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Agriculture AN EIGHTH DISTRICT PERSPECTIVE SUMMER 1985 Eighth District Agriculture: A Statistical Overview The Census of Agriculture, which is conducted every five years, provides detailed information on the production of various commodities and their percentage contribution to total agricultural output. This information is important for many reasons, not the The Composition of Farm Output The results of the most recent census, conducted in 1982, are reported in the table, which includes data for the four primary Eighth District states as well as the four-state total. Value of Agricultural Sales in Eighth Federal Reserve District States—1982 PRODUCT ARKANSAS °/o mil. $ All Crops2 13541 48.0 G rain s3 1172 86.6 6 0.5 W h eat 188 16.0 Soybeans 520 27 C orn-grain Sorghum Oats O ther grains Cotton Tobacco O ther Crops All Livestock Poultry KENTUCKY mil. $ °/o TENNESSEE mil. $ % MISSOURI mil. $ °/o FOURSTATE TOTALS mil. $ % 42.9 8 49 50.4 5109 48.7 1385 89.5 4 42 52.1 3531 69.1 2 88 20.8 78 17.6 604 17.1 11.1 195 14.1 16.5 515 14.6 2 33 43.8 784 56.6 73 282 63.8 1819 51.5 3 0.6 90 6.5 7 1.6 127 3.6 0.0 0 0.0 2 0.1 0 0.0 2 0.1 26 1.9 1 0.2 460 13.0 81 9.5 273 5.3 1359 57.2 1547 5 32 39.1 2 32 43.6 59 44.4 2.3 0 428 36.5 5 0.9 142 10.5 0 0.0 50 3.2 0 0.0 768 56.5 9 0.6 224 26.4 1001 19.6 12.0 304 6.0 49.6 5381 51.3 40 3.0 59 4.3 103 6.7 102 1469 52.0 1018 42.8 206 0 57.1 834 1021 69.5 25 2.5 195 9.5 98 11.8 1339 24.9 9 94 18.5 Dairy 109 7.4 270 26.5 3 42 16.6 273 3 2.7 C attle and C alves 243 16.5 381 37.4 9 06 44.0 2 99 35.9 1829 34.0 Hogs and Pigs 67 4.6 142 13.9 5 95 28.9 148 17.7 952 17.7 O th er Livestock 29 2.0 2 00 19.6 22 1.1 16 1.9 267 5.0 Total 2823 2377 3607 1683 10490 1 Subtotals may not add up due to rounding. 2 Percentages of crop and livestock sub-categories refer to percents of crop or livestock sales, not percent of total agricultural sales. 3 Percentages of grain sub-categories refer to percent of grain sales, not percent of total agricultural sales. least of which is an analysis of how District farm income could be affected by various pending changes in the 1985 Farm Bill. Of course, as farm income is affected, the profitability of agricultural banks and rural businesses will be affected as well. To project the future of agriculture in the Eighth District, it is important to know something about its current organization. THE FEDERAL I A RESERVE RANK of ST.m iJIS The value of total output ranges from Missouri’s $3.61 billion total production of agricultural commodities to Tennessee’s $1.69 billion output. The data show that production is essentially evenly divided between crop and livestock products in Tennessee and Arkansas. The somewhat larger share of crop output in Kentucky is due, of course, to tobacco, which FEDERAL RESERVE BANK OF ST. LOUIS represents more than half of that state’s total crop output. In con trast, Missouri’s larger cattle and hog industries give more weight to livestock production as a share of total output. For analytical purposes, especially with regard to potential changes in commodity price support programs, the composition of total output is more revealing. For example, of the $5.1 billion value of total crop output in the four District states, soybeans represent about 35 percent or more than $1.8 billion of that total. Tobacco, valued at $1 billion and concentrated heavily in Kentucky, is the next largest District crop, followed by corn and wheat valued at $604 and $515 million, respectively. Reductions in loan rates, which support commodity prices directly, or target prices, which determine the value of income transfers, would af fect not only farm prices and income but also the value of resources