“It was the best of times, it was the worst of times …” Charles Dickens, “A Tale of Two Cities”
While writing our recent 2019 Agricultural Year in Review we realized that more than the year was coming to a close. The decade – at least how most of us think about it – was also coming to a close. We think it’s helpful to reflect on what’s happened and what can be learned. With that we share the Agricultural Decade in Review – our list of the most important agricultural stories from 2010 to 2019.
Disappearing Bees: A U.S. Department of Agriculture report on colony-collapse disorder captured the shocking magnitude of honey bee deaths.
Commodity Price Take-off: The 2010 corn crop had a market-year average price of $5.18 per bushel in the 2010-2011 marketing year. It was a big increase compared to $3.55 in 2009. The market-year average price for soybeans was $11.30; it was $5.70 for wheat.
Interest Rates Decrease: As global economies continued to respond to the impacts of the Great Recession, interest rates decreased. Farm-level interest rates in 2010 reached the most reduced level observed since the late-1980s. Ironically 2010’s welcomed step less would actually mark the greatest rates producers would see for the decade.
Commodity Prices Even More: Move over 2010 – 2011 market-year average prices were even better. They were $6.22 for corn, $12.50 for soybeans and $7.24 for wheat.
Fertilizer Prices Soar: As the United States and World rush to produce more corn and soybeans, fertilizer prices soar. Anhydrous ammonia prices break $800 per ton as the farm-level expense for corn fertilizer approached $160 per acre. Fertilizer prices would remain stubbornly inflated through 2013.
The Texas Drought: Fall-2010 dryness turned into a full-blown drought across the South and Southwest. The impacts were long felt, particularly for Texas cattle producers forced to sell their herds.
The Midwest Drought: The Corn Belt is caught in the crosshairs of a dry hot summer. The U.S. average corn yield of 134 bushels per acre was 35 bushels less than trend, a record in the data going back to the 1960s.
Commodity Price Better Again: Tight stocks and a record drought increased commodity prices even more. For the 2012 harvested crop, producers received an average price of $6.89 for corn, $14.40 for soybeans and $7.77 for wheat. These would be the greatest prices of the decade.
Net Farm Income Soars: With production recovering and prices strong, farm income soared in 2013. It would also mark the peak. The global acreage expansion stopped in 2013 – or at least paused.
The Farm Bill that Didn’t Happen: There was a lot of activity surrounding the farm bill, but it never crossed the finish line. The House and Senate each had their own versions, and efforts were eventually sent to a conference committee.
Monsanto’s Billion-Dollar Buy: Monsanto purchased Climate Corp for almost $1 billion.
Viptera: China refuses to buy U.S. corn after detecting the unapproved Viptera genetics. Lawsuits followed.
Farmland Values and Cash Rents Soar: The 2013 Purdue Farmland Survey found values were up about 20 percent across the state. Rental rates for excellent-quality farmland reached $294 per acre, and increase from $202 in 2010. With hindsight 2013 marked the peak for cash-rental rates of excellent-quality Indiana farmland.
Warning Signs in the Farm Economy: At the annual U.S. Department of Agriculture Outlook Conference, all eyes were on the shocking estimates that net farm income could decrease 25 percent for the year.
Uncertainty in Ethanol: A late-2013 decision by the U.S. Environmental Protection Agency to reconsider aspects of the Renewable Fuels Standard caused turmoil in 2014. The EPA initially proposed reducing the amount of ethanol blended but ultimately punted to 2015 for a final decision.
Big Crops: Ideal weather pushed U.S. corn and soybean yields to more than trend. As a result U.S. and global grain stockpiles increase, but are not as oversupplied as some suggested.
California Drought: California was gripped by a powerful drought.
PEDv: The Porcine Epidemic Diarrhea virus rocked the hog and pork markets.
GMOs on the ballot: Ballot measures to require the labeling of foods containing genetically modified organisms failed in Oregon and Colorado. From a 2012 ballot measure, Colorado started legally selling a new cash crop.
2014 Farm Bill Approved: The 2014 farm bill was approved, creating the Agriculture Risk Coverage and the Price Loss Coverage programs crop producers would then need to choose from. Sliding into the void between the end of direct payments in 2013 and Agriculture Risk Coverage and Price Loss Coverage payments starting in 2015, a large livestock-disaster bill was approved along with the 2014 farm bill.
Agricultural Economic Insights at www.aei.ag launched: While colleagues at Purdue University, Brent Gloy and David Widmar launched a weekly blog titled Agricultural Economic Insights.
Farmland values start to decline: The toll of reduced commodity prices and reduced farm incomes decreased farmland values. Excellent-quality farmland in Indiana went from $5,310 per acre in 2010 to a best price of $9,765 by 2014. By 2019 values would adjust to $8,206. Even with the adjustments, it was a decade of big changes in farm equity.
Avian Flu: Avian Flu hit chicken and turkey producers hard. Egg and Thanksgiving-turkey prices increased.
Merger Mania: Dow and DuPont announced they would merge and eventually split into three companies – Hello, Corteva. Monsanto tried it’s hardest to purchase Syngenta – in early May, June and again in August. Monsanto’s Climate Corp sold Precision Planting to John Deere. Of course the U.S. Department of Justice would intervene; AGCO finalized the purchase of Precision Planting in 2017.
U.S. Meat Consumption Increases: The Great Recession triggered a significant decline in U.S. meat consumption. The year 2015 marked the first year of strong growth in total meat consumption. It would take until 2018 for U.S. meat consumption to return to pre-recession levels.
