agricultural webinar/media/others/people/... · agricultural webinar august 27, 2015 fed@yourdesk...
TRANSCRIPT
![Page 1: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/1.jpg)
Agricultural Webinar
August 27, 2015
Fed@YourDesk
David Oppedahl
Senior Business Economist
312-322-6122
![Page 2: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/2.jpg)
Federal Reserve System
![Page 3: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/3.jpg)
0%
10%
20%
30%
40%
1950 1960 1970 1980 1990 2000 2010
Food Health Care
Personal consumption shares
![Page 4: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/4.jpg)
USDA split of a dollar spent
on food in 2008
![Page 5: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/5.jpg)
![Page 6: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/6.jpg)
U.S. and District output shares from farming
and food manufacturing
U.S.
0
1
2
3
4
5
1997 1999 2001 2003 2005 2007 2009 2011 2013
percen
t
Farming Food Manufacturing
District
0
1
2
3
4
5
1997 1999 2001 2003 2005 2007 2009 2011 2013
percen
t
Farming Food Manufacturing
![Page 7: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/7.jpg)
A 10% rise in the dollar has slowed exports,
including a decline of $12 billion for agriculture
(Real Broad Trade-Weighted Exchange Value of the US$){March 1973=100}
80
90
100
110
120
1991 1994 1997 2000 2003 2006 2009 2012 2015
![Page 8: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/8.jpg)
Value of agricultural exports expected to fall in 2015
0
20
40
60
80
100
120
140
160
FY1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
bil
lio
n $
Exports
Imports
Surplus
(*USDA projection)
2015*
![Page 9: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/9.jpg)
Real Cash Crop Prices
($/bushel, adjusted by CPI-U for January 2010)
0
5
10
15
20
25
30
35
40
1976 1982 1988 1994 2000 2006 2012
Corn Soybeans
![Page 10: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/10.jpg)
Real USDA Livestock Prices
($/hundredweight, adjusted by CPI-U for January 2010)
0
50
100
150
200
250
1976 1980 1984 1988 1992 1996 2000 2004 2008 2012
Hogs Cattle
![Page 11: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/11.jpg)
Real USDA Milk Prices
($/hundredweight, adjusted by CPI-U for January 2010)
0
10
20
30
40
50
1980 1985 1990 1995 2000 2005 2010 2015
![Page 12: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/12.jpg)
U.S. Farm Production Value (billion dollars, 2009 $)
0
50
100
150
200
250
1929 1939 1949 1959 1969 1979 1989 1999 2009
Livestock
Crop
*USDA forecast
2015*
![Page 13: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/13.jpg)
![Page 14: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/14.jpg)
Real net farm income boosted by direct government
payments to farmers, but the regional impact varies
0
25
50
75
100
125
150
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
bil
lio
n 2
00
9$
gov't payments*USDA forecast
![Page 15: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/15.jpg)
![Page 16: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/16.jpg)
Real farm sector assets and equity
at levels above prior peak
0
500
1,000
1,500
2,000
2,500
3,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
billio
n 2
00
9$
Debt
Equity
Assets
2015*
*USDA forecast
![Page 17: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/17.jpg)
Farm financial ratios improved following the ‘80s crisis
8
12
16
20
24
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
perc
en
t
Debt/asset ratio
*USDA forecast
2015*
![Page 18: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/18.jpg)
7th District Acres Harvested (million acres, USDA estimates)
0
10
20
30
40
50
1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014
Corn
Soybeans
![Page 19: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/19.jpg)
7th District Crop Yield Indexes
(1964=100)
100
150
200
250
1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014
Corn
Soybeans
2015*
(*USDA projection)
![Page 20: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/20.jpg)
Survey results for July 1, 2015
![Page 21: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/21.jpg)
Annual change in farmland values in
Seventh Federal Reserve District
-30
-20
-10
0
10
20
30
1970 1975 1980 1985 1990 1995 2000 2005 2010
Perc
en
t
![Page 22: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/22.jpg)
Index of Seventh District farmland values (1981=100)
0
100
200
300
400
500
1970 1975 1980 1985 1990 1995 2000 2005 2010
Nominal
Inflation
Adjusted
![Page 23: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/23.jpg)
Indexes of Seventh District Farmland
Values vs. Cash Rents (Inflation Adjusted, 1981=100)
0
50
100
150
200
1980 1985 1990 1995 2000 2005 2010 2015
Cash rents
Land values
![Page 24: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/24.jpg)
7th District Earnings to Price Ratio (left axis, 1981=1)
vs. Real Return on 10 Year Treasury Bonds
0.6
0.8
1.0
1.2
1.4
1980 1985 1990 1995 2000 2005 2010 2015
-2
0
2
4
6
8
10
E/P Ratio
10 year
bond rate
Percent
![Page 25: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/25.jpg)
Index of agricultural loan demand for the Seventh
Federal Reserve District (excluding real estate)
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005 2010 2015
![Page 26: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/26.jpg)
Index of agricultural loan repayment rates
for the Seventh Federal Reserve District
20
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005 2010 2015
![Page 27: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/27.jpg)
Interest rates charged on new farm loans in the
Seventh Federal Reserve District
0
5
10
15
20
1980 1985 1990 1995 2000 2005 2010 2015
perc
en
t
Farm operating
Farm real estate
![Page 28: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/28.jpg)
•Solid U.S. economic growth boosting demand at restaurants
and for animal products
Status of Agriculture
•Slower world economic growth and higher value of the dollar
holding back U.S. agricultural exports
•More plentiful grain and oilseed supplies pushed down prices and
feed costs for animal agriculture
•Milk and hog prices have stopped falling, while cattle remain pricey
•Rising input costs counter low interest rates, amid volatility
•Lower farm income again in 2015
•Reductions in farm assets and equity, but still quite strong
![Page 29: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/29.jpg)
The Federal Funds Rate is anticipated to return to
a neutral rate by the end of 2017
0
1
2
3
4
5
6
7
8
9
1990'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Target Federal Funds Ratepercent
FOMC
![Page 30: Agricultural Webinar/media/others/people/... · Agricultural Webinar August 27, 2015 Fed@YourDesk David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org](https://reader034.vdocuments.us/reader034/viewer/2022050600/5fa76375e9dd0011ec5e65c1/html5/thumbnails/30.jpg)
www.chicagofed.org