Ep. 9 Review of September 2024 USDA Farm Sector Income Forecast

00;00;07;26 – 00;00;11;08
Dr. Ryan Loy
Well, boys, it’s been, it’s been quite the 24 hours for us all.

00;00;11;08 – 00;00;11;23
Dr. Ryan Loy
I think

00;00;11;27 – 00;00;15;07
Riley Smith
It’s been quite the 36 hours anyway.

00;00;15;09 – 00;00;15;24
Dr. Hunter Biram
Yeah, since.

00;00;15;24 – 00;00;20;24
Dr. Hunter Biram
That report came out, I mean, yeah, it’s been. I think you might, like 9 a.m., 10 a.m. hour.

00;00;20;24 – 00;00;25;23
Dr. Ryan Loy
Time, which was a surprise for me. I was expecting about 11. And then getting emails and.

00;00;25;26 – 00;00;27;22
Dr. Hunter Biram
Crap because the webinar is scheduled for noon.

00;00;27;22 – 00;00;37;18
Dr. Ryan Loy
Right? Central time. I figured they weren’t going to give us that much time ahead of time for people to review it. And, you know, but yeah, that was, it’s a very interesting report.

00;00;37;21 – 00;00;40;27
Riley Smith
Yeah, that for poor woman.

00;00;40;29 – 00;00;41;20
Dr. Ryan Loy
On the webinar.

00;00;41;20 – 00;00;47;24
Dr. Hunter Biram
Yeah, a lot of questions. I mean, but it’s a very serious issue. I mean, we’re talking about livelihoods here.

00;00;47;24 – 00;01;09;10
Dr. Ryan Loy
That’s right. Talking about livelihoods. And it’s it’s it’s difficult from the USDA’s perspective. And giving them their roses to, to try to justify an improvement in net farm incomes this year. Well, you know, that that’s a big task to justify saying, hey, you know, we we accounted for 22% decline in net farm income, but really now we’re only expecting a 4% decline year over year.

00;01;09;12 – 00;01;25;21
Riley Smith
I’m gonna pull your reins up just a little bit. Just let me let me get started here. Good morning. Good morning. Welcome to morning coffee and ag markets was with Riley Smith but we have had a logo change. So now we’ve got a brand new logo

00;01;25;28 – 00;01;27;03
Dr. Ryan Loy
a beautiful logo.

00;01;27;06 – 00;01;33;09
Dr. Hunter Biram
It it’s still with Riley Smith. Well I really no need to mention that I don’t think. But the logo looks nice. That’s really.

00;01;33;09 – 00;01;33;19
Dr. Hunter Biram
Nice.

00;01;33;19 – 00;01;37;08
Riley Smith
Yeah, the logo is nice and we have to, Mr. Chris

00;01;37;10 – 00;01;40;14
Dr. Hunter Biram
Oh, yeah. Chris Meux is a, graphic design genius.

00;01;40;14 – 00;01;47;00
Dr. Ryan Loy
Oh, man. He took a design that looked like it was put together by a kindergartner. And it just beautiful. I mean,

00;01;47;00 – 00;01;48;04
Riley Smith
You could definitely tell

00;01;48;04 – 00;01;58;08
Riley Smith
Who the amatuers and the professionals were. Just like, we drew ours with crayons. Like I. Oh, yeah. And then his comes out and you’re like, oh, boy.

00;01;58;15 – 00;01;59;09
Dr. Hunter Biram
He’s a magician.

00;01;59;10 – 00;02;11;18
Dr. Ryan Loy
Oh he is. And we really appreciate everybody down there and communications. They’ve helped us out tremendously. They’ve helped us out with getting this, podcast equipment for this episode. In fact, this is a kind of an on the spot episode as well, similar to last week.

00;02;11;18 – 00;02;29;12
Riley Smith
Yeah, well, we liked it so much. We’re actually here at the state office in little Rock today, but, instead of doing it in the studio, we liked the roundtable discussion so much. And this is a pretty hot it’s a really hot topic, actually. It’s like a hot potato being thrown around right now. So we decided to do another roundtable discussion.

