Farm News & Views - January 25, 2022
Overall good economic conditions in agriculture led to the lowest non-real estate agriculture lending at commercial banks in the fourth quarter of 2021 in nearly a decade, according to a new report from the Federal Reserve Bank of Kansas City. The decline was driven by a "sharp drop" in operating loans and lending at banks with the largest farm-loan portfolios, according to a KC Fed analysis of the data.
The KC Fed pointed to "strong" economic conditions in the ag economy through 2021 as the reason for the decline. But inflation is a hot topic in the popular press now, with the cost of almost everything going up for consumers. But you may want to be careful when complaining about high costs when talking to farmers and ranchers. Input costs are on an up escalator for almost everything they need to produce crops and livestock this year. For example, corn belt university agricultural economists are warning farmers that they will need 200 bushel per acre corn yields to just break even if current input costs remain the same on into the spring. These higher costs will affect small grain and hay producers as well. The Creighton University Rural Mainstreet Index, A survey of small town bankers in ten states, including Colorado, identified the greatest risks to farmers and ranchers in 2022 as, rising input costs, disruptions of delivery of inputs, less federal financial support, tariff and trade restrictions, and rising interest rates.
Earlier this month, John Deere Corporation, the 2nd largest farm equipment manufacturer in the world, demonstrated their first fully autonomous tractor. There are already a couple of small self driving tractors being readied for sale, but John Deere is going big. They’ve fitted one of their 8R series, 44,000 pound, 400 horse power tractor with the necessary equipment for making it’s way around fields without a human driver. A regular 8R tractor costs about $500,000, but they won’t be selling any of these autonomous tractors yet, the plan is to initially lease them out at about $50,000 annually.
A couple of weeks ago, the Environmental Protection Agency announced that it has started to evaluate many pesticides based on the Endangered Species Act. In a news release on January 11th, the agency stated, "Reversing decades of practice, the U.S. Environmental Protection Agency (EPA) is taking meaningful action to further the Agency's compliance with the Endangered Species Act when evaluating and registering new pesticide active ingredients. Effective today, before EPA registers any new conventional active ingredient, the Agency will evaluate the potential effects of the active ingredient on federally threatened or endangered species, and their designated critical habitats…" Any pesticides that go through the re-registration process will be evaluated for their impact on endangered species. EPA has already conducted biological evaluations on common ag pesticides, including finalized evaluations of glyphosate, the active ingredient in Roundup herbicide, atrazine and simazine, which may impact the use of these commonly applied pesticides in agricultural production in the U.S.
English author Dorothy Sayers, who passed away in the 1950’s wrote, “A society in which consumption has to be artificially stimulated in order to keep production going is a society founded on trash and waste, and such a society is a house built upon the sand.”