The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ARM AND IT 1ANCH B u l l e t in September 1968 Vol. 23, No. 9 W H E A T CARRY-OVER MOVING UPW ARD AGAIN The wheat turnaround that began in 1961 has turned around again. It sounds like an old story, but present estimates of production, domestic use, and exports favor an increase in wheat carry-over beginning with July 1, 1968. Carry-over is the difference between total sup ply (beginning carry-over, total production, and imports) and disappearance (domestic use and exports). 68. Domestic consumption is expected to in crease, but some slack in exports is anticipated. The condition of the 1968 world wheat crop indicates that competition for foreign markets will be more intense in 1968-69. Stocks of wheat available for export and carry-over on April 1, 1968, in the five major exporting countries were 1.9 billion bushels— 175 mil lion bushels more than a year earlier. Large im Most wheat farmers can remember the sur porters of U.S. wheat, such as India and Pak plus buildup in 1960-61, when carry-over istan, are expecting bumper wheat crops, and reached above the 1.4-billion-bushel mark. Fol India is predicting a record food grain crop. lowing the peak in carry-over in 1961, the U.S. W h e a t: Supply, surplus fell steadily through 1967, when the Disappearance, and C a rry-O ve r July 1 carry-over was 425 million bushels, the smallest quantity in 15 years. (In millions of bushels) The cause for the turnaround is quite sim ple: production is outrunning demand. All wheat production is estimated, as of July 1, at Year1 1.6 billion bushels for the 1968 crop year, which is 4 percent above last year’s output. The 1959 1968 wheat acreage was reduced because of 1960 estimates by the U.S. Department of Agricul 1961 ture that world wheat supplies would increase, 1962 but improved growing conditions in the winter 1963 wheat areas of the United States have more 1964 1965 than offset the 1968 acreage reduction. Adding the estimated 1968 wheat produc tion to the July 1 carry-over of more than 537 million bushels results in a total 1968-69 sup ply of about 2.1 billion bushels. Overall pros pects for disappearance of the 1968-69 wheat crop appear to be about the same as the total disappearance of 1.4 billion bushels in 1967- F E D E R A L R E S E R V E DAL L AS, 1966 1967i( 1968 Total supply Total disappear ance Ending carry over 2,420.1 2,676.2 2,649.4 2,419.4 2,345.9 2,185.9 2,133.8 1,848.6 1,950.3 2,126.0i' 1,106.7 1,264.9 1,327.4 1,224.2 1,444.5 1,368.6 1,598.6 1,423.6 1,413.1 1,425.0° 1,313.4 1,411.3 1,322.0 1,195.2 901.4 817.3 535.2 425.0 537.2 701.0° 1Year beginning July 1. ^Preliminary. ''Estimated. SOURCE: U.S. Department of Agriculture. B A N K TEXAS OF D A L L A S Therefore, if 1968 estimates of wheat pro year record of 10.4 billion bushels. However, duction are correct, domestic consumption re cotton registered a strong comeback, following mains constant, and exports meet strenuous a period of nominal trading, with a volume competition, the U.S. wheat carry-over by July of 19.7 million bales in 1967-68, as com 1, 1969, may increase by 200-300 million pared with only 85,700 bales traded a year bushels, depending mainly on export demand. earlier. This would represent the second continuous year of a surplus buildup, following the low Agricultural Processing Is Important of 425 million bushels of carry-over wheat on In Oklahoma's Economy July 1, 1967. An interindustry analysis of the Oklahoma economy, recently completed by Charles H. Futures Trading Declines Little, Assistant Professor of Agricultural Eco The volume of futures trading in agricul nomics, Oklahoma State University, revealed tural commodities in the Nation dropped sub that agricultural processing is a key industry stantially in 1967-68 from the record trading in Oklahoma’s economy. Agricultural process of the previous year, said the U.S. Department ing ranked first in the State in terms of output of Agriculture in its release of fiscal-year data multipliers. from the Commodity Exchange Authority. Output multipliers measure the value of total In 1967-68, speculators and hedgers had new output generated by a $1 change in final 14.7 million futures transactions in wheat, corn, demand for commodities produced in a given soybeans, pork bellies, and 16 other agricul sector. The output multiplier for agricultural tural commodities traded on commodity ex processing was $2.50; the original purchase of changes, as compared with 19.1 million in $1.00 is included in the $2.50 multiplier. An 1966-67. The value of all regulated futures additional $1.50 of output was generated trading in 1967-68, estimated at $59.5 billion, through the interaction of firms in the agricul dropped sharply