00;02;29;15 – 00;02;34;11
Riley Smith
No special guests. It’s just me and, Doctor Biram and Doctor Loy in here today.

00;02;34;14 – 00;02;36;07
Dr. Hunter Biram
So, with a roundtable.

00;02;36;07 – 00;02;50;29
Riley Smith
With a literal roundtable. So today we’re going to be talking about, just kind of the review of the USDA, net farm outlook that was released yesterday or but now it was released a few days ago now released yesterday.

00;02;50;29 – 00;02;51;12
Dr. Hunter Biram
Yesterday.

00;02;51;12 – 00;02;52;07
Riley Smith
It did yesterday.

00;02;52;07 – 00;02;53;10
Dr. Ryan Loy
Yesterday at 9 a.m..

00;02;53;10 – 00;03;13;13
Riley Smith
And then we had the webinar at noon. So unfortunately this is bad, bad news. But we’re trying to I guess we’re going to pick it apart some in this podcast and try to get a, try to get a bright outlook on it as well. From the.

00;03;13;13 – 00;03;17;10
Dr. Hunter Biram
Released about, you know, how do we, you know, what do you do with it? Like how do you manage what’s going on?

00;03;17;12 – 00;03;31;00
Dr. Ryan Loy
This one is going to be a lot more of a just down the road kind of analysis of, you know, middle of the road analysis of what was reported. And, you know, as, as Hunter said, kind of, what can you do to, manage these certain risks?

00;03;31;00 – 00;03;52;22
Riley Smith
Yeah. So we don’t really have any questions, to ask today. So this is just an analysis breakdown of the outlook and what was talked about yesterday. And, we’re just picking apart the major points that we saw that, we believes that growers and producers really need to know about as far as, there’s a lot of numbers, involved in this and so in percentages.

00;03;52;22 – 00;04;14;00
Riley Smith
So we wanted to really pick out, what was we deemed, I guess, important, to know as far as information goes. So, if you want to get started, we’ll just kind of talk about a brief, brief everyone on the farm sector income and what they kind of forecasted, for 2024,

00;04;14;03 – 00;04;14;29
Dr. Ryan Loy
happily.

00;04;15;02 – 00;04;42;12
Dr. Ryan Loy
So some of the things that we looked at, that’s very important to Arkansas producers, it’s really looking at this update. So what this is, what was released yesterday is essentially an update, revision to what they released in February. So they release in February, September, and then right at like the end of December, as far as their forecast for that, farm income in February, they were expecting a 22% decline in farm income overall, including crop and animal receipts.

00;04;42;12 – 00;04;42;23
Dr. Hunter Biram
Year over.

00;04;42;23 – 00;05;11;00
Dr. Ryan Loy
Year, year over year from 2023. So they were expecting that 2020 or 22% decline from 23 to 24. This revision now, revised at 22% and said that it’s actually only declining about 4% year over year from 2023. And that’s about 9.8 billion. So that’s still a huge chunk. That is that’s going away. But the important part here is, is that the USDA says that, okay, we’re in the second straight year of decline.

00;05;11;00 – 00;05;29;21
Dr. Ryan Loy
However, this year, the price for animal receipts on the, you know, the producer at the farm gate price for animal receipts is going to be much higher and subsequently is going to offset the crop receipts. Now that’s what they claim, and I’ll leave it at that. And so that’s, that’s really their, their factors and their justification.

00;05;29;23 – 00;05;49;15
Dr. Ryan Loy
In addition to the increase in animal receipt value, we’re looking at a decline in farm expenses. That’s mainly driven by, input costs, as they said. So labor still going up. That was one thing. One indicator that they said was increasing labor. And we all know that that’s going to get increasingly more expensive with the H-2a program, which is good and which is good.

00;05;49;18 – 00;05;59;04
Dr. Ryan Loy
But there is a lot of added cost to that H-2a program. Is there anything else that y’all want to kind of touch on before I keep going on?

