The U.S. Department of Agriculture kicked off their two-day annual Agricultural Outlook Forum here yesterday with highlights from industry experts and keynotes from House Ag Committee Chairman Mike Conaway (R-TX) and Iowa’s Governor, Terry Branstad.
One of the largest draws of the Forum are the economic projections for the U.S. agriculture industry provided by USDA’s Chief Economist Robert Johansson.
Johansson shared that soybean acreage is expected to grow by about 5 million acres this year while corn drops about 4 million acres. Prices are sharply favorable to soybeans right now, likely causing the shift in production. Wheat production is expected to drop by 8.3 percent and cotton is expected to grow by 14.2 percent. Rice projections by USDA take one of the most significant cuts at 17.4 percent, down to 2.6 million acres.
The overall farm economy is expected to stay rather stagnant, the debt-to-asset ratio for farmers is projected to average 13.9 percent. This ratio hit its historic high at 22.2 percent in 1985, “To reach that point today would still take a dramatic increase in debt payments or a loss in farmland value of more than 50 percent,” Johansson said.
There was some lightness in Johansson’s remarks. “Farm programs are working as designed. Given the rapid decline in agricultural sector profitability since 2013, we have seen farm programs providing a safety net to many producers. Those programs have helped farmers adjust to lower commodity prices,” he said. “PLC payments have totaled $1.9 billion for crop year 2015, with the largest shares going to rice, peanuts, and wheat base.”
“We’re obviously not in a good place with regard to low rice prices and the corresponding lower plantings as projected by USDA,” said USA Rice Vice President of Government Affairs Ben Mosely. “But overall, PLC has been working well for long grain rice growers and USDA agrees.”
The U.S. Congressional Budget Office projections anticipate PLC’s 2016 crop year payments, to be made in November, to total $3.5 billion.