from the previous year’s figure tural-processing sector with those in the other of $86.4 billion, reflecting both a decline in sectors. The large multiplier for agricultural trading volume and lower prices of major processing is due to that sector’s purchases of inputs from other Oklahoma suppliers and commodities. to the selling of inputs to other producing The CEA’s fiscal-year report on futures trad sectors. ing includes, for the first time, livestock and The multiplier for the livestock and livestocklivestock products. Live cattle, live hogs, frozen products sector was the second largest ($2.25 ). pork bellies, and hides were brought under This high multiplier indicates that there is futures-trading regulations by amendment of considerable interaction among livestock pro the Commodity Exchange Act on June 18, ducers and other firms in the Oklahoma 1968. economy. Frozen pork bellies, with a 1967-68 volume of 1.3 million contracts, was the most actively traded of the new commodities and was the About 900 million pairs of shoes are re fourth largest of all commodities regulated at quired each year in order to keep the Nation’s the end of the fiscal year. Live cattle and live population shod, points out the Agricultural hogs also had increased volumes during fiscal Research Service. Of this total, 600 million 1968. pairs are leather shoes manufactured in the Grain markets accounted for the year’s United States; 150 million pairs are nonleather greatest decline in futures trading; the decline and synthetics; and 125 million pairs are im is attributed generally to large supplies of major ported. Women buy an average of 4 pairs of grains and a drop in prices. Wheat trading of shoes each year, while men purchase an aver 9.3 billion bushels declined from its previous- age of only 13A pairs. Corporate Farming in Arizona and New Mexico In November 1967, Secretary of Agricul ture Freeman, in the midst of growing concern about corporations having agricultural opera tions, directed the Economic Research Service to conduct a survey to determine the number, kinds, and general characteristics of corpora tions that are directly involved in the produc tion of farm commodities. The U.S. Department of Agriculture recently released the first part of the survey on corporate farming, covering 22 states in the Corn Belt, Lake, Mountain, and Pacific Northwest re gions. Among the individual states included in the first part of the survey were the Eleventh Federal Reserve District states of Arizona and New Mexico. The report on Louisiana, Okla homa, and Texas will be included in the second part of the survey, which will be completed at a later date. The results of the study indicate that corpo rations have not made serious inroads on the family farm in the area as a whole. A total of 153 corporations in New Mexico, operating 6,216 acres of farming land, and 205 corpora tions in Arizona, operating 2,165 acres, were found for the two states. These totals for the two states represented about 2 percent and 6 percent, respectively, of all commercial farms and 17 percent and 12 percent, respectively, of the total land in farms for each state. About 14 percent of the corporations in New Mexico and 13 percent of those in Arizona were individually owned. The remaining corpo rations in each state were other types of cor porations with diversified ownership. About one-fourth of the corporations in each state had one or more business activities in addition to their farming interests. A larger percentage of the corporations in Arizona with additional business activities were in agribusi ness, while a larger percentage of those in New Mexico were involved in nonagribusiness op erations. Only about 3 percent of the diversi fied corporations in each state were involved in agribusiness and nonagribusiness operations. Total gross sales of farm products from all corporations found in the 22 states, including Arizona and New Mexico, were estimated at slightly less than $1 billion in 1967, or about 4 percent of the total cash receipts from farm marketings in the 22 states. Crops produced by corporations having agricultural operations tended to be similar to those produced by farms generally in each state; however, livestock op erations on corporate farms appear to be more frequent and on a substantially larger scale than for all farms in each of the regions. Approximately 72 percent of the corpora tions found in New Mexico were family corpo rations, compared with 63 percent in Arizona. Approximately 45 percent of all corpora tions were reported to have been organized prior to 1960; and about an equal proportion, in 1960-66. The proportion organized in 1967 and through the first month or two of 1968 was about 8 percent. C C C Interest Rates Cotton Production (In thousands of bales) Effective August 25, 1968, the interest rate Average payable on certificates of interest issued by the Area 19681 1967 1962-66 Commodity Credit Corporation to financial in 635 454 776 stitutions participating in the financing of crop A rizo n a............. 540 428 566 price-support loans has been decreased to 5.375 Louisiana . . . . 