00;05;59;06 – 00;06;27;24
Riley Smith
Well, I did want to say like what they were talking about as far as there is a, looking that there is a slight decline in both farm income and net cash farm income, you know, with both with both measures, I mean, they anticipated to drop by 6.8%. That’s on, net farm income and then 9.6% on the net cash farm income.

00;06;27;26 – 00;06;34;00
Riley Smith
But both measures will. They’re still above the 2004 to 2023 average.

00;06;34;02 – 00;06;38;12
Dr. Ryan Loy
Right. So what you’re saying is, is basically we’re still above that at that 20 year average.

00;06;38;12 – 00;06;40;12
Riley Smith
We’re still above the 20 year average.

00;06;40;15 – 00;07;00;10
Dr. Ryan Loy
You know what I’d be really curious to do at some point, and this is something that we could work on, is just looking at that from a perspective of a ten year average. And I wonder to what degree that that is still the same story. In the same case, if we took rather than a yeah, okay. We’re actually looking at a graph right now and it is about what we expected.

00;07;00;10 – 00;07;26;00
Dr. Ryan Loy
So we’re about right there is that that five year average line. So it looks like we’re actually if we’re doing a five year average we’re actually below that in net farm income. And if we’re looking at a ten year average we are right on that ten year average. So really if we if we kind of limit that average out, we’re either looking at right where we have been the last ten years on average, or a little bit less than we have been in the last five years.

00;07;26;00 – 00;07;44;28
Dr. Ryan Loy
And so that’s something really important to take away. Depending on the viewpoints and how and how you’re looking at these averages. So again, even if we say decline and we say price is coming down or costs are coming down, we’re still in a bad situation. So, you know, don’t want to get it twisted and saying, oh we’re improving.

00;07;44;28 – 00;07;49;29
Dr. Ryan Loy
Well, we’re improving relative to some other indicators. However, it’s still a very bad situation.

00;07;50;02 – 00;07;51;01
Dr. Hunter Biram
It’s all relative, right?

00;07;51;01 – 00;07;51;14
Dr. Ryan Loy
That’s right.

00;07;51;16 – 00;08;10;17
Dr. Hunter Biram
That’s exactly right on. Your, your standard of comparison or. Yeah. You know, some of us would say you normalize this and, you know, that 20 year average. I can see where they’re coming from on that. But, I mean, I think it is worth it to still consider that more recent window of maybe a ten year or five year.

00;08;10;19 – 00;08;30;09
Dr. Hunter Biram
I think the three years to wait too short. I mean, there’s a, we had an abnormally high, crop prices in that window. Maybe that’s like coming out of Covid and your increased demand. People are out and about. And so prices, prices went up a great deal. But, you know, the the the ten year window, captures a more recent window.

00;08;30;11 – 00;08;43;22
Dr. Hunter Biram
And, there were periods of price declines and periods of higher prices in that ten year window. And given that, you know, taken into consideration, we are right at that ten year average. And, if prices don’t improve, we will be going below and below.

00;08;43;22 – 00;08;44;06
Dr. Ryan Loy
That ten year.

00;08;44;06 – 00;08;44;18
Dr. Hunter Biram
And ten.

00;08;44;18 – 00;08;52;11
Dr. Ryan Loy
Year. And we’re not that far away from that 20 year average at all either. So we can probably get below both of them if prices continue to have that downward pressure.

00;08;52;14 – 00;08;57;15
Riley Smith
Especially with labor and production expenses. That’s right on the increase.

00;08;57;16 – 00;08;58;12
Dr. Ryan Loy
That’s right, that’s right.

00;08;58;12 – 00;09;05;03
Riley Smith
And I think I think, note say it was labor expenses are expected to rise but it’s 6.9%.

00;09;05;05 – 00;09;11;04
Dr. Ryan Loy
Yeah that’s right. That’s a year over year. That’s that’s an exorbitant amount to increase by year over year.

00;09;11;06 – 00;09;19;06
Riley Smith
Now they are expecting they’re predicting that production expenses to slightly decrease about 1%.

