peter Zimmel, based on FSA-reported data, Oct. 2017
$0$1 - $20$21 - $40$41 - $60$61 - $80Insufficient data
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
Source: Map by FAPRI-MU analyst Peter Zimmel, based on FSA-reported data, Oct. 2017
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
JacksonLafayette
Saline
Johnson
Cass
Bates
Henry
Pettis
RayClay
Clinton
Platte
Buchanan
Caldwell
Carroll
Livingston
Linn
Chariton
Randolph
Howard
Cooper
Moniteau
MorganBenton
St. Clair
DeKalb
Miller
Camden
HickoryVernon
Boone
Callaway
Audrain
Montgomery
Lincoln
Warren St. Charles
St. Louis
Jefferson
Franklin
Gasconade
Osage
Maries
Phelps
Crawford Washington
Pulaski
Cole
Monroe
Pike
DentIron St. Francois
Ste.Genevieve
Dallas Laclede
Polk
Webster
Texas
Wright
Douglas
Ozark
Howell
Shannon
OregonRipley
Carter
Reynolds
Wayne
Butler
Christian
Taney
Stone
Greene
Pemiscot
DunklinNew Madrid
Mississippi
Stoddard
Bollinger
CapeGirardeau
Madison
Scott
Perry
Clark
Lewis
MarionShelby
Ralls
Knox
ScotlandSchuyler
Adair
Macon
Sullivan
PutnamNodaway
Andrew
Holt
Atchison HarrisonWorth
Gentry
Daviess
Grundy
Mercer
Cedar
Dade
Lawrence
Barry
McDonald
Newton
Jasper
Barton
$0$1 - $20$21 - $40$41 - $60$61 - $80Insufficient data Source: Map by FAPRI-MU analyst Peter Zimmel,
based on FSA-reported data, Oct. 2017
41
48
36
1511
0
9
31 3129
0
10
20
30
40
50
60
2014/15 2015/16 2016/17 2017/18 2018/19
ARC PLC
Source: FAPRI-MU March 2017 stochastic baseline (average of 500 outcomes)
Source: page 10 of 2017 U.S. Baseline Briefing Book, March 2017
3012 15 10 6
3860
203
27 3210
116
187
0
50
100
150
200
250
C o r n S o y b e a n s W h e a t S o r g h u m B a r l e y R i c e P e a n u t sDo
llars
per
par
tici
pat
ing
bas
e ac
re
2014-18 annual average
ARC PLC
Source: page 10 of 2017 U.S. Baseline Briefing Book, March 2017
15 8 8 5 729
5732
1122
3522
99
207
0
50
100
150
200
250
C o r n S o y b e a n s W h e a t S o r g h u m B a r l e y R i c e P e a n u t sDo
llars
per
par
tici
pat
ing
bas
e ac
re
2019-26 annual average
ARC PLC
Source: page 10 of 2017 U.S. Baseline Briefing Book, March 2017
7 3
44
6875
95 100
7060
8090
8595 100
0
20
40
60
80
100
120
C o r n S o y b e a n s W h e a t S o r g h u m B a r l e y R i c e P e a n u t s
Per
cen
t o
f b
ase
acre
age
Share of base area enrolled in PLC
2014-18 2019-26
Source: page 5 of 2017 U.S. Baseline Briefing Book, March 2017
0123456789
10
1 0 / 1 1 1 2 / 1 3 1 4 / 1 5 1 6 / 1 7 1 8 / 1 9 2 0 / 2 1 2 2 / 2 3 2 4 / 2 5 2 6 / 2 7
Bill
ion
do
llars
Marketing year
DCP & ACRE ARC PLC
Private insurers sell various types of crop insurance Most common: pays when yields or revenues fall below a
trigger tied to past yields, prices Available to most major crops and even fruits and
vegetables; most field crop acres are enrolled
Taxpayer costs Premium subsidies (avg.: 63% in 2016) Delivery subsidies to insurers Underwriting gains to insurers
Congressional agriculture committees not inclined to make major changes, according to press reports
-200
0
200
400
600
800
1000
1200
1400
2011 2012 2013 2014 2015 2016
Mill
ion d
olla
rs
Producer-paid premiums Indemnities Net indemnities
Between 2011 and 2016, Missouri producers as a group received more in indemnity payments than they paid in premiums 4 years out of 6
Source: RMA Summary of Business (http://www.rma.usda.gov/data/sob.html) data as of 10/16/17
Net indemnity payments = indemnity payments for losses minus producer-paid premiums.
Source: page 65 of 2017 U.S. Baseline Briefing Book, March 2017
0
2
4
6
8
10
12
14
1 0 / 1 1 1 2 / 1 3 1 4 / 1 5 1 6 / 1 7 1 8 / 1 9 2 0 / 2 1 2 2 / 2 3 2 4 / 2 5 2 6 / 2 7
Bill
ion
do
llars
Marketing year
Crop insurance net indemnities Select Title I payments
President’s budget includes proposed changes in “mandatory” farm programs Limit crop insurance premium subsidies to $40,000 Eliminate harvest price option for crop insurance Lower AGI limit for program benefits to $500,000 “Streamline” conservation programs Eliminate small programs
Total projected reduction in 10-year outlays OMB: $38 billion CBO: $29 billion
House Budget Committee version of FY 2018 budget resolution
$10 billion over 10 years in cuts at USDA
Assumed to be from SNAP (but not required)
Final budget resolution did not mandate any cuts in farm or nutrition programs
Also set up current tax reform debate
House bill approved 227-205 on Nov. 16
20% corporate tax rate
Larger standard deduction
Expensing of business investments until 2022
Elimination of estate tax in 2025
Changes in pass-through rules and rates
Ends many deductions, including for state and local income and sales taxes
Many, many other changes
10-year impact on federal revenues (FY 2018 – FY 2027
Reduce corporate tax rate to 20% -$1,456 billion
Other business tax changes +$702 billion
Net effect on business taxes -$754 billion
Change personal tax rates, standard deduction -$2,011 billion
Eliminate personal exemptions, other changes +$1,047 billion
Net effect on personal taxes -$964 billion
Foreign taxes and other provisions of the bill +$281 billion
Overall bill as passed by Committee -$1,437 billion
Source: Estimate by Joint Tax Committee, https://www.jct.gov/publications.html, publication JCX-54-17. Amended bill approved by the full House may differ.
