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9 F3 Federal Reserve Bank of Chicago - - August 15, 1958 CROP PRODUCTION for 1958 promises to be the largest ever, exceeding previous highs by nearly 7 per cent. Although some areas have experienced heavy losses from record rainfall and flooding, moisture and temperature conditions in most areas have approached the ideal. As a result, new output highs are estimated for wheat, soybeans and barley, while near records are expected for corn, hay and sorghum grain. Number 469 For most commodities these large crops are being produced on fewer acres than the 1947-56 average. Yields per acre, on the other hand, have increased more than enough to offset lower acreages. For wheat the indicated yield is one-fourth above last year's record and new records are predicted for corn, rice, cotton, sorghum grains and other crops. Acres harvested Production Yields 1947-56 indicated 1947-56 indicated11947-56 indicated average 1958 average 1958 'average 1958 (millions) Corn, bu. 3,144 Wheat, by. 1,116 Oats, by. 1,294 Hay, ton 105 Soybeans, bu. 296 • 3,487 1,421 1,345 116 536 (per acre) 38.8 17.7 34.3 1.42 20.3 47.6 26.5 42.1 1.59 22.9 I (thousands) I 81,256 163,672 37,752 1 74,204 114,557 73,185 53,650 31,926 72,905 23,367 The over-all index of per acre yield is 37 per cent above the 1947-49 average and 8 per cent above last year. This large outpouring is filling storage bins and is expected to add more to Government stocks than three _ years of diligent surplus disposal efforts have been able to decrease stocks. Renewed concern is being expressed by Government officials and others over the mounting surpluses. The amount of the surplus agricultural production in recent years has been about 8 per cent, measured in terms of the flow of farm commodities through Government hands. According to a recent Michigan State University publication, the largest surplus has been in wheat and the other food grains where the Government has taken more than one-third of total production off the domestic market from 1952 through 1956. The cotton surplus has been nearly one-fourth the annual production. Feed grains, tobacco and dairy products have smaller amounts of production going into Government hands. Annual Flow of Surplus (per cent of total production) 1952-56 1952-53 1953-54 1954-55 1955-56 average • Food grains Feed grains Cotton Tobacco Dairy products Livestock (excl. dairy) All farm products 27.4 7.0 12.2 5.1 2.2 0 5.8 37.7 10.4 21.8 4.4 6.7 0 1.0.5 41.8 9.5 8.8 9.4 6.1 0 8.0 32.8 11.4 40.8 3.1 3.1 0 34.6 9.6 23.4 5.5 4.1 0 IT 8.4 The size of this flow is likely to increase. While population and consumption increases will take a greater amount of total output, technological advances probably will increase yields and output even faster. Projections for 1965 indicate that the surplus production going into Govemment-hands may be-double the current atë;de pending, of course, on the kinds and levels of price support provided. Surplus disposal efforts hold little hope of reducing stocks substantially in the near future. A special White House report concludes that even at present rates of disposal operations, "the probability is that surpluses will continue to be substantially above any normal or desirable carryover for at least the next five years." THE ACREAGE RESERVE of the soil bank is due to end this year. The Agricultural Department has raised payments on acreage put into the soil bank's conservation reserve next year in the hope of attracting cropland which has been in the acreage reserve. However, officials set a goal of only 12.5 million acres in the 1959 conservation reserve while 17.1 million acreas were banked in the 1958 acreage reserve. Payments for the 1959. conservation reserve have been increased to $13.50 per acre from the previous $10 an acre average. Since payments under the acreage reserve in _1958 were much higher, it i s unlikely that this program will be successful in tripling the 4.1 million acres brought into the conservation reserve in 1958. NON-REAL ESTATE LOANS to farmers in the Seventh District(see.back of Letter) increased moderately from March 4, 1958 to June 23, 1958. Compared with June 1957, substantial increases have occurred, Iowa being up 31 per cent, Illinois up 14 per cent and the District showing a gain of 17 per cent. Western Iowa showed the greatest gain, over 50 per cent, which reflects the recovery of agriculture in that area from the drought of 1955-56. The general large increase in loans over the remainder of Iowa and over northwestern Illinois is partially due to the larger number of cattle on feed and and the higher prices for feeder cattle. Farm real estate loans outstanding have shown only small changes in recent months. At Iowa banks, outstandings were 3.5 per cent higher in June than in March. Research Department Farm real estate loans outstanding, District member banks outside Chicago Per cent change: • March 14, 1958 to June 23, 1958 TOP: BOTTOM: June 6, 1957 to June 23, 1958 VII II 1-1_ +0.7 +3.3 +4.6 +4.0 +7.7 +2.4 IV +2.6 VIII -1.6 +3.7 + 5.9 +11.0 +0.8 +5.0 -0.5 +7.1 June 6, 1957 to June 23, 1958 Illinois Indiana Iowa Michigan Wisconsin +0.3 +1.7 +3.5 +1.9 +2.1 +5.4 +3.6 +6.2 +4.2 -1.2 SEVENTH DISTRICT +1.9 +3.9 1 E +2.3 +1.8 XV XI ?' x III March 14, 1958 to June 23, 1958 \ +5.4 +2.1 +2.8 +9.6 • • • "Short-term" farm loans outstanding, District member banks outside Chicago (excludes teal estate and CCC-guatanteed loans): VI +6.7 +6.9 Per cent change: March 14, 1958 to June 23, 1958 TOP: BOTTOM: June 6, 1957 to June 23, 1958 H. - 03 +50.7 1 + 3.2 +19.8 + 5.8 +20.7 IV t.„ VIII + 0.8 +18.9 + 2.7 ,22.5 IX + 7.1 +18.3 March 14, 1958 to June 23, 1958 '5.8 +11.8 + 2.5 + 8.3 + 4.7 Illinois Indiana Iowa Michigan Wisconsin + 5.7 SEVENTH DISTRICT • • . .. • + 6.3 +20.4 June 6, 1957 to June 23, 1958 •,.. •..., +13.9 I + 9.8 `1 +30.7 + 8.3 + 5.1 +0.8 +9.7 +14.3 +10.3 XV XI + 9.5 +10.3 +9.9 +7.1 +17.0 , a'a•••. •"V a -Y., a +1.3 +4.8
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