00;09;19;09 – 00;09;24;27
Dr. Ryan Loy
But and that’s overall too. And so that’s the important thing to bring up is that that’s a basket of goods. Right.

00;09;24;27 – 00;09;30;21
Riley Smith
So that’s not just that’s not for row crop that’s feed fertilizer. That’s for the, animal side.

00;09;30;26 – 00;09;49;07
Dr. Ryan Loy
And I really I really believe that a lot of that, you know, we were talking to some people anecdotally that, you know, feed is much cheaper this year than it has been the last two years. And a feed if feed is included in that, then yes, then that that is going to drive down those production expenses. But that doesn’t mean that every other cost category comes down with it.

00;09;49;07 – 00;09;52;20
Dr. Ryan Loy
Right. So that’s that’s important to kind of consider when you’re looking at these.

00;09;52;27 – 00;10;21;29
Riley Smith
That and two, I mean, you think about that too, as well as we talked about farm, you know, net farm income. Well that’s including livestock as well. Right. And I know that the cattle market is doing really well right now. But I mean, you consider that with the kind of crop or kind of crop prices we’re receiving right now in the market, I mean, that’s counterintuitive to me because now you’re you’re the offset of it.

00;10;22;03 – 00;10;23;22
Dr. Ryan Loy
That’s right. And the, you know, it’s.

00;10;23;23 – 00;10;24;27
Riley Smith
Doing better than the other.

00;10;24;28 – 00;10;44;25
Dr. Ryan Loy
That’s right. And so if we’re going to disentangle those certain things and just look at crop receipts as a whole, crop receipts as a whole. And most of this is driven by soybean and corn, right. You know, that makes sense. They have the most acreage of all the crops. It’s going to come in down about 10%. So it’s coming down to 27 billion, which is about 10%, to 249 billion for crop receipts.

00;10;44;25 – 00;11;07;04
Dr. Ryan Loy
That’s just crop. Now let’s actually disentangle that a little bit more corn is coming down 16 billion okay. As far as crash receipts are concerned we can see that with under $4 corn and soybean is down 8.6 billion. So you can see how much those two commodities are driving that. In good news rice is up 0.3%. Another way to look at that is rice is basically relatively unchanged, year to year.

00;11;07;04 – 00;11;10;24
Dr. Ryan Loy
So that if we’re looking for a positive here, there’s a positive right there.

00;11;10;26 – 00;11;16;10
Riley Smith
Now, just out of curiosity, in your notes, do you have anything on acreage as far as loss of acreage?

00;11;16;11 – 00;11;18;16
Dr. Ryan Loy
I did not put anything on acreage in this report.

00;11;18;23 – 00;11;35;20
Riley Smith
I’m just curious because I got to reading the Arkansas Farm Net, yesterday, and I was looking at the amount of acreage that were leased they predicted to lose this year. And that was an April release, by the way. So we’re waiting for the September release, correct? Yep. So they’re on the market at the end of the month.

00;11;35;20 – 00;11;41;29
Riley Smith
So we’ll look at those, reevaluate those numbers. But, I was just curious if you had them, but.

00;11;42;01 – 00;11;47;17
Dr. Ryan Loy
I didn’t include them in here. I was I was really jumping on the receipts, equity and expenses side of things.

00;11;47;17 – 00;12;08;09
Dr. Hunter Biram
Well, one thing I want to add on the rice thing, you talked about this 0.3%. I mean, that may be a slight increase, not even negligible, no change. But, you know, back to, production expenses. I mean, I think it’s fair to take into account the expense part. I know that, rice is very an input intensive crop because we, flood, irrigate most of the production.

00;12;08;09 – 00;12;27;08
Dr. Hunter Biram
And so you got fuel cost. You got cost of, taking care of those, you know, taking care of your flooding. Flooding equipment, making levees, all those, all those practices that need to be accounted for. So, I mean, yeah, it is a bright spot, but I think it’s, you know, not as bright as what we would like for it to be.

