It was another difficult year for Kansas farmers as farm incomes continued to deteriorate. The rate of decline was modest, but combined with the drop seen in recent years, it has created a challenging situation for agricultural producers. The issue continues to be low commodity prices, increasing production costs and an abundance of grain. Commodity prices are, by far, the biggest concern. The average price per bushel of wheat, as recently as 2012 was $7.12 while in 2019 it was only $4.94. Soybeans and corn prices saw similar declines when compared to 2012. Soybean prices were $17.58 per bushel in 2012 compared to $8.97 in 2019. Corn prices were $7.82 in 2012 and $4.53 per bushel in 2019, respectively. Farmers are trying to adjust by cutting spending and selling assets to improve liquidity.
Cattle Producers Fared Somewhat Better
Cattle producers fared somewhat better in 2019 as stronger than expected demand helped prices stabilize late in the year after falling sharply during the summer. Cattlemen continue to be hampered by large inventories as well as high feed and labor costs.
Land Values a Bright Spot for Farm & Ranch
Land values were a bright spot for the agricultural community in 2019. These increased for both cropland and pastureland. Irrigated cropland had the largest increase at 11.4% going from $2,980 per acre to $3,320, while non-irrigated increased from $1,960 to $2,050 per acre. Pastureland prices increased by 5.3% to $1,390 per acre compared to $1,280 in 2018. The increase in values for Kansas agricultural land was significantly higher than the national average, which was 1.2% for cropland and 2.2% for pastureland, indicating there is still strong interest among buyers when quality land comes on the market in the state.
Kansas farmers and cattlemen are hoping trade agreements signed late in 2019 will help offset some of their losses. Grain producers are generally optimistic that the Phase 1 Trade Agreement between the United States and China will have a positive impact on exports. Soybean markets will be the biggest beneficiaries of the new agreements. The China trade resolution as well as new agreements with Japan could dramatically help beef exports.
The Tenth District of the Federal Reserve us quick to point out that the slumping agricultural economy hasn’t reached crisis proportions yet, “but could turn into one if things don’t start improving soon.” We hope the trade agreements and a stronger economy, in general, keep that from happening.
A fire at Tyson’s Holcomb beef plant negatively affects feeder cattle market through the second half of the year.
Farm income continue to decline.
New trade agreements forecasted to alleviate down turning commodity prices.