Winter has finally arrived in the Four Corners Region, with cold temperatures and welcome moisture. The Region continues to be affected by drought and abnormally dry conditions in all four states. Severe and extreme drought is impacting southwest Colorado, most of New Mexico, and about half of Arizona, while abnormally dry conditions and moderate drought is affecting the eastern edge of Utah. So let it snow!
The slightly improved Drought Monitor Map for Colorado this month may be the reason that pasture and range conditions in the state are improved from what they were at the end of 2022, when conditions were reported as 11% very poor, 24% poor, 24% fair, and 41% good. There were no excellent pasture conditions reported a year ago. To start 2024, pasture and range conditions in Colorado are rated at 4% very poor, 8% poor, 16% fair, 67% good, and 5% excellent.
The Iowa Environmental Mesonet collects environmental data from cooperating members with observing networks, and the data are stored and made available on its website. Based on data gathered in the last month, December 2023 was the warmest December on record. Most of the climate districts across the northern tier of the U.S., that are east of the Rockies were in the top five warmest. And even much of the Central and Southern Plains and portions of the West were in the Top 10. The cause of this record warmth was an upper-level ridge of high pressure that persisted for almost the entire month across most of the U.S. and Canada. Official reports were submitted from Copernicus Climate Change Service in Europe, and U.S. agencies such as NASA and the National Oceanic and Atmospheric Administration. These organizations are set to make a "warmest year on record" announcement over the next couple of weeks. Scientists say that 2023 may have been the warmest year in the past 125,000 years.
The USDA reports that the ag economy was down in 2023 compared to 2022, and with the worst performance since 2013. Reasons for this decline include corn prices that were 30% lower than in 2022, wheat prices down 20%, and soybeans were 14% lower than a year ago. According to Dr. David Kohl, Professor Emeritus, with the Ag and Applied Economics Department at Virginia Tech, these lower prices were caused by a global recession that will continue to keep pressure on U.S. grain, hog and dairy markets in 2024. He also points out that China’s economic growth rate was only 2 to 4 percent in 2023, which caused U.S. exports to China to decline by 40 percent for the year. Kline predicts that this trend will continue through 2030, while at the same time South America’s agricultural production is expanding, with land equal to half the size of Illinois going into production in Brazil annually.
With all of these headwinds developing, I wonder why prices paid for farmland hit all-time record highs during 2023? If lower crop prices will be with us for the remainder of this decade, are we setting up conditions that will send the ag economy into another farm debt crisis similar to what happened in the 1980s?
American economist and former chairman of the Federal Reserve Alan Greenspan wrote: “How do we know when irrational exuberance has unduly escalated asset values?”
