Thursday, July 25, 2024
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John Deere Announces More Layoffs

(Moline, IL) — A new round of layoffs are underway at John Deere as a reduction in product demand and increased operational costs have forced the company to make cuts.

According to various media reports, the moves by Deere this week could potentially affect 4,500 to 6,000 employees. The layoffs are expected to impact various corporate and administrative divisions globally. As of Wednesday, Deere had not confirmed how many employees were let go or from which facilities.

The Iowa Workforce WARN list shows the Moline based manufacturer laid off 34 employees in Dubuque, IA and 69 employees in Waterloo, IA yesterday. According to KCCI-TV in Des Moines, IA the company says “it will provide up to 12 months of severance pay for employees who are let go, with the exact amount based on years in the company.”

The cuts come after John Deere recently announced hundreds of layoffs of production workers at various locations in Iowa and Illinois.

***Editor’s note: we have reached out to John Deere for comment and will continue to update this story as it develops.

House GOP Bill To Cut EPA Funding By 20 Percent

(Washington, DC) — House Republicans have passed a bill that would slash funding for the Environmental Protection Agency by 20 percent. The annual government funding bill for the EPA and the Interior Department passed late Wednesday by a slim majority. Democrats were strongly opposed to the bill, which also proposes cuts to the National Park Service and the Smithsonian. The bill is seen as unlikely to pass in its current form in the Democrat-controlled Senate.

Bird Flu in Dairy Cattle Can Be Stopped

Federal officials said this week that the H5N1 outbreak in dairy cattle can be eliminated. Stat News Dot Com says officials face increasing doubts from experts because the virus is still spreading to new herds.

“All signs that we have are, with good biosecurity, with good farmer participation, we will be able to eliminate this,” says Eric Deeble, acting senior adviser for H5N1 response at USDA. He says the reason for the confidence is that investigations are showing that it’s the transportation of the cattle, as well as the shared use of equipment and vehicles, spreading the virus.

Deeble says that means cutting off virus access to the cattle at those points in the delivery chain can contain it. “We understand this moves with the cattle and the people that work closely with them, so improving biosecurity should get us to a point where we can arrest the spread,” Deeble adds.

New Cracks Appear in Partisan Resistance to Farm Bill Deal

New cracks are starting to appear in months of partisan resistance to a farm bill deal on Capitol Hill. That, as pressure from farm interests reaches a boiling point.

The cracks weren’t big, but they were noticeable. House Ag Chair Glen “GT” Thompson made this remarks during a House panel this week saying “For those who believe the only path forward with the time we have remaining in this Congress is informal pre-conference negotiation with the Senate, that is not my preferred option. But it is one I’m willing to entertain.”

Thompson’s saying that publicly was clear evidence of just how much pressure he’s under from hundreds of farm and Ag-related groups. But he’s not alone in changing his tune. Ranking Ag Democrat David Scott (D-GA) said “Commodity prices are not keeping up with higher input and credit costs. That is where we are, and why we need to address this issue to help our farmers.”

That’s a sea change from Scott’s months of loudly defending Democrats’ ‘red line’ against paring SNAP benefits. Scott added, “It is clear that we need to come together, Republicans and Democrats, on a farm bill that strengthens the farm safety net, and we are going to do it together.” Scott said he was sincere amid a “desperate time situation” but added that finding enough money is still the main stumbling block and Thompson’s bill to limit the use of CCC funds is not the answer.

Panel witnesses like Minnesota Corn Growers President Dana Allen-Tully warned of dire farm conditions ahead. She said, “Unless conditions change, we’re facing a ‘perfect storm.’ Plummeting crop prices, high cost of production, doubling interest rates, natural disasters, and tightening credit are some of the key culprits. Working capital is quickly depleting. John Deere’s layoff of thousands of workers is a ‘canary on the coal mine.’”

Allen-Tully says another farm bill extension won’t stop the ‘hemorrhaging’, a new one may not be timely, and adding a disaster supplemental bill may be needed in short order.

Story by Matt Kaye/Berns Bureau; courtesy of NAFB News Service

Wednesday, July 24th, 2024 Podcast

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We saw a bit of a weather rally in U.S. markets to start the week while things turned mixed and quiet on Wednesday. However, Mike Zuzolo with Global Commodity Analytics makes the case the fund managers might be finally turning their attention to weather related supply risks globally. We discuss what that could mean and more on today’s show. Contact him online at https://www.globalcommodityanalytics.com.

AUDIO ONLY SHOW LINKS:

 

Over 500 Groups Unite to Call for a New Farm Bill

Programs that benefit every family in America are too important to put off any longer.

