Full text of Pieces of Eight : Agriculture : An Eighth District Perspective, Summer 1984

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Agriculture
AN EIGHTH DISTRICT PERSPECTIVE
SUMMER 1984

Eighth District Farmers Still Struggling to
Recover From Setbacks of 1980
The recent past has been a turbulent time for U.S.
agriculture. Droughts in 1980 and 1983, export embargos, PIK, a rapid disinflation and the persistence of
historically high nominal interest rates have made farm
income more variable and generally lower in real terms
over the past decade. Eighth District farmers may have
been affected relatively more by these events, since they
rely heavily on crops for their income and since recent
disruptions have had their dominant effects on the cash
grain market.

Chart 1

Eighth District Shares of Cash Receipts and
Government Farm Program Payments

Earned Income Declines; Government
Payments Rise
As chart 1 shows, states in the District generally have
earned a lower share of net farm income in recent years.
In addition, District farmers have received a higher share
of government income and price support payments. Most
notably, the chart shows a relatively constant or increas­
ing share of earnings and a declining share of government
payments until 1979.

Other recent data on individual states suggest a slight­
ly different picture for the farm sector recovery in the
District. These data show that reliance on different
primary products can give widely varying views of a sec­
tor’s health. Mississippi and Arkansas, for example,
receive large shares of their receipts from cotton and rice,
respectively. In both instances, low levels of beginning
stocks are causing prices to increase; in the case of cot­
ton, prices also are increasing in response to increased
foreign demand. As table 1 indicates, these price in­
creases have raised cash receipts for Arkansas and
Mississippi farmers in the first quarter of 1984 by about
26 and 14 percent, respectively, over the
same period in 1983. This picture contrasts
sharply with the substantial declines in
receipts for District states heavily reliant
on food and feed grains and livestock
THE
FEDERAL
marketings for their income. These declines
RESERVE
put most District states in the same dilem­
RANK of
ma as the nation as a whole, whose cash
ST. IX)H S
receipts declined substantially in the first
quarter of this year.

The decline in the District’s share of farm income that
year was caused by slow growth in its receipts, while
receipts for the nation as a whole expanded by 19 percent.
Conditions worsened for District farmers in 1980 when a
severe drought and an embargo of grain exports depress­
ed farm income. These events probably affected farm in­
come more than they otherwise might have as rapid
reductions in the U.S. rate of inflation possibly raised the
value of the dollar more quickly than it reduced the
growth rate of U.S. commodity prices. Many analysts
have argued that the appreciation of the dollar had some
negative short-run impact on U.S. ex­
ports of farm products.
Each of these factors resulted in lower
cash receipts from grain production,
which, for the most part, were offset by
higher price support payments and direct
income transfers from government pro­
grams. The decreasing share of income
and increasing share of government



payments graphically show the difficulty, relative to
other regions, that Eighth District states have had in
recovering from the 1980 shocks to farming.

SUMMER 1984

FEDERAL RESERVE BANK OF ST. LOUIS

Table 1
Cash Receipts: Evidence of an Uneven Recovery
C h a n g e in
c a s h r e c e ip ts
J a n u a r y -M a rc h 1984

S ta te

Table 2
Changes in Eighth District Farmland Values

S ta te

A v e ra g e V a lu e P e r A c re
A s o f A p r il 1, 1 9 8 4 1

A rk a n s a s
A rk a n s a s

2 6 .4 %

$

C h a n g e F ro m
Y e a r E a rlie r
-4 .0 %

944

I llin o is

1 ,69 2

-2 .0

I llin o is

-3 1 .6

In d ia n a

1 ,47 7

-1 .0

In d ia n a

-2 6 .7

K e n tu c k y

927

-4 .0

M is s is s ip p i

966

5.0

K e n tu c k y

-8 .1

M is s is s ip p i

13.8

M is s o u r i

7.0

Tennessee

-1 2 .2

U .S . to ta l

-1 0 .8

M is s o u r i

759

0.0

Tennessee

951

3.0

U .S . to ta l

739

-0 .5

1Values are based on land and buildings.
1Change over same three months in 1983

Farmland Values Decline in Four Eighth District States
The average value of U.S. farmland declined for the
third consecutive year based on valuations dated April 1,
1984. This is the first time that farmland values have
declined in three consecutive years since 1933. For the 48
continguous states, average values declined 0.5 percent
last year compared with declines of 0.8 and 5.8 percent,
respectively, in 1981 and 1982. Chart 2 shows, however,
that these declines are a continuation of a general trend
dating back to 1977.
Chon 2