Senate bill still evolving on 11/18/17
Likely to include many House provisions
But has to satisfy different budget rules to be debated under rules requiring only 50 votes + VP▪ Cannot increase official estimate of deficit after FY 2028
▪ Joint Tax Committee estimates say House version would increase deficit after 2028
▪ So, Senate could only pass House version with 60 votes (i.e., with at least 8 Democrats supporting)
▪ Finance Committee versions ends many benefits in or before 2025 so 20% corporate rate can be permanent
Far from clear what (if anything) will pass
Risks
Renegotiations of NAFTA and other agreements
TPP without the U.S.? Japan-EU agreement
Foreign retaliation to U.S. trade moves
Opportunities
New bilateral agreements
Renegotiation of NAFTA and other agreements
Using trade enforcement tools to push for policy
reform elsewhere
2018 farm bill could look mostly like 2014 farm bill
Many like what they have
Hard to agree on alternatives
If no agreement on new bill, could be “forced” to extend current bill, at least for awhile
But many would like at least some tweaks
And some want major reforms
Crop insurance
To protect against drop in yields or revenue within a year
Agricultural Risk Coverage
To protect against a drop in revenues relative to experience of recent years
Price Loss Coverage
To protect against an extended period of low prices
What to do about dairy?
Few appear to like current Margin Protection Program
June 2017 CBO baseline had $87 million/year in dairy outlays over FY 2018-27
Milk production value: about $40 billion/year
Hard to build a program that does much for producers if cost is about 0.2% of value of milk
And if want to spend more, where does money come from?
What to do about cotton?
2014 ended cotton commodity programs, other than marketing loans
No program to protect against multi-year low prices or returns
One option: cottonseed program, either by act of Secretary under “other oilseed” authority or by Congressional action
Possible complications: budget issues, generic base, response of countries that brought original WTO case
Senate Appropriations Committee bill addresses two “farm bill” issues
Cotton: Makes cottonseed a commodity eligible for PLC payments, with a reference price of $15 per cwt.
Dairy: Eliminates or reduces MPP premiums for small scale producers
Total cost: about $1 billion over 10 years
If these changes are in final bill
Two major issues have at least a short run resolution
May reduce resistance to extending current farm bill if it proves difficult to agree on a new farm bill
What to do about ARC/PLC?
Should payments be on base or planted area?Budget, market and WTO implications
Change ARC formulas?
Change PLC reference prices?
Do something to reduce discrepancies in county ARC payments?
Arguments for shifting to planted acreage as basis for ARC and PLC payments
Easier to administer and explain▪ Currently, farmers get payments based on crops they
may not even be producing
Might reduce program costs▪ Base acreage exceeds planted area for crops with high
payment rates, such as rice, peanuts, corn and wheat
▪ Base acreage is less than planted area for soybeans, which has the lowest payment rates
Arguments against shifting to planted acreage as basis for ARC and PLC payments
Payments would more directly affect producer planting decisions▪ Distorts producer decisions: “plant for the payment”
▪ Result could be lower prices for some commodities and higher PLC payment rates/unit
WTO reasons▪ Current: ARC & PLC classified as non-product specific
support, U.S. unlikely to exceed WTO support commitments
▪ If planted area used: ARC & PLC probably become product-specific support, which is more likely to result in challenges
What to do about CRP?
Should limit on size of CRP be increased from current 24 million acres?
Should way in which rental rates are set be changed?
What types of acres should be targeted?
Should there be another program with a shorter enrollment period?
Some want more dramatic changes Heritage and others from “right”: less government
involvement in agriculture and less spending
Environmental Working Group and others from the left: less on large farms, more on small farms and conservation
Are the votes there for a “continuity” farm bill? Need 218 in House and 51 or (more likely) 60 in Senate if
President will sign
Or 2/3 in both chambers to overcome a veto
What role will budget concerns play?
What will the President be willing to sign?
FAPRI-MU website: www.fapri.missouri.edu
Follow us on Twitter: @FAPRI_MU
To contact Pat Westhoff:
573-882-4647
FAPRI-MU team:
Julian Binfield
Sera Chiuchiarelli
Deepayan Debnath
Scott Gerlt
Hoa Hoang
Lauren Jackson
Willi Meyers
Byung Min Soon
Wyatt Thompson
Jarrett Whistance
Peter Zimmel
This material is based upon work supported by the U.S. Department of
Agriculture, Office of the Chief Economist, under Agreement #58-0111-16-
011, and the USDA National Institute of Food and Agriculture, Hatch
project number MO-HASS0024.
Any opinion, findings, conclusions, or recommendations expressed in this
publication are those of the authors and do not necessarily reflect the view
of the U.S. Department of Agriculture nor the University of Missouri.