00;12;27;08 – 00;12;47;29
Dr. Ryan Loy
That’s right. That’s exactly right. And even on the bright spot of things, you know, one of the high points and one of the bright spots in the report was farm equity. The USDA claims that farm equity is actually increasing and getting better year over year, to the tune of about 5.3%. But there’s a little anecdote in there that I would like to share.

00;12;48;01 – 00;13;16;15
Dr. Ryan Loy
They that’s very important. The USDA and this is not finger finger pointing or blaming the USDA from their perspective of forecasting. They’re looking at land ownership. And so when they’re accounting for this equity, they’re accounting for farmers who are also land owners. And I think that that’s an important distinction to make because on the whole, for farm owners who have those non depreciable assets such as land, yeah, they’re going to improve year over year of course.

00;13;16;17 – 00;13;36;13
Dr. Ryan Loy
But what about those farmers who only have depreciable assets. I can’t see a situation this year where their equity is going to improve. Right. You know and there’s depreciable assets. You could sell them. But let’s look at the consideration of what if everybody has to sell them to get equity. That’s going to be a fire sale, and they’re not gonna be able to get out the equity that they put into it.

00;13;36;13 – 00;13;46;08
Dr. Ryan Loy
And so that’s something to really consider. And when you’re reading these reports, understand that much of these reports are from the perspective of a landowner.

00;13;46;10 – 00;13;51;10
Riley Smith
Well, is there anything else you want to add?

00;13;51;12 – 00;14;12;26
Dr. Hunter Biram
Yeah, yeah, we can go into a little bit of a, talk about government payments. So one thing that I noticed as I was looking at this data was, since 2015, total government assistance has accounted for about 5% of, total cash income. And what I’m what can’t when I’m defining cash income to be is livestock receipts.

00;14;12;29 – 00;14;31;00
Dr. Hunter Biram
All crop receipts plus government assistance, all kinds of government assistance. So that’s ad hoc. That’s the market based programs, whatever that may be. That will not include, crop insurance will not include crop insurance. So that’s the measure that I’m going to go after. So if if so, if I say cash income, you know what I’m talking about.

00;14;31;00 – 00;14;56;23
Dr. Hunter Biram
Crop receipts and these government payments, not including expenses. It’s not a net number. It’s just cash income. Is is the way that I’m going to define it for this discussion. The only years which have more than the ten year average, which, by the way, the ten year average percentage of government assistance as a percentage of this cash income is 5%.

00;14;56;25 – 00;15;18;17
Dr. Hunter Biram
So this government, the government assistance, account for about 5% of cash income, over this span of 2015 through 2024, forecast. And so there were three instances where it was above that. So in 2019, it was about 7% 2020 to 13%. In 2021 it was 6%. But what’s so special about those years? In 2019 we got the market facilitation program.

00;15;18;20 – 00;15;42;22
Dr. Hunter Biram
You know, we had the, we had the trade war with China and, got the assistance through the MSP program, 2020 some pandemic assistance, 2021 pandemic assistance. With most of the pandemic assistance coming from the USDA being in 2020. And, there’s still some in 2021. But the vast majority that assistance came in 2020. Like I said, you know, 13% of that, of the cash income contributed government payments.

00;15;42;24 – 00;16;12;05
Dr. Hunter Biram
Now, the vast majority of government assistance for 2022, the 2024. So, you know, kind of just progressing through this, through this history, it’s going to be mostly for emergency relief program or ERP. So the the program and for the conservation program. So not looking at any kind of market based programs, really there’s a very small, very, very small amount, of these market based programs such as agricultural risk coverage and, and price launch coverage, which we talked some about last week.

00;16;12;08 – 00;16;46;10
Dr. Hunter Biram
Now, in particular, when I found interesting about this is the shift from majority market based, assistance to supplemental assistance. So when I mean market by market base, it’s going to be your agricultural risk coverage, NRC or your price Loss coverage PLC, which we talked about some last week. But there’s been a big shift. So in the 2015 to the 2018 time period, which is the life of the 2014 farm bill, we saw that, the Ark and PLC payments as a percentage of total government payments account for 48% of government payments.

