Podcast Summary
August recess advocacy: During the August recess, farmers and ranchers should engage with their representatives to discuss key issues like the Farm Bill, upcoming election, and tax reform expirations.
The August recess is a crucial time for farmers and ranchers to engage with their members of Congress. During this period, policy makers return to their districts to interact with constituents and learn about their concerns. The face-to-face interaction between farmers, ranchers, and their representatives is the most effective advocacy tactic, allowing for questions, answers, and follow-ups. Key issues for farmers and ranchers to discuss include the upcoming election, the Farm Bill, and tax reform, specifically provisions in the Tax Cuts and Jobs Act that will expire next year. By taking advantage of this opportunity, farmers and ranchers can ensure their voices are heard and their concerns are addressed.
Agriculture prices: University of Illinois agricultural economist Gary Schnitkey advises farmers to prepare for potential lower returns in agriculture, as prices for soybeans and corn have been above historical averages but demand increases are unlikely and supplies look adequate. He suggests using financial resources wisely for weathering or long-term investments.
Farmers are currently facing another period of potentially lower returns in agriculture, following several years of high prices. University of Illinois agricultural economist Gary Schnitkey explains that prices for soybeans and corn have been significantly above the long-term plateau prices, which have historically been around $4.55 for soybeans and $11 for corn. These high prices were likely caused by either demand shocks or supply shocks, but Schnitkey notes that demand increases are unlikely in the near future, and supplies look adequate. He advises farmers to use their financial resources from the high price period wisely, either to weather the current situation or make long-term investments. Schnitkey also notes that periods of low returns tend to last longer than periods of high prices, typically around seven to eight years. So, while there is a possibility of higher prices in the current year, the long-term outlook is uncertain. Farmers should prepare for this potential period of lower returns and consider using their financial resources strategically.
USDA cattle report, herd rebuilding: Despite unexpectedly high cattle on feed numbers, lower placements and marketing numbers suggest a slower herd rebuilding process. The current percentage of heifers and steers on feed is an indicator of this, and the trend towards more heifers in feedlots will help mitigate short-term beef supply concerns, but long-term implications for inventory and production are uncertain.
The USDA's latest cattle on feed report showed higher numbers than expected, but placements were lower than projected. Dr. Lee Schultz, an Iowa State University professor and extension economist, notes that marketings were also lower than expected. While June is typically not a large placement month, the lack of the July 1st cattle inventory report, which would have provided information on heifers held for beef cow replacement and beef cow numbers, makes it difficult to determine the herd's rebuilding status. Schultz instead looks to the number of heifers and steers on feed to calculate the herd's status. This number is currently just under 40%, indicating that more heifers are being sent to feedlots instead of being retained for the breeding herd. This trend has helped mitigate the impact on fed cattle supplies and beef production in the short term. However, as the herd continues to rebuild, inventories will tighten, and the longer the expansion is delayed, the larger the impact on herd inventories and beef production will be. Producers are responding to profits rather than high prices, and while prices are historically high, they have not yet equated to large profits due to the highest cost environment we've ever seen.
Agriculture Industry Profitability: Costs are stabilizing and prices are strengthening in agriculture, leading to potential profits for marketing cabs and incentivizing expansion. Resources are also abundant due to improved pasture and range conditions and hay production.
Costs are stabilizing and prices are strengthening in the agriculture industry, according to Dr. Lee Schultz from Iowa State University. This is the first time in a long while that marketing cabs will make notable profits, potentially incentivizing expansion. Additionally, resources are available due to improved pasture and range conditions and hay production. Meanwhile, the National Junior Angus Association collected a record-breaking donation of over $326 and 652 pounds of pop tabs for the Ronald McDonald House charities of Madison, Wisconsin. These efforts demonstrate the association's commitment to supporting families in need. Overall, the agriculture industry is showing signs of financial improvement, and organizations are making a positive impact in their communities.