WOTUS: The Obama administration issued the Clean Water Rules, which included Waters of the United States.
Buzz Word of the Year: Drones
Soybeans to the Rescue: A short South American crop send soybean futures to better prices late in the spring. The 2016 marketing-year average price for soybeans was $9.47 per bushel, an increase from $8.95 in 2015.
Wheat Implodes: Cash prices decrease so much that farmers collect loan-deficiency payments, and the long trend toward fewer wheat acres turns to a free-fall as the United States planted 4.5 million fewer acres in 2016 – a decline matched again in 2017. The marketing-year average wheat price was $3.89 – the worst price of the decade.
Corn Prices Decrease: The marketing-year average corn price fell to $3.36 per bushel, tied for the worst price of the decade. Prices hit $3.36 again in 2017.
Mergers Continue: Syngenta sold to ChemChina. Bayer acquired Monsanto. Input cooperatives and Farm Credit associations even merged.
The 2016 Election Proves to be a Surprise.
Farm Income Hits Bottom: With hindsight U.S. farm income hit bottom. In summary, a difficult year.
Dicamba Headaches: Facing herbicide resistance, farmers turn to dicamba and dicamba-tolerate seeds. Tensions increase in summer 2017.
Troubles in the Farm Economy Continue: Farm debts increase, loan delinquencies increase although remain historically reduced and CHS found itself suing a farmer customer for $145 million in unpaid loans.
Another Big Year of Crop Production: Twitter posts and pictures to the contrary, U.S. corn and soybean yields go to more than trend for the fourth year in a row.
U.S. Beef to China: U.S. beef found its way into Chinese grocery stores in 2017 – but Chinese consumers weren’t too excited.
Agribusiness Shuffling Continues: BASF buys $7 billion in Bayer assets to appease Bayer-Monsanto merger concerns. DuPont purchased Granular – a farm-management software startup – for $300 million. AGCO closed on the Precision Planting deal after John Deere moved on.
Disruptors Settle In: Farmers Business Network raised $110 million in capital bringing total investments to $200 million and Indigo Ag raised $47 million in new capital bringing its total to $203 million.
NAFTA Uncertainty: Trump announced plans to renegotiate the North American Free Trade Agreement. Earlier in the year Trump withdrew the United States from Trans-Pacific Partnership negotiations.
Tax Reform: Late in 2017 the president and Congress moved to reduce taxes.
Renewable Fuel Standard War Turns Ugly: From Carl Ichan’s bad bet on renewable identification numbers to the EPA- Sen. Chuck Grassley-Sen. Ted Cruz battles, tensions around the Renewable Fuel Standard increase.
Buzz Word of the Year: Bitcoin
Trade War: China imposed retaliatory tariffs in July on U.S. soybeans. As 2018 came to a close, a December truce gave hope for an early-2019 resolution.
Market Facilitation Payments: To offset Trade War impacts, the USDA and White House issued Market Facilitation Payments in 2018.
USMCA: In November the leaders of Canada, Mexico and the United States announced an agreement to update the North American Free Trade Agreement with the U.S.-Mexico-Canada trade agreement. Ratification by all three nations, including Congressional Approval in the United States, would be necessary.
2018 Farm Bill Approved: The “Agricultural Improvement Acts of 2018” was approved; the 2014 farm bill’s Agriculture Risk Coverage and Price Loss Coverage programs remain.
Ethanol Good News, Bad News: It was a mixed year for ethanol. On one hand Trump directed the EPA to allow year-round sales of E15 – theoretically increasing the potential market for ethanol sales. On the other hand the EPA granted several small-refinery waivers – effectively bypassing the Renewable Fuel Standard mandates.
Trade War Continues: 2018’s 90-day truce came and went with no deal. Again in 2019, optimism soared at year-end with rumors and Tweets of an imminent “Phase 1” deal. Market Facilitation Program payments were made again in 2019; direct payments accounted for a larger share of farm income.
African swine fever: Beyond trade, global agriculture also adjusted to the realities of African swine fever, hitting China hard.
U.S. Grain Production Hiccups: It started with 20 million acres of prevented planting. Then corn and soybean yields were less than trend, the first time in five years. Many wondered why prices didn’t increase, but it’s worth considering just how bad conditions could have been.
USMCA Progress: The House of Representatives passed legislation to ratify the 2018 negotiated U.S.-Mexico-Canada trade agreement bill. The Senate might finalize the deal in the next decade.
Difficult Year for USDA Staff: The USDA’s cost-cutting plan to relocate more than 500 employees out of Washington, D.C., came to fruition with a move to Kansas City. Rather than moving, most of the impacted employees quit. A USDA employee also faced threats of harm during a crop tour – a difficult year for often-underappreciated public servants.
Move Over Beef: Meat-industry disruptors Impossible Food and Beyond Meat had a big year. The former had Burger King take its product nationwide; the later went public.
Wrapping it Up
The dichotomy of the past decade is quite stark. The first several years centered around production shortcomings and the difficulty of meeting strong demand. It was common to hear pondering about feeding 9 billion people by 2050. But most recently the challenges have been almost the opposite – large yields, burdensome endings stocks, weak commodity prices and farm incomes, and concerns about too-little demand for ag products – from trade, diseases and disruption.
For many the best years of their career were quickly followed by the most challenging. Because of that the 2010-2019 decade will be discussed for generations to come.
Without a doubt the next decade will have its own set of challenges, uncertainties and opportunities. We wish you and yours all the best.
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