Photo courtesy Gage Skidmore
The Department of Agriculture remains headless under President-elect Donald Trump, but not for long. Trump is expected to announce his choice for USDA Secretary this week. Still, there’s no clear front-runner for the post. While the media circuit to start the week named former Georgia Governor Sonny Perdue as the leading candidate, by Tuesday, reports suggested a former lieutenant governor of California was the top choice for Trump. Perdue is a Democrat-turned-Republican who served on Trump’s agricultural advisory committee during his presidential campaign. Perdue would appease Trump’s agriculture advisory committee, but he may not be the final name in the hat. A White House correspondent for CNN said Tuesday former California Lieutenant Governor Abel Maldonado was emerging as the frontrunner to lead USDA. Maldonado is a Mexican-American who grew up in a farming family, and he currently operates a California Vineyard. USDA Secretary is one of the last few major positions for Trump to fill. However, Trump’s USDA transition team did have two leaders removed from the post in the early going. Currently, Brian Klippenstein of Protect the Harvest and Carrie Castille, former associate commissioner of the Louisiana Department of Agriculture, are leading the efforts.
2016 was a rough year for wheat farmers, who are now trying to set themselves up for more success next year by reducing the number of planted acres. Craig Van Dyke of Top Third Ag tells the U.S. Farm Report that rumors of drought next year are less concerning than the acreage prospects. Van Dyke says, “We need to drastically reduce acreage to find ourselves competitive globally price-wise.” Soybean prices could be a big motivator for producers to switch acres from wheat to soybeans next year. Van Dyke says he’s even talked to producers in Montana who are planting soybeans for the first time ever. Advance Trading, Incorporated, shares the same view, noting that unlike soybeans that can be grown in the U.S. and South America, wheat can be grown all over the world, making it difficult to trade. It’s easier to keep track of what’s going on in corn and beans across America versus what’s going on in the rest of the world.
Starting on January 9, The U.S. Department of Agriculture is changing cancellation policies on certain Conservation Reserve Programs. Pro Farmer’s First Thing Today says the new termination policy is intended to make it easier to pass land from one generation to the next. The land eligible for early termination is among the least environmentally sensitive lands enrolled in the program. In the past, if a landowner decided to terminate a contract early, they would normally be required to pay back all the money they received while enrolled, with interest. The new policy will waive the repayment requirement only if the land is transferred to a beginning farmer or rancher through either a sale or a lease with an option to buy. This change is one of many set forth by the Land Tenure Advisory Subcommittee formed by Secretary of Agriculture Tom Vilsack in 2015. In making the announcement, the USDA noted that the average age of farmers is 58. Land tenure, estate planning, and access to land are increasingly important for the future of agriculture. The USDA conducted a survey on farm succession in 2014, which showed farmland owners expect to transfer 93 million acres to new ownership between 2015 and 2019.
Net cash farm income and net farm income are two popular ways to measure farm sector profitability, but they aren’t the same thing. Net cash farm income tracks cash receipts and cash expenses, while net farm income includes non-cash transactions, including inventory changes, capital replacements costs, and others. Both measures have headed lower since 2013 after several years of higher income. The U.S. Department of Agriculture is forecasting that net cash farm and net farm income for 2016 will be $90.9 billion and $54.8 billion, respectively. Both amounts fall below the ten-year averages. Before the recent drops, both income measures largely trended upwards. Between 2010 and 2013, rising crop and animal receipts helped to push net cash farm income and net farm income higher. However, prices declined for a large group of commodities in 2015 and fell further in 2016. Production expenses were forecast to contract in 2016 but not enough to offset the drop in commodity prices.
Brazil soybean harvest is just underway in Matto Grosso, getting started a few days before Christmas. Pro Farmer’s First Thing Today says soybean harvest in Parana should get going within the next ten days. South American Crop Consultant Michael Cordonnier notes that rainfall increased during early December, leading to concern that wet weather could cause disease issues like mold, potentially knocking down yield numbers. However, he left the Brazil soybean yield forecast at 103 million metric tons and the corn projection at 86 million metric tons. Heavy rains fell in Argentina through the weekend, totaling 2.5 to 4 inches combined over the period. Much heavier rains totaling up to 8 inches fell in other parts of the country, prompting some flooding concerns. The rain events missed southern Buenos Aires province, where dryness is becoming a concern. Planting in the province is up to 20 percent behind normal. Still, Cordonnier puts his Argentina soybean forecast at 56 million metric tons and the corn forecast at 35 million metric tons, with a neutral bias toward both crops.