242 180 New Mexico . . 157 percent annually. According to the U.S. De 303 200 194 partment of Agriculture, this decrease in the Oklahoma . . . . 4,223 Texas ................ 3,325 2,767 interest rate, from 5.875 percent, is in line with 6,110 T o ta l............. 4,880 4,000 recent changes in the money market. This was the first decrease in interest rates paid on CCC 1August 1 estimates. SOURCE: U.S. Department of Agriculture. certificates of interest since April 1967. Vegetable Processing in the South The cannery in Anytown, Texas, was built to process 1,000 cases of canned toma toes a day. However, less than 800 cases are coming off the production line, leaving 22 percent of the processing plant’s production capacity unused. Across the Louisi ana border, there is a similar situation. The cannery was replaced a few years ago by a processing plant, where peas and okra and kale and other leafy greens are frozen, but about 26 percent of the plant capacity there is not being utilized. There are many more examples of underutili zation of plant capacity in the South similar to the two above. If canning and freezing plants in the region were producing at their full capacities under normal conditions, their con tribution of canned and frozen vegetable prod ucts to the Nation’s supply could be about 390,000 more tons than current output. These are findings of a study by the Economic Re search Service, in cooperation with southern agricultural experiment stations, and recently prepared by J. L. Pearson of the Florida Agri cultural Experiment Station. The primary pur pose of the study was to measure the vegetable processing capacity of plants in 11 southern states. The study covered all but 4 plants in the area, including 134 canning plants, 18 freezing plants, and 2 canner-freezer combination plants. Texas, with 29, had the largest number of plants of both types. For the South as a whole, only 57 percent of the vegetable canning capacity of 58 million cases and 74 percent of the freezing capacity of 256 million pounds were being utilized; 38 percent of the surplus tonnage capacity was in Louisiana. tionately more unused capacity for tomatoes (22.4 percent) than for any other vegetable. The causes of nonuse of capacity ranged from purchasing of inputs to selling of outputs. Problems with raw product procurement and quality were revealed by 45 percent of the can ners. About the same proportion of freezers had procurement problems, but less than a fourth of them complained about raw product quality. Because of the seasonality of raw products, variations in raw product supplies occur. Therefore, many processors find it in their best interests to have enough capacity to accom modate seasonal supply. As a result, operation at full capacity is the exception rather than the rule. Approximately 39 percent of the canners, but only 22 percent of the freezers, reported that availability of labor was a problem. On the output side, 43 percent of the canners and 33 percent of the freezers reported that they had some problems selling additional outputs. Over the 1964-68 period, researchers found that, for the South, the freezer industry has had a sharper growth than the canning indus try. Out of 14 plants that closed during the period, only 1 was a freezer plant. Cotton-Blending Machine Proven in Mill Test A machine that blends cotton fibers from as many as 20 bales has successfully passed testing in a commercial mill, the U.S. Depart ment of Agriculture reports. The new machine, now ready for commercial use, is called the SRRL Bale-Opener-Blender. A comparison of the new unit with the con ventional system showed that the new unit is consistently better in cloth uniformity, strength variation, warp and filling, cloth nep count, and warp strength. The new machine is in Use of processing capacity varied among tended to meet the need for a unit that would types of plants, products, plant sizes, and areas. remove cotton from the bale and deliver thor In general, the largest plants used the greatest oughly blended tufts at controlled weights of portions of their capacities. Freezers tended one-tenth to one-half gram. The machine also to process on a larger scale than canners. takes less floor space than machines now used Among single commodities, there was propor to open and fluff tightly packed cotton.
@FedFRASER