Changes in Value per Acre of Farm Land and
Buildings, Real and Nominal
P»rc««t

P»rct»t

As table 2 indicates, states in the Eighth District fared
generally worse than the national average. Land values in
Kentucky and Arkansas declined by an average of 4 per­
cent. The smaller 1 to 2 percent declines in Illinois and
Indiana were still more than double the national average.
And, even though average land values in Mississippi and
Tennessee actually increased from 1983 levels, last year’s
drought, low prices for some commodities and changes in
government support legislation have reduced the ex­
pected returns from farming and, consequently, exerted
downward pressure on the prices of farm assets. The lat­
ter two effects are particularly important to Kentucky,
whose farmland has been affected by actual and expected
changes in the tobacco and dairy programs and increas­
ing imports of foreign tobacco.
The general downward trend in farmland values,
however, is more closely linked to the substantial reduc­
tion in inflation that has occurred since 1981. Under high
and rising rates of inflation, people tend to hold more of
their wealth in physical assets, like land, as a hedge
against declines in their purchasing power. This shift in
wealth holdings, which tends to increase the demand for
land and, consequently, land prices, was reversed as infla­
tion fell to lower levels in recent years.
— Michael T. Belongia

Agriculture—An Eighth District Perspective is a quarterly summary of agricultural condi­
tions in the area served by the Federal Reserve Bank of St. Louis. Single subscriptions are
available free of charge by writing: Research and Public Information Department, Federal
Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not
necessarily official positions of the Federal Reserve System._____________________________
2



FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1984

EIGHTH DISTRICT AGRICULTURAL DATA

Prices and Costs1
C O N SU M ER PRICE INDEX (% change)
N o n fo o d
Food
PRODUCTION COSTS FOR FARM ERS (% change)
A ll in p u ts
F e rtiliz e r
A g ric u ltu ra l ch e m ic a ls
F uels and energ y
PRICES RECEIVED BY FARM ERS (% change)
A ll p ro d u c ts
L iv e s to c k
C rops

Mar.
1984

Apr.
1984

May
1984

Ayerage
for 1983

0.3%
-0 .3

0.6%
-0 .2

0.3%
-0 .7

0.3%
0.2

0.6
7.8

Percent Change
Year-To-Date Same Period
19842
Year Ago
1.8%
2.1

4.5%
2.4

0.3

0.0
0.8
2.0
0.2

0.8
-0 .2
0.3
-0 .3

-3 .2
8.6
2.0
1.2

3.7
6.4
2.0
-0 .7

0.9
0.3
1.6

3.1
0.8
4.5

5.6
0.8
11.3

0.0

0.0
0.0

-0 .5

0.2

0.8

0.4

0.0

0.0

1.5

0.7

-0 .8
-4 .2
2.6

FEEDER CATTLE
W h o le sa le p rice - Kansas C ity ($/cwt.)

$67.42

$67.51

$65.87

$63.71

3.5

-2 .6

FEEDER PIGS
W h o le sa le p rice • So. M is s o u ri ($/head)

$50.12

$51.08

$43.58

$33.96

57.6

24.0

BRO ILERS
W h o le sa le p rice -12-city (c/lb.)

62.01c

55.99c

57.61C

50.39c

0.8

22.8

TURKEYS
W h o le sale p rice - New York,
8-16 lb. yo ung hens (c/lb.)

65.69c

67.04C

66.93c

60.48c

- 11.0

18.3

CORN
W h o le sale p rice - St. L o u is ($/bu.)

$ 3.55

$ 3.61

$ 3.58

$ 3.27

3.8

10.5

S O YBE AN S
W h o le sa le p rice - N.C. Illin o is ($/bu.)

