AG ECONOMIC INSIGHTS' REVIEWS THE 2010 DECADE, BIGGEST EVENTS
Dec. 31, 2019
Ag Economic Insights reports:
While writing our recent 2019 Agricultural Year in Review, we realized that more than the year was coming to a close. The decade - at least how must of us think about it - was also coming to a close. We think it's helpful to reflect on what's happened and what can be learned. With that, we share the Agricultural Decade in Review - our list of the top agricultural stories from 2010 to 2019.
Disappearing Bees: A USDA report on colony-collapse disorder captured the shocking magnitude of honey bee deaths.
Commodity Price Take-off: The 2010 corn crop had a market year average (MYA) price of $5.18 per bushel (2010/2011 marketing year); a big increase over $3.55 in 2009. The MYA price for soybeans were $11.30, $5.70 for wheat.
Interest Rates Nudge Lower: As global economies continued to respond to the impacts of the Great Recession, interest rates nudged lower. Farm-level interest rates in 2010 reached the lowest level observed since the late 1980s. Ironically, 2010's welcomed step lower would actually mark the highest rates producers would see for the decade.
Commodity Prices Even Higher: Move over 2010, 2011 MYA prices were even better! $6.22 for corn, $12.50 for soybeans, $7.24 for wheat.
Fertilizer Prices Soar: As the U.S. and World rush to produce more corn and soybeans, fertilizer prices soar. Anhydrous ammonia prices break $800 per ton as the farm-level expense for corn fertilizer approached $160 per acre. Fertilizer prices would remain stubbornly high through 2013.
The Texas Drought: Fall 2010 dryness turned into a full-blown drought across the South and Southwest. The impacts were long felt, particularly for Texas cattle producers forced to sell their herds. Drought map here.
The Midwest Drought: The Corn Belt is caught in the crosshairs of a dry, hot summer (drought map here). The U.S. average corn yield of 134 bushels per acre was 35 bushels below trend, a record in the data going back to the 1960s.
Commodity Price Higher Again: Tight stocks and a record drought pushed commodity prices even higher. For the 2012 harvested crop, producers received an average price of $6.89 for corn, $14.40 for soybeans, $7.77 for wheat. These would be the highest prices of the decade.
Net Farm Income Soars: With production recovering and prices strong, farm income soared in 2013. It would also mark the peak. The global acreage expansion stopped - or at least paused - in 2013 as well.
The Farm Bill that Didn't Happen: There was a lot of activity surrounding the Farm Bill, but it never crossed the finish line. The House and Senate each had their own versions, and efforts were eventually sent to a conference committee.
Monsanto's Billion Dollar Buy: Monsanto purchased Climate Corp for nearly $1 billion.
Viptera- China refuses to buy U.S. corn after detecting the unapproved Viptera genetics. Lawsuits followed.
Farmland Values and Cash Rents Soar: The 2013 Purdue Farmland Survey found values were up nearly 20% across the state. Rental rates for top-quality farmland reached $294 per acre, up from $202 in 2010. With hindsight, 2013 marked the peak for cash rental rates of top-quality Indiana farmland.
Warning Signs in the Farm Economy: At the annual USDA Outlook Conference, all eyes were on the shocking estimates that net farm income could fall 25% for the year.
Uncertainty in Ethanol: A late 2013 decision by the EPA to reconsider aspects of the Renewable Fuels Standard (RFS) caused turmoil in 2014. The EPA initially proposed reducing the amount of ethanol blended but ultimately punted to 2015 for a final decision.
Big Crops: Ideal weather pushed U.S. corn and soybean yields above-trend. As a result, U.S. and global grain stockpile increase, but not as oversupplied as some suggested.
California Drought: California was gripped by a powerful drought.
PEDv: Porcine Epidemic Diarrhea virus (PEDV) rocked the hog and pork markets.
GMOs on the ballot: Ballot measures to require the labeling of foods containing GMOs failed in Oregon and Colorado. From a 2012 ballot measure, Colorado also started legally selling a new cash crop.
