The Rural Mainstreet Index climbed above growth neutral this month. The monthly survey of bank CEO’s in ten Midwestern states climbed to 54.8 from 53.8 in July. The index ranges between 0 and 100 with 50.0 representing growth neutral. Organizer Ernie Goss of Creighton University says the survey shows expansion of the economy outside of agriculture, but adds “the negative impacts of recent trade skirmishes have begun to surface, weakening already anemic grain prices.” In reaction to weak farm commodity prices and income, almost one-third, or 31.0 percent, of bank CEOs reported rejecting a higher percentage of farm loans. More than half, or 54.8 percent, indicated raising collateral requirements, while 4.8 percent reported reducing the size of farm loans. Meanwhile, the August farm equipment sales sub-index fell to 37.8 from July’s 38.8. This marks the 60th consecutive month the reading has moved below growth neutral 50.0. In terms of the sale of farm equipment over the next 12 months, bankers expect sales to decline by 7.8 percent.
President Trump spoke recently during a Cabinet meeting at the White House, saying farmers are starting to prosper. However, a Bloomberg article says the numbers tell a different story. “I hear they’re starting to do well in spite of everything,” the President said during comments from the meeting. “They’re selling corn, they’re selling soybeans, they’re selling everything, at levels that are soon going to be pretty good levels.” Benchmark soybean futures are down 14 percent since China first proposed putting tariffs on American imports back in April. China followed through on that threat in July. The Bloomberg Agricultural Sub-Index, which is made up of corn, soybeans, and other major farm products, hasn’t recovered from the record-low it set in July. The Purdue/CME Group Ag Economy Barometer sank last month. The USDA is projecting net farm income to total $59.5 billion, the lowest number since 2006. The administration says it will offer $12 billion in aid to farmers who’ve been hurt by the trade conflict. “They attacked our farmers by not buying from our farmers,” Trump says. “They know the farmers like Trump and I like them. I love them.”
Depressed commodity prices, poor weather, and trade war ramifications aren’t just worrying for the nation’s farmers. The second quarter Agriculture Credit Conditions Survey from the Federal Reserve Bank of Minneapolis says ag bankers are worried as well. The report, which covers April through June, says farm income, spending on capital equipment, and household purchases all decreased. Nearly half of the lenders located within the Fed district, which stretches from Wisconsin through Montana, reported a decrease in farm income. Only eight percent reported an increase in farm income. Wisconsin, one of the nation’s most prominent dairy states, has the highest number of lenders reporting falling incomes, coming in at 71 percent. Lower incomes did slightly hurt the rate of loan repayments. Survey respondents also said cropland values increased somewhat. About half of the survey respondents are also predicting that conditions will worsen further by the time the third quarter of 2018 rolls around.
It’s taken months of divesting, negotiating, and waiting, but Bayer and Monsanto will complete their merger. An Ag Web Dot Com article notes German-based Bayer can now officially begin integrating Monsanto after Bayer divested itself of certain Crop Science businesses in a sale to BASF. The name Monsanto is expected to officially disappear in the future. However, familiar brand names like Dekalb, Asgrow, and Channel are expected to remain after the merger is complete. Bayer became Monsanto’s sole shareholder back in June, but the merger couldn’t officially take place until Bayer completed the sale of certain assets to BASF. Some of the divestments included Bayer’s field crops business, vegetable seed business, a digital platform, and other assets. The U.S. Justice Department required the divestments be completed before the merger was allowed to officially begin. Prior to completing the sale of assets to BASF, Bayer didn’t have access to Monsanto’s information. The company says with the integration, it “gains the ability to become actively involved in defense efforts at glyphosate trials and any other legal disputes, such as potential claims for damages in connection with dicamba.”
A district court judge in South Carolina overturned the Trump Administration’s attempt to delay implementation of the “Waters of the U.S. Rule,” or WOTUS. The Hill Dot Com says the Obama-era rule is immediately law in 26 states as the judge’s ruling put an exemption on the administration’s suspension rule. The U.S. District Court in South Carolina decided the Environmental Protection Agency did not follow rule-making procedures in suspending WOTUS implementation. The judge says EPA did not give an adequate public notice and comment period as stipulated by the Administrative Procedures Act. The court wrote in its decision that, “As administrations change, so do their priorities. But the requirements of the APA remain the same. The Court finds that the government failed to comply with these requirements in implementing the suspension rule.” A federal judge had previously granted the other 24 states the ability to get out of WOTUS regulations. Environmental groups like the Sierra Club hailed the decision as a victory for communities across the country. The EPA says it will look at the order before determining its next steps.
A coalition of animal agriculture stakeholders is seeking permanent funding for disease preparedness programs in the farm bill. In a letter to the farm bill conferee members, who will be ironing out differences between the House and Senate bills, the group specifically seeks permanent full funding for the National Animal Disease Preparedness and Response Program. The groups say permanent funding is “critical “ as an outbreak of a foreign animal disease, such as Foot and Mouth Disease or Avian Influenza, “has the ability to cripple the entire agricultural sector and create long-lasting ramifications.” The letter says recent studies indicate that the cumulative 10-year loss due to an uncontrolled FMD outbreak would be $199.8 billion. The coalition includes more than 100 state and national livestock, veterinary and animal health organizations.
The North American Free Trade Agreement renegotiation effort passed the one-year anniversary this week. A year ago Thursday, the U.S., Canada and Mexico convened for the start of the renegotiation talks. Now, the U.S. could be nearing a deal on NAFTA, at least with Mexico. Politico reports the political situation in both countries is such that each is more eager than ever to make a deal, setting up a scenario in which significant progress could be on the near horizon. Plus, the incremental progress, along with “good faith negotiations” between Mexico and the U.S. are offering signs of hope to U.S. farmers and business in the global trade arena. Mexico says the list of items to resolve is “no longer a question of chapters, it’s now a question of paragraphs and points.” Meetings were scheduled to continue through the end of this week in Washington as negotiators seek an agreement, before moving on to striking a deal with Canada.
A Chinese delegation will travel to the U.S. as part of the ongoing trade war as both sides “remain far apart.” China said Thursday the delegation will meet with U.S. Treasury Undersecretary David Malpass to discuss trade issues. However, the South China Morning Post reports observers say the talks are unlikely to yield any breakthrough, but could lead to further negotiations aimed at de-escalating the trade war. Malpass has no authority to negotiate with China on trade, but can set up the basic protocol for a possible future round of talks. The U.S. is due to issue tariffs on another $16 billion worth of Chinese goods in the next week, with China again vowing to retaliate against the U.S. tariffs. The visit between China and the U.S. is mainly viewed as a means to check and see if future dialogue between the two nations is possible.