00;16;46;13 – 00;17;10;13
Dr. Hunter Biram
Now, remember the long run average about 5%. So 2% of all the cash income is going to Ark and PLC in the 15 through 18 crazy period and the in the supplemental percentage. So think about 48% of total government payments for Ark plc. Something else 18%. Okay, so 18% of the total government payments conservation accounts for 31% in this period.

00;17;10;16 – 00;17;37;12
Dr. Hunter Biram
Now what about in the period from 19 through the 2024 forecast? And what we saw yesterday? Ark and PLC accounts for 7% of government programs. So in that 14, in the 15 through 18 period, doing 48% of government program payments, 7% in that post period in the 1919, the 2024 forecast. Now, what about supplemental 69% of the of government assistance comes from supplemental.

00;17;37;14 – 00;17;55;20
Dr. Hunter Biram
So you go from 18% in 15 through 18 period to 69% in the 19 to 2024 period. Conservation has remained pretty consistent. It’s about 22% in that 19 through 24 period. So, you know, what’s the big deal? What’s the big idea here? I’m not sure that the Ark PLC program is doing what it was originally designed to do.

00;17;55;21 – 00;18;12;11
Dr. Hunter Biram
I mean, in the in that 15 through 18 period in the 14, the period for which the 14 farm bill was written, it looked like it did a pretty good job of doing what it was supposed to do to provide risk protection. And that 19 through where we are now in 2024, it’s not look like it’s really doing what it was designed to do.

00;18;12;13 – 00;18;14;23
Dr. Hunter Biram
So that begs the question, you know, what do you do about it?

00;18;14;25 – 00;18;32;18
Dr. Ryan Loy
That’s interesting. How do you bring that up? And mainly and this is something you and I talked about earlier, you know, when we’re looking at this big shift from market based to this supplemental, you know, help that, you know, assistance that these farmers get, you know, they can budget in account for these market based, these market based programs.

00;18;32;18 – 00;18;45;04
Dr. Ryan Loy
They can budget and account for it and kind of know how they’re going to end up at the end of the year. But if they’re not working and they’re not triggering because of, of, you know, a farm bill that probably needs updating, you know, they can’t budget for these supplemental.

00;18;45;06 – 00;18;45;17
Riley Smith
Help.

00;18;45;17 – 00;18;51;14
Dr. Ryan Loy
Because they don’t know if it’s coming or not. And that really is a detriment to their, their, their bottom line of the farm.

00;18;51;17 – 00;19;06;16
Dr. Hunter Biram
Yeah. I mean it’s it’s going to be it’s going to be coming from the KCC or the Commodity Credit Corporation. You know, the way I think about it is like a rainy day fund for the Secretary of Agriculture to come in and say, you know, here’s some cash, because what we have isn’t, working at the moment. Not to say the bad program just isn’t working at the moment.

00;19;06;16 – 00;19;18;17
Dr. Hunter Biram
So maybe this is a way to offset some of that. But there seems to be a huge shift. We’re not talking about 10 or 12% year. We’re talking I mean, 48 verse 7%. Our PLC 18 versus 69% supplemental. I mean.

00;19;18;19 – 00;19;19;24
Dr. Ryan Loy
That’s not even the same world.

00;19;19;24 – 00;19;26;25
Dr. Hunter Biram
No way different where it’s like now where to pin on the supplemental. And I don’t think that’s a place that we want to be in.

00;19;26;27 – 00;19;43;02
Riley Smith
Oh, this might be a bad analogy, but it’s almost like you went from independent farming to, like, owning your own crop, so on it, and now you’re sharecropping with the government because you’ve basically they’re supplementing you, your income because you’re not getting enough in the cash market.

00;19;43;03 – 00;19;53;17
Dr. Ryan Loy
That’s true. And the even bigger point about that is you don’t they don’t know how much you’re supplementing. That’s that’s kind of the point I was trying to make. Right. You don’t know really until it comes off as to what kind of assistance you’re going to be getting on.