That’s the message from the American Farm Bureau and more than 500 other groups that sent a letter to Congressional leaders calling for the passage of a new, modernized farm bill. The groups signing onto the letter represent agriculture, nutrition, conservation, the environment, rural development, and several other economic sectors. The groups say in the letter, “Millions of Americans rely daily on the provisions of the farm bill to produce food, fiber, and fuel to feed their families and others around the world and to voluntarily conserve fish and wildlife and their habitat.”

The groups recognize that time is running out to write and pass a farm bill this year. Passing a stopgap extension would put it at risk of further delay following the presidential election, seating a new Congress, and other legislative priorities.

How Farmers Adjust Spending During Low Commodity Prices

History does repeat itself, especially in agricultural cycles. Rabobank put together a report on how farmers adjust input spending when commodity prices drop.

It explores the responsiveness of input volume and price to farm profitability in America, forming a view of how the current downturn will impact the input marketplace through next year. For example, the report says farm machinery is a hard asset that can be maintained, and new purchases can be deferred as needed. That makes machinery the most income-elastic of the major farm input categories. Fertilizer prices are also elastic. Lower fertilizer prices typically shoulder the bulk of changes in expenditures, but farmers can also adjust those volumes as well.

Seed spending has increased markedly during the past 20 years as corn revenues increased during the early 2000s. As some seed patents expired, seed production costs are now expected to dictate price, suggesting farmers may see relief ahead.

Panel Warns Congress of Impending Farm Economy Cliff

WASHINGTON, DC — Today, panel of witnesses before the House Committee on Agriculture—including producers, a lender, an input supplier, and Extension economist—warned of the dire outlook facing our agricultural supply chain. Plummeting crop prices, escalating input costs, worsening credit conditions, and sustained natural disasters are creating a “perfect storm” of headwinds for farm country. Witnesses urged policy makers to “head off the economic hemorrhaging” and take advantage of the opportunity to substantially course correct the farm safety net through the enactment of enhanced risk management tools.

“The testimony from today’s hearing painted a dark picture of the American farm economy and should be a wake-up call for my Democrat colleagues,” said Chairman of the House Agriculture Committee, Glenn “GT” Thompson (PA-15). “This Committee advanced a bipartisan bill that effectively responds to the crises outlined today and the pleas of rural America.”

Notable Testimony:

“Unless conditions change, I believe we’re heading into a perfect storm, a storm that I don’t think will be fully appreciated until early next year when farmers try to get loans but are unable to do so because they cannot demonstrate the ability to cash flow,” said Ms. Dana Allen-Tully, PhD., a family farmer and President of the Minnesota Corn Growers Association. “There are a myriad of factors contributing to this situation, including plummeting crop prices, very high costs of production, interest rates that have doubled, natural disasters for so many around the country, and tightening credit. Our working capital is fast being depleted.”

“I have never known a worse time in my 40 years of farming, and the stress has led to personal health issues as I wonder how our operation will survive. Inputs such as labor, supplies, equipment, parts, fuel, land rent, fertilizer, and seed have skyrocketed,” said Mr. David Dunlow, Chairman, American Cotton Producers. “Some of these expenses have nearly doubled, and my margins have narrowed over the last several years. Things have gotten so bad that these days a bumper crop is required just to break even… The bottom line is we need a new Farm Bill this year.”

“The agricultural economy is in a position it has not been in for many years. There is a return to the cyclical agricultural conditions that were present before the surge of government support during the COVID-19 pandemic. Rising input prices, combined with lower commodity prices, have resulted in USDA projecting a 25% reduction in net farm income in 2024 compared to 2023…” said Mr. Tony Hotchkiss, Chairman, Agriculture and Rural Bankers Committee of the American Bankers Association. “The meaningful changes proposed in the 2024 Farm Bill will allow bankers to better serve their customers and ensure they have high levels of credit availability in the years to come.”

“The rising cost of doing business and inflationary pressures are chipping away at farmers’ margins,” said Mr. Joey Caldwell, on behalf of the Agricultural Retailers Association. “It is for this reason, that passing a Farm Bill, sooner rather than later, will lighten this burden of uncertainty… The Biden Administration’s climate policies have increased costs for crop inputs in agriculture. Higher natural gas prices have made nitrogen fertilizer more expensive, while rising diesel prices have elevated transportation costs for products to farms and the operation of agricultural equipment. Diesel, crucial for ag retailers, grain shippers, and farmers, now costs significantly more.”

“Farmers across the South continue to adapt to the challenging agriculture environment made worse by relatively high input prices, historically low commodity prices, and current relatively high interest rates,” said Mr. Ronald Rainey, Ph.D., Assistant Vice President, University of Arkansas System Division of Agriculture.