used in farm production and their allocation among alternative uses. Although soybeans, the District’s major crop, have a support price, it has been set until recently at a level sufficiently below market prices that it has not attracted additional resources to soy bean production. Therefore, changes in the soybean program, unlike the corn, wheat and tobacco programs, are not likely to have major direct effects on crop prices or the values of resources used to produce crops. However, insofar as changes in the corn program reduce expected returns to corn production, resources are likely to be shifted to soybeans from supported crops like corn with effects on both soybean prices and production. The remaining 65 percent of crop output also could be affected substantially by changes in the current system of price supports and income transfers. In addition to corn and wheat, prospective changes in the tobacco, cotton and rice programs could have large negative effects on farm income and asset values in those regions where supported crops are prominent. Livestock Production The long-run returns to livestock production also are chang ing. National dietary patterns have revealed a rather sharp and persistent trend away from red meats, especially pork, toward poultry. This trend implies ongoing shifts not only in farm in come and prices, but also in the values of resources employed in the production of various livestock products. Only Arkansas, however, shows a significant presence in the poultry industry. While poultry represents about two-thirds of all livestock production in Arkansas and more than one-third of its total agricultural output, it represents about 10 percent of livestock output in the other District states. In fact, about threefourths of Missouri’s livestock income is derived from the red meats group, while the share in Kentucky and Tennessee is slight ly more than one-half. The general conclusion from this over view is that income derived from livestock production is likely to decline in three District states in the years ahead. SUMMER 1985 Farmland Values in the Eighth District Farmland Values Continue Their Decline Farmland values have fallen sharply since their peak in 1981. Nationally, the average value of farm real estate has declined more than 18 percent over the past four years. Moreover, the 12 per cent decline between April 1984 and April 1985 was the largest single-year decline since 1933. While farmland values also fell in all Eighth District states (see the figure), the extent of their declines varied widely and appears to be related to an individual state’s reliance on corn and soy beans as cash crops. For example, Tennessee (-6 percent), Arkan sas (-9 percent), Kentucky (-10 percent) and Mississippi (-11 per cent), whose farm economies tend to be more diversified and less dependent on the production of these crops, saw reductions in land values smaller than the national average. Conversely, In diana (-21 percent), Missouri (-23 percent) and Illinois (-27 per cent) realized declines substantially higher than the national average and are much more reliant on corn and soybeans as primary sources of farm income. Because land values are deter mined by the real net income a given parcel of land can generate, further declines appear likely unless expectations about the future of crop prices are increased substantially. —Michael T. Belongia Agriculture—An Eighth District Perspective is a quarterly summary of agricultural conditions 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._______________________ FEDERAL RESERVE BANK OF ST. LOUIS SUMMER 1985 EIGHTH DISTRICT AGRICULTURAL DATA P ercent Change Prices and C o sts 1 M ar. 1985 Apr. 1985 May 1985 C O N S U M E R P R IC