2014 Farm Bill passed: The 2014 Farm Bill was passed, creating the ARC-CO and PLC programs crop producers would then have to choose from. Sliding into the void between the end of direct payments (in 2013) and ARC/PLC payments starting in 2015, a large livestock disaster bill was passed along with the 2014 Farm Bill.
Agricultural Economic Insights (www.aei.ag) launched: While colleagues at Purdue University, Brent and David launched a weekly blog titled Agricultural Economic Insights.
Farmland values start to decline: The toll of lower commodity prices and lower farm incomes pushed farmland values lower (here and here). Top-quality farmland in Indiana went from $5,310 per acre in 2010 to a high of $9,765 by 2014. By 2019, values would adjust to $8,206. Even with the adjustments lower, it was a decade of big changes in farm equity.
Avian Flu: Avian Flu hit chicken and turkey producers hard. Egg and Thanksgiving turkey prices turned higher.
Merger Mania: Dow and DuPont announced they would merge and eventually split into three companies (Hello, Corteva). Monsanto tried it's hardest to purchase Syngenta - in early May, June, and again in August. Monsanto's Climate Corp sold Precision Planting to John Deere. Of course, the Department of Justice would intervene and AGCO finalized the purchase of Precision Planting in 2017.
U.S. Meat Consumption Turns Higher: The Great Recession triggered a significant decline in U.S. meat consumption. 2015 marked the first year of strong growth in total meat consumption. It would take until 2018 for U.S. meat consumption to return to pre-recession levels.
WOTUS: Obama administration issued the Clean Water Rules, which included Waters of the United States (WOTUS).
Buzz Word of the Year: Drones.
Soybeans to the Rescue: A short South American crop send soybean future higher late in the spring. The 2016 MYA price for soybeans was $9.47 per bushel, up from $8.95 in 2015.
Wheat Implodes: Cash prices fall so low producers that farmers collect LDP (loan deficiency payments), and the long-trend towards fewer wheat acres turns to a free-fall as the U.S. planted 4.5 million fewer acres in 2016 - a decline matched again in 2017. The MYA wheat price was $3.89 - the lowest price of the decade.
Corn Price Lows: The MYA corn price fell to $3.36 per bushel, tied for the lowest price of the decade. Prices hit $3.36 again in 2017.
Mergers Continue: Syngenta sold to ChemChina. Bayer acquired Monsanto. Input cooperatives and Farm Credit associations even merged.
The 2016 Election Proves to be a Surprise.
Farm Income Hits Bottom: With hindsight, U.S. farm income hit the lows. In summary, a difficult year.
Dicamba Headaches: Facing herbicide resistance, farmers turn to dicamba and dicamba-tolerate seeds. Tensions reach a high in the summer of 2017.
Troubles in the Farm Economy Continue: Farm debts higher, loan delinquencies rise (although remain historically low), and CHS found itself suing a farmer customer for $145 million in unpaid loans.
Another Big Year of Crop Production: Despite all the Twitter posts and pictures to the contrary, U.S. corn and soybean yields go above-trend for the fourth year in a row.
U.S. Beef to China: U.S. beef found it's way onto Chinese grocery stores in 2017 - but Chinese consumers weren't too excited.
Agribusiness Shuffling Continues: BASF buys $7 billion in Bayer assets to appease Bayer/Monsanto merger concerns. DuPont purchased Granular - a farm management software start-up- for $300 million. AGCO closed on the Precision Planting deal after John Deere moved on.
Disruptors Settle In: Farmers Business Network (FBN) raised $110 million in capital (bringing total investments to $200 million) and Indigo Ag raised $47 million in new capital (bringing its total to $203 million)
NAFTA Uncertainty: Trump announced plans to renegotiate the NAFTA Trade Agreement. Earlier in the year, Trump withdrew the U.S. from TPP negotiations.
Tax Reform: Late in 2017, the President and Congress moved to lower taxes.
RFS War Turns Ugly: From Carl Ichan's bad bet on RINS to the EPA- Sen. Chuck Grassley - Sen. Ted Cruz battles, tensions around RFS flare-up.