Key Takeaways:

  • In 2023, the agriculture sector represented nearly 20 percent of the country’s economic activity. Agriculture represents more than $9.6 trillion in outputs, yielding $181.4 billion in exports, $1.3 trillion in tax revenue, $2.8 trillion in wages, and provides 48.6 million jobs. However, collapsing on-farm prices, a lack of market expansion, and increasing input prices are driving a decline in farm financial security.
  • Farm sector net income is forecast to fall for the second consecutive year in 2024. Net farm income (NFI), a broad measure of profits, is forecast to decrease by $43.1 billion (27.1 percent) from 2023 to $116.1 billion in 2024.
    • This represents the most significant two-year decline of NFI in history.
  • While cash receipts continue to decline year-over-year, production expenses are forecast to increase by $16.7 billion (3.8 percent) from 2023 to 2024 to a total of $455.1 billion.
  • Producer sentiment and expectations regarding the future are declining in the face of financial pressures.
  • The last time significant resources were added to the farm safety net was in the 2002 Farm Bill. At the time of enactment, the Congressional Budget Office (CBO) projected $142 billion in outlays through Title I policies over the following decade ($248 billion in 2024 dollars).
  • In comparison, the June 2024 CBO scoring baseline projects outlays under the current safety net at roughly $44.4 billion. Accounting for inflation, this amounts to an 82 percent cut in the Title I baseline from 2002 to 2024.

Department of Defense Backs Off Feeding Lab-Grown Protein

WASHINGTON (July 23, 2024) – Today, the National Cattlemen’s Beef Association (NCBA) confirmed that efforts to prevent ultra-processed, lab-grown protein from showing up in the diet of the American armed forces were successful, following news that the U.S. Department of Defense (DoD) is not pursuing lab-grown protein projects for human consumption.

“NCBA was the first and only cattle group to uncover this stream of DoD funding that could go toward lab-grown protein projects, and we were the first and only group to fight back,” said NCBA President and Wyoming rancher Mark Eisele. “After weeks of engaging with Congress and speaking out against this plan, we are thrilled to have DoD confirmation that lab-grown protein is not on the menu for our nation’s servicemembers. These men and women make the greatest sacrifices every day in service to our country and they deserve high-quality, nutritious, and wholesome food like real beef grown by American farmers and ranchers.”

NCBA has worked with agriculture allies in Congress to secure the introduction of several amendments to the Fiscal Year 2025 Defense Appropriations bill, National Defense Authorization Act, and Fiscal Year 2025 Agriculture Appropriations bill, aimed at preventing lab-grown protein from ever showing up on the plates of American servicemembers. Cattle producers appreciate the leadership of Rep. Don Bacon (R-NE), Rep. Zach Nunn (R-IA), Rep. Warren Davidson (R-OH), Rep. Mary Miller (R-IL), Sen. Roger Marshall (R-KS), Sen. Cynthia Lummis (R-WY), and Sen. Deb Fischer (R-NE) in standing up for farmers, ranchers, and our military. NCBA also issued a statement drawing attention to these DoD grants and NCBA members also discussed their concerns with this plan in national media.

“The Department of Defense can and should be on the cutting edge of science, and we respect their work to investigate defense applications for new tools and technology. However, there’s a big difference between industrial or defense applications and the food we put in our bodies. U.S. farmers and ranchers are more than capable of meeting the military’s need for high-quality protein,” said NCBA Senior Director of Government Affairs Sigrid Johannes. “NCBA appreciates the DoD’s responsiveness on this issue, and we thank our allies in Congress, including Senator Fischer, Congressman Davidson, and Congressman Bacon, for quickly acting to ensure that only the most wholesome and unprocessed products end up on the plate for our servicemembers.”

Tuesday, July 23rd, 2024 Podcast

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We saw the grain markets fade late session on Tuesday while the livestock market surged into the close. Overall, it feels like a giant game of chicken being played right now in the grain and livestock markets. We discuss that and overall market sentiment with Matt Bennett from AgMarket.net on today’s show. Find more at https://www.agmarket.net.

Also on today’s show, CHS has announced their Q3 FY2024 financial earnings results. We discuss the numbers and more with CHS executive vice president, chief financial officer and chief strategy officer Olivia Nelligan. You can learn more online at https://www.chsinc.com and also view the Q3 numbers here: https://americanagnetwork.com/2024/07/chs-reports-third-quarter-fiscal-year-2024-earnings.

AUDIO ONLY SHOW LINKS:

https://podcasts.apple.com/us/podcast/market-talk/id1533318516?i=1000663127837