E IN D E X (% cha n g e ) N onfood Food 0.6 % -0 .2 0 .5 % -0 .4 0 .3 % -0 .4 P R O D U C T IO N C O S T S FOR F A R M E R S (% cha n g e ) A ll inputs F e rtilize r A g ric u ltu ra l ch e m ica ls Fuels and e n e rg y -0 .6 - 1.4 -0 .8 1.6 P R IC E S R E C E IV E D BY F A R M E R S (% change) A ll p ro d u cts L iv e sto ck C rops 0.0 0.0 Average for 1984 0 .3 % 0.3 Year-To-Date 19852 Same Period Year Ago 2 .0 % -0 .1 1.9 % 1.6 -1 .6 3.1 -0 .7 -1 .5 1.6 1.0 -0 .1 0.2 0.2 -0 .1 -0 .7 -2 .9 -0 .8 2.5 1.3 8.1 2.4 1.0 -0 .7 -3 .4 1.6 -2 .2 -2 .9 -1 .6 -1 .5 -1 .5 -0 .8 -0 .3 0.1 -0 .7 -4 .4 -7 .6 -0 .8 3.6 1.4 6.6 FE E D E R C AT T LE W h o le sa le p rice - K ansas C ity ($/cw t.) $ 67.40 $68.60 $67.04 $ 6 5 .3 2 1.1 3.2 FE E D E R PIG S W h o le sa le p rice - So. M isso u ri ($/head) $46.31 $43.67 $39.39 $ 3 9 .1 3 10.7 55.0 B R O ILE R S W h o le sa le p rice - 12-city ($/lb.) 49.70$ 47.77$ 51.81$ 5 5.54$ 6.1 0.8 TURKEYS W h o le sa le p ric e - N ew Y ork, 8-16 lb. yo u n g hens ($/lb.) 67.04<P 64.52$ 62.64$ 74.48$ -3 5 .6 -1 1 .0 CORN W h o le sa le p rice - No. 2, y e llo w - St. Louis ($/bu.) $ 2.86 $ 2.88 $ 2.81 $ 3.2 7 2.2 3.8 SOYBEANS W holesale price - No. 1, yellow - Central Illinois ($/bu.) $ 6.08 $ 6.13 $ 5.95 $ 7.06 -0 .3 10.8 W HEAT W h o le sa le p ric e - No. 1, h ard w in te r K ansas C ity ($/bu.) $ 3.67 $ 3.62 $ 3.42 $ 3.80 -9 .0 -3 .4 LO N G -G R A IN RICE W h o le sa le p rice - A rka n sa s ($ /cw t.) $17.94 $17.75 $17.83 $ 1 8 .4 3 -1 .4 -1 .5 -0 .4 9.8 CO TTO N A v e ra g e p rice re ce ive d by U .S. F a rm e rs ($/lb.) 54.50$ 55.90$ 55.60$ 6 5.47$ U.S. Exports Jan. 1985 Feb. 1985 Mar. 1985 Average for 1984 209.0 72.5 109.0 3.8 835 .6 167.0 80.6 93.0 5.9 810.6 172.0 67.9 65.0 5.8 648.5 162.1 5 9 .6 134.2 5.4 5 8 0 .4 Percent Change C orn (m il. bu.) S o yb e a n s (m il. bu.) W h e a t (m il. bu.) R ice (ro u g h e q u iv a le n t, m il. cw t.) C o tto n (thou, bales) Year-To-Date 19852 -1 7 .3 % -2 2 .2 -5 1 .5 2 6 .7 -1 .7 Same Period Year Ago 0 .7 % -5 .8 -3 .5 29.4 42 .8 3 Non Real Estate Farm Debt Outstanding Banks Outstanding ($ millions) u.s. E ig h th D is tric t4 A rk a n s a s K e n tu c k y M isso u ri T e n n e sse e $ 3 8 ,2 9 4 2,6 6 6 429 673 1,422 338 PCAs3 Percent Change3/84 - 3/85 3/83 - 3/85 -2 .2 % -2 .5 -6 .8 5.4 -4 .8 -4 .8 5 .1 % 5.8 1.2 12.8 -0 .9 -3 .4 Outstanding ($ millions) Percent Change 3/84 - 3/85 3/83 - 3/85 NA NA $297 325 357 311 NA NA -1 6 .8 % -2 8 .3 -1 8 .8 -2 9 .0 NA NA - 2 3 .2 % -4 3 .6 -2 .5 -3 9 .4 Agricultural Bank Loan Performance5 Percent of Net Loan Charge-Offs at Agricultural Banks Percent of Overdue Farm Loans at Agricultural Banks 3/85 U .S. E ig h th D is tric t4 A rk a n s a s K e n tu c k y M isso u ri Tennessee 6 .1 % 7.1 8.5 6.3 8.3 5.8 3/84 3/83 4 .4 % 5.0 6.8 6.5 5.0 4.4 3 .3 % 2.9 3.3 2.6 2.9 3.7 3/85 3/84 .3 2 % .29 .42 .12 .43 .27 .1 5 % .11 .20 .10 .16 .10 Agricultural Production Loan Interest Rate6 PCAs Banks E ig h th D is tric t A v e ra g e 5/85 5/84 12.4% 13.3% 4/85 1 2 .5 % 4/84 1 2 .0 % 1 The consumer price index components are seasonally adjusted. All other data are not seasonally adjusted. 2 Percent change from December of previous year, based on the most recent month available. 3 Source: Farm Credit Banks of Louisville and St. Louis, Farm Credit Administration. 4 Includes all of AR and parts of IL, IN, KY, MO, MS and TN. 5 Agricultural banks are defined as those with more than 25 percent of total loans in agricultural loans. 6 Interest rate data are for different dates. PCA rates are weighted averages for Arkansas and Missouri, not adjusted for stock purchase requirements. Source: Farm Credit Banks of St. Louis. 3/83 .1 1 % .12 .16 .21 .15 .19
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