$ 7.83

$ 7.97

$ 8.34

$ 6.86

5.2

34.5

W HEAT
W h o le sa le p rice - No. 1, hard w in te r Kansas C ity ($/bu.)

$ 3.85

$ 3.93

$ 3.72

$ 3.95

-3 .4

LO N G -G RAIN RICE
W h o le sa le p rice - A rka n sa s ($/cwt.)

$18.60

$18.00

$18.72

$18.40

-1 .5

1.2

10.7

20.7

- 8 .1

COTTON
W h o le sa le p rice - all m a rke ts (c/lb.)

70.50c

68.60c

74.50c

62.30C

U.S. Exports

Jan.
1984

Feb.
1984

Mar.
1984

Average
for 1983

173.4
80.4
121.0
4.3
696.0

159.0
79.7
116.0
3.1
759.0

177.5
78.8
126.0
6.5
947.0

157.6
69.5
125.7
5.9
459.7

0.7
5.8
-4 .2
29.4
42.8

1.9
-6 .6
-8 .9
- 1.4
84.6

$4,928
1,045

$5,048
931

$6,072
1,232

$5,772
1,180

13.3
17.6

14.7
4.1

6,153
1,019

5,937
919

6,094
1,000

5,855
905

-2 .6
-1 .0

0.1
10.2

C orn (m il. bu.)
S oybeans (m il. bu.)
W heat (m il. bu.)
R ice (rough e q u iv a le n t, m il. cw t)
C o tto n (thou, bales)

Percent Change
Year-To-Date Same Period
19842
Year Ago

Receipts3
CROPS (m illio n s o f d o lla rs )
U nited S tates
D is tric t (seven-state to ta l)
LIVE STO C K (m illio n s o f d o lla rs )
U nite d S tate s
D is tric t (seven-sta te to ta l)




3

EIGHTH DISTRICT AGRICULTURAL DATA

Marketing Year
Crop Production4

1980/81

1981/82

1982/83

CORN (O c to b e r 1 - S e p te m b e r 30)
A c re s p la n te d (m il. a cres)
P ro d u c tio n (bil. bu.)
Y ie ld (bu. p er acre)
E nding s to c k s (bil. bu.)

84.0
6,644.8
91.0
2,774.2

84.2
8,201.6
109.9
3,904.1

81.8
8,359.4
114.5
4,962.3

S O Y B E A N S (S e pte m b e r 1 - A u g u s t 31)
A cre s p la n te d (m il. a cres)
P ro d u c tio n (bil. bu.)
Y ie ld (bu. per acre)
E nding s to c k s (bil. bu.)

70.0
1,792.1
26.4
679.4

67.8
2,000.2
30.1
652.2

71.5
2,229.5
31.9
857.0

W H E A T (June 1 - M ay 31)
A cre s p la n te d (m il. a cres)
P ro d u c tio n (bil. bu.)
Y ie ld (bu. per acre)
E nding s to c k s (bil. bu.)

80.6
2,374.3
33.4
988.8

88.9
2,798.7
34.5
1,163.9

87.4
2,812.3
35.6
1,540.7

RICE (A u g u s t 1 - J u ly 31)
A cre s p la n te d (m il. a cres)
P ro d u c tio n (m il. cw t.)
Y ield (cw t. per acre)
E nding s to c k s (m il. cw t.)

3.4
146.2
44.1
16.5

3.8
182.7
48.2
48.9

3.3
153.6
47.1
66.6

14.5
11.1
0.8
2.7

14.3
15.6
1.1
6.6

11.3
12.0
1.2
7.9

COTTON (A u g u s t 1 - J u ly 31)
A c re s p la n te d (m il. a cres)
P ro d u c tio n (m il. bales)
Y ie ld (net bales p e r acre)
E nding s to c k s (m il. bales)

1 The consumer price index and its components are seasonally adjusted. All other data are not seasonally adjusted.
2 Percent change from December 1983, based on the most recent month available.
3 Data for receipts are seasonally adjusted.
4 Annual data for crops are based on each crop’s marketing year. SOURCE: Crop Production, Statistical Reporting Service,
Crop Reporting Board, USDA.