00;19;53;20 – 00;20;12;27
Dr. Hunter Biram
Yeah. I mean, and frankly, I don’t I don’t think farmers want to rely on the supplemental stuff. They, they want to farm, farmers want to farm. And but we do know that the market is not in our favor. Farmers are price takers. We know that. And in the 15 through 18 period our PLC seemed to do well.

00;20;12;27 – 00;20;34;18
Dr. Hunter Biram
And it was originally designed to do. But now we’re in this, we’re in this 18 farm bill space that largely there were no changes made to it. But effectively we’re dealing with the same safety net that we had in 2014 and it shows up in the data. I mean, that ain’t going along. I mean, that shows up in this USDA, net net net farm income data.

00;20;34;19 – 00;20;46;29
Riley Smith
You can definitely see that we’re still running off of I know it’s the 18 farm bill, but I mean, like you said, it wasn’t broke. Nothing was changed in it a whole lot. So we’re basically running off to 14.

00;20;46;29 – 00;20;47;14
Dr. Ryan Loy
That’s right.

00;20;47;17 – 00;21;11;02
Riley Smith
Yeah. No. And I mean, the the difference in ten years is detrimental as far as technologies in the way the way the market is now and the shift to hands and farmers are just being forced to feed because they they are price takers. But they can’t I mean, they, they obviously can’t have it and there’s no option for them.

00;21;11;02 – 00;21;27;09
Riley Smith
Right? They have to do it now to get that supplemental. They probably don’t want to just off assumption, but they’re just at the point where if they want to stay in business or they’re going to sell farm, go do something else because they can’t they can’t afford it right.

00;21;27;12 – 00;21;33;27
Dr. Ryan Loy
Meanwhile, the report claims that we have better equity than we’ve had in the last few years. So that’s that’s one thing that, you know.

00;21;33;29 – 00;21;45;16
Dr. Hunter Biram
Which is crazy. I mean, we heard this in the House at committee testimony not too long ago. I can’t remember what the Jones name was or where, who he was with, but there was a stat saying 20% of.

00;21;45;18 – 00;21;45;29
Dr. Ryan Loy
That’s right.

00;21;45;29 – 00;21;46;27
Dr. Hunter Biram
Cotton borrowers.

00;21;46;27 – 00;22;02;11
Dr. Ryan Loy
Yeah. Cotton producers in his district, in his area in Georgia that are all cotton producers, as he said, 20% of his current borrowers, he’d have to let go if everybody made average yields. That was the important part that I really took away from it. It’s not.

00;22;02;11 – 00;22;03;13
Riley Smith
That it’s insane, just.

00;22;03;13 – 00;22;24;20
Dr. Ryan Loy
Average, just just what the USDA expects you to make. Just on the average, you’re not going be able to stay in business. 20% of them are going to have to go insolvent. And and the real concern is who’s going to buy that land? Is it going to stay with farmers? You know, it’s not going to be taken out of farming production, but who’s going to buy that land and how is that tenant structure going to work?

00;22;24;23 – 00;22;32;14
Dr. Hunter Biram
Yeah, I mean, we’ve heard in Arkansas even a similar stat, I mean, we’ve heard of lenders saying 25, 30%, could be going out of business next year.

00;22;32;19 – 00;22;48;21
Dr. Ryan Loy
And I heard, you know, anecdotally from the lending side, too, and this is all anecdotal, but I know from that side that, some of these lenders and banks are going to have to start, you know, laying off some people because they don’t have, you know, this farmers have to stay in business for them to stay in business.

00;22;48;21 – 00;22;52;24
Dr. Ryan Loy
Right? And so if they don’t have the farming business like they did, they don’t need the workforce.

00;22;52;24 – 00;23;11;18
Riley Smith
So that’s everybody. I mean, that’s like I heard a equipment dealer the other day. He said, I’m not going to price you. And he’s like, I’m to price enough for me to make money, he said. But if I don’t get your business, I don’t make no money. Nobody makes a living here. That’s right. He’s like, I’m selling to you for you to make your living, for me, to make my living.

