Ag Policy Blog

Some Reason for Optimism at USDA's Ag Outlook Forum

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Updated Post:

I have to amend what I wrote earlier today regarding the Ag Outlook Forum and correct the record a bit. A long flight afforded me the chance to revisit my view.

In terms of changing the 10-year baseline projections for farmers, USDA did have some perspective. One key opportunity to improving the situation for commodity farmers is through approval of the Trans-Pacific Partnership. TPP was a major point of discussion at Outlook, especially after the American Farm Bureau Federation released an analysis showing the pact would increase net farm income in the U.S. by $4.4 billion, compared to not approving the trade deal.

Obviously, TPP isn't going to change the outlook for 2016-17, but if agriculture can help convince Congress to pass the deal that would be a significant accomplishment.

USDA also focused on improvements in precision agriculture and abilities of the technology in both input applications and improving efficiency. Soil health remains a focus and USDA continues looking at ways to encourage a broader group of farmers to embrace those practices. There were even optimists in the crowd still looking to create carbon markets. Farmers from Ontario, Canada, were talking with me about a cap-and-trade system going into their province.

Outlook also included more discussion about transitioning to organic production as organic food consumption continues to rise. More farmers are getting involved in both organic and local-food markets.

There was no silver bullet to deal with low commodity prices, but the Ag Outlook Forum did offer better food for thought than I was giving it credit for.

Earlier Post:

USDA's Ag Outlook Forum has been filled with a little too much optimism for some people.

We saw this starting Wednesday when Agriculture Secretary Tom Vilsack testified before the House Agriculture Committee expressing his optimism for rural America. Some lawmakers seemed a bit taken aback by the suggestion. But Vilsack carried forward with that perspective that the glass was more half full than half empty when he spoke at Ag Outlook on Thursday. The secretary cited the continuing decline in unemployment, job growth and the decline in poverty rate as reasons to not look pessimistically at the rural economy.

But the key word in Ag Outlook Forum is "ag" and crop farmers are looking at their third to fourth year of lost income. Corn, wheat and cotton will be in their fourth year of declining cash receipts, but soybeans will get a small uptick to avoid falling into that category. Cash receipts across all commodities are expected to fall by nearly $9.6 billion in 2016. All ag exports are pegged to decline 10% this year as well.

As ERS recently stated, "Both net cash and net farm income are forecast to decline for the third consecutive year after reaching recent highs in 2013 for net farm income and 2012 for net cash income. Net cash farm income is expected to fall by 2.5 percent in 2016, while net farm income is forecast to decline by 3 percent. These declines are moderate compared to the 27- and 38-percent reductions in net cash income and net farm income, respectively, that occurred in 2015."

I wasn't in the session on farm income and only heard about it after the fact, but an Iowa farmer stood up during the Q & A and all but suggested the USDA economists were smoking something now legal in D.C. because of their failure to take into account some of the costs facing farmers with these low prices. It was a pretty valid argument. You would think the economists might integrate a farmer or two into these income panels.

"Everybody here keeps talking about optimism, but where's the optimism?" said an Outlook attendee Thursday night. She added, "If they acknowledged there's a problem with farmers right now then we could be using these sessions to talk about what they ought to be doing to fix it."

Another D.C. observer made a similar comment to me on Friday as well. "You can't just paint a rosy picture by declaring you are optimistic about the future."Follow me on Twitter @ChrisClaytonDTN


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andrew mohlman
2/29/2016 | 9:29 AM CST
This country dealt with over production with fallow in past but nobody speaks of it now what is the fear of resting the soil we say we have so much.
tom vogel
2/29/2016 | 9:28 AM CST
Chris: Your comments on organic agriculture are "spot on." I have a lot of conversations with millenials and they are focusing more and more on organic food of all types - grains, meats, and produce. I am initiating a transition this year with one of my partner farmers to go organic. The only thing is this - the markets for organic are not highly developed, especially the national markets. However, with the strong demand from the big retailers, the markets are beginning to evolve and I want to be part of the supply chain. Thank you Chris for bringing that to the forefront.
Raymond Simpkins
2/29/2016 | 7:59 AM CST
Ok, So here's what they are really saying. TTP is going to be good for ag trading but not so much for the farmer directly. Traders and the government maybe?Probably not!!! They also try to tell us that income is only going down 2.5 and 3 percent. Thats from 2015 levels add that to 27 and 38 percent from the year before now cash income is down 29.5 percent and net farm income is down 42 percent from 2014 levels. They also say it will be 2024 before corn hits 3.75 again witch is still at an unprofitable level. How can they figure land prices will stay strong with these outlooks???? I don't think many have pockets that will last 10 years maybe longer. The U.S. will probably never be number one in bean production again, all countries are getting much better at ag production and less dependent on U.S.grains. I know I can't wait to get in the fields and throw some money away.