Ag Policy Update–24 Apr 03       

 

1.      USDA just announced a new CRP signup.  What can you tell us?  

–That’s right.  Signup will be 5-30 May 03.

–Viewers may recall the 2002 farm act expanded the CRP from 36.4 million acres to 39.2 million.

–Other changes include:

–cropping history will be required

–managed haying & grazing will be allowed

–there’s a new Farmable Wetlands Program (FWP)

–there will be cost-share for performance of contract management activities

–there’s a new marginal pastureland criteria

–FSA will have a new automated process with new software that should make things easier for both FSA staff and participants.

–For those who want more information, check with FSA, USDA’s website or their local extension office.    

 

2.      What’s the latest  on the economic situation?  

–The Fed released it’s “Beige Book” summary update on the economy.

–Overall, the assessment is that the economy is still weak.

–Only the Richmond District shows growth.

–We are in the Kansas City District.

–The war continued to impact the economy adversely.

–Consumer spending and Manufacturing is weak nationally and in the KC District.

-- Home building is up nationally and in this district.

–Ag may improve with recent rains, but in this district the ag finance data suggests worsening conditions.

–This district also shows growth in the energy sector, especially when prices were up.  

 

3.      What will the Fed do with this information?  

–Their next meeting is 6 May.

–Few analysts expect them to drop interest rates.

–Their comments suggest they still think the economy will improve later in the year.

–Meanwhile, the President out pushing his tax cut plan, but most are skeptical of it.

–Joblessness is up again.

–Factory output is down, at its lowest in 20 years.

–The Stock Market continues to be sluggish.

–State budget cuts are having sobering impacts on public education and services in most states, including OK.  

 

4.      USDA released a report on farm income.  What’s the bottom line?  

–No surprises.

–Most farms get more than half their income from off-farm sources.

–Small farms get virtually all their income from off-farm, while very large operations get most of their income from on-farm.

–Average farms compare well to the general US household.

–average farm net worth: $546,000

–average US household net worth: $413,000

–Very large farm average income: $214,000

–That is 3 times the US average household income.

–Farmers are now much less likely than non-farmers to file bankruptcy.  

–It is important to be careful of averages.

–A more careful review of cohort groups in the small and mid-size range might be more revealing & would likely show farms that are still struggling.  

 

5.     Congress:

a.     Recent activity:

–Congress continues work on the FY04 budget

–Senate Ag Committee subcommittee conducted a field hearing on COOL in Joplin, MO (22 Apr)  

b.     Current/upcoming:  

c.     2003 schedule:

–to be announced  

d.     Key issues not completed

–work on the fy04 budget

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

–Response to economic slump

–Comprehensive energy legislation (& status of renewable fuel standards)

–Restoration of full CSP funding

     

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