00;23;11;18 – 00;23;31;19
Riley Smith
So if he has to price him out of the range of a tractor or a combine or something that he can’t afford, now you’re talking about losing equipment dealers. You’re talking about because they’re the driving force. That’s right. I mean, everybody it’s a chain. It’s a chain. That’s right, it is. You break a chain link, you lose. You split the chain in half.

00;23;31;21 – 00;23;40;03
Riley Smith
So now you’re you’re starting to lose banks. Dealers like that goes along with seed dealers. That goes along with equipment dealers.

00;23;40;06 – 00;23;41;04
Dr. Ryan Loy
That’s right.

00;23;41;06 – 00;23;42;14
Riley Smith
So I mean.

00;23;42;16 – 00;24;01;16
Dr. Ryan Loy
It’s a this is all something that, people need to continue to put, keep their finger on the pulse of, even with a, more favorable report from the USDA, it’s still something to keep on your radar, just the same as it was before.

00;24;01;19 – 00;24;04;13
Riley Smith
Well, anything else below?

00;24;04;15 – 00;24;07;06
Dr. Ryan Loy
No, I think that’s about it. Riley, really appreciate you hosting.

00;24;07;06 – 00;24;26;07
Riley Smith
Yeah. Other than that, we, want to thank you guys for taking the time today. I know you’re super busy. But really enjoyed doing this, doing the roundtables, I love it. It’s a lot more. I feel comfortable because you’re not stuck in that little B studio, even though the sound is a lot better in the studio. But.

00;24;26;10 – 00;24;51;25
Riley Smith
But anyway, following this, it will be my market report. Stay tuned. All right, guys, back to you. Market report September 24th. Corn, currently at $3.91 per bushel a month ago, was at $3.91. So there’s no change on that. Year goes price is at $4.71. September 24th rice is at $15.36 per cwt. What month ago was at $15.28 per cwt

00;24;51;25 – 00;25;21;08
Riley Smith
This difference on that went up $0.08 a year ago. Price was 16.86 cwt. Wait, that’s down $1.50. I forgot to mention on September corn, the, year to current price was down $0.80. So, back to the where I was at that we were 24 soybeans, $10.22 per bushel. Month goes price is at $10.41, and that’s down $0.19.

00;25;21;15 – 00;25;52;12
Riley Smith
year agoes price was at $13.65 per bushel. That is down $3.43 from current price. July 25th. Wheat, $6.19 per bushel. Month agoes price is at $6.02. That’s up $0.16, $6.48. a year agoes price that is down $0.30 December 24th. Cotton’s at $0.69 per pound. Month agoes. Price is at $0.67 per pound. That’s up $0.02 year.

00;25;52;12 – 00;26;20;24
Riley Smith
agoes. Price was at $0.88 per pound. That’s down $0.19 weekly U.S average peanuts current price is at $478 per ton month ago, price is at $524 per ton, that is down $46 a year agoes price is at 528. That is down $50. That was your commodity futures this week and your fertilizer prices this week. And diesel, urea is at $465 per ton.

00;26;21;00 – 00;26;47;05
Riley Smith
UAN 32-0-0 is at $400 per ton. DAP is at $420 a ton, potash is at $420 a ton, AG lime is at $60 a ton. And your diesel price this week is at $2.43 per gallon here. Mississippi River level at Memphis, current level is at -6.6 year ago was at -9.09. So I mean we’re better than we were a year ago.

00;26;47;08 – 00;27;04;20
Riley Smith
Definitely affecting the basis though. Looked at them today. So, you’ll keep an eye on that. Keep an eye on the river. Other than that, we want to thank you all again for joining another episode of Morning Coffee and AG Markets. We hope you enjoy it, and we hope you enjoy your morning coffee and enjoy the rest of your week.

00;27;04;22 – 00;27;06;03
Riley Smith
So we’ll catch you on the flip flop.

00;27;06;06 – 00;27;20;29
Riley Smith
Bye bye. Now.

00;27;21;01 – 00;27;21;17