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Three Midwest ag economists share insights and predictions | The Spokesman Speaks Podcast, 3-Part Series

The Spokesman Speaks podcast

Welcome to this special 3-part podcast series with three Midwest Farm Bureau economists: Iowa Farm Bureau senior economist Dr. Sam Funk, Nebraska Farm Bureau senior economist Jay Rempe, and Illinois Farm Bureau senior economist Mike Doherty.

Part 1 covers farm income and credit conditions, government assistance, international trade, and more. Part 2 deals with the changing nature of farm production, ownership, and management – as well as the impact of COVID-19. Part 3 dives into changing farm demographics, the impact of consumer and farmland owner preferences on farming practices, how the next generation of farmers is changing things up, and more.

Part 1 (released November 9)

 

Part 2 (released November 12)

 

Part 3 (released November 16)

 

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Click here to view the part 1 transcript +
Narrator: Welcome to the Spokesman Speaks a podcast from Iowa's leading agricultural news source brought to you by the Iowa Farm Bureau. Now here's your host.

Andrew Wheeler: Come to this special November 9th edition of the Spokesman Speaks podcast. I'm Andrew Wheeler and today's episode is the first part of a three-part series that we're bringing to you over the next few weeks. In late October, we brought together three Midwestern Farm Bureau economists, Iowa Farm Bureau, Senior Economist, Dr. Sam Funk, Nebraska Farm Bureau, Senior Economist, Jay Rampy, and Illinois Farm Bureau, Senior Economist, Mike Doherty, who had a robust recording of a virtual meeting that lasted more than an hour. During that discussion, we really drilled into some of their insights into 2020, as well as their predictions. Looking further out into the future. We'll split that discussion into three parts that were released to you over the next couple of weeks. Right now, I actually have Dr. Sam Funk here with me. Now, Sam, it was your idea to bring this group together. Tell us why you thought it was important to do this special series now and at a high level, what you think farmers will gain from this discussion.

Dr. Sam Funk: Well, glad to be here with you, Andrew, you know, part of the aspect of having the three economists from these Midwestern states come together is really just to kind of show what things are similar amongst our states and what are different. As we look at trying to bring this information together with several of the topics there'll be raised in these podcasts, how our different states that our members view these and what do we do as economist, or to address certain issues that arise day-to-day or sometimes in a very unique fashion, such as we'll see with COVID.

Andrew Wheeler: Now this podcast series is actually a precursor for a larger webinar series that you're planning for farmers in 2021. Why don't you tell us about that and where farmers can go to stay tuned for the details? Dr. Sam Funk: Sure. So, normally we would have, in-person an IFB Economic Summit. This year, obviously COVID put a crimp on a lot of plans that we have as an organization and obviously in our day-to-day living. So, if we think about what we wanted to do, we still want to get some very high level information out for our members to be able to understand what that current leading edge economic thought is and bring it out through there. So, what we want to do is coming into the beginning part of 2021 is to actually have the IFBF Economic Summit Webinar Series. And so that webinar will actually have a video presentation that people will be able to log on and be able to provide questions while we're going through that. And also then view the recorded webinar later on as they might want to. So, where is that one going to be coming up? Well, I think for one thing, we'll have it mentioned again on some of these podcasts with the Spokesman Speaks. There'll probably be articles coming out with the Spokesman and then we'll actually put a lot of that information when all the dates and times are known for these webinars series, we'll put that on IowaFarmBureau.com. So, people can obviously go to the website and be able to see when those events are going to take place. But we anticipate just with some of the speakers we've already lined up, it'll be some very interesting topics that many of our farm families will be interested in being able to attend those webinars virtually and get that information.

Andrew Wheeler: Well, we'll definitely look forward to that upcoming webinars series, which our listeners will be hearing a lot more about in this podcast, in the Spokesman newspaper and on our website as we inch closer to 2021. And Sam, thanks for pulling this group of economists together. I know our listeners really appreciate their expert insight.

Dr. Sam Funk: You know, it's always one of those great things to be able to bring good people together, to hear from them. And I think there's going to be a lot information that our members and others are going to be able to hear through these podcasts for just if you get three economists together from these Midwestern State Farm Bureaus, what do we think about and where do some of our topics range when we get into these deeper discussions?

Andrew Wheeler: All right, let's get to it. Spokesman editor Dirck Steimel takes it from here.

Dirck Steimel: We're here with Sam Funk, Senior Economist with the Iowa Farm Bureau Federation and two of his counterparts from neighboring states, Jay Rampy, economist with the Nebraska Farm Bureau and Mike Doherty from the Illinois Farm Bureau. Today, we're going to discuss the state of the Midwest farm economy and the economic outlook for farmers as we head into 2021. Let's talk first about the farm income outlook in each of your states. Let's move West to East and we'll start with you, Jay.

Jay Rampy: Well, thank you, Dirck, and thank you for the opportunity to be here today. I certainly appreciate that and appreciate appearing with, with Sam and Mike and, and I I'm sure I'll learn something out of this discussion today as well. At Nebraska actually considering COVID and everything that the captain to do 2020 things are looking fairly decent right now in terms of farm income. The latest numbers or projections that we've seen projected increase in farming income this year. We may hit close to $6 billion in net farm income. Last year, we had a USDA estimated about a 4.2 billion net farm income in the state of Nebraska. And so we're seeing the increase in there's a couple of reasons for that. I think one is the higher commodity prices that we've had here in the last few months, and that certainly will help with the crop receipts. And then in the livestock receipts, most of if tradition or history holds, most of our crop is marketed from September through December of the year, or at least 43% of it is and so we should see some higher receipts out of that. But then the government assistance that we saw seen out of COVID is, has been a big, big thing too, as well for farm income. At the farm level, it's been a little bit, I call it the kind of the tale of two farms where I think we have a cohort of farmers that are doing well. They're keeping their costs and their control. They're managing things. And they're able to break even, or see positive returns out of even the commodity prices that we've seen this year. But then we have another segment that I think is really struggling. They came into the year working capital, they burned through, they are, they're having trouble meeting their short-term debts. And, and so it's kind of a tale of two different farms there, if you will. I think the Kevin of assistance this year is helping those on the low end managed through that this year. I'm a little concerned what 2021 might mean for them in terms of trying to, to generate some farm income, some positive returns given the level of commodity prices. But I think we'll have to see commodity prices go up a little more for them to see some positive returns, but overall setting right now I'm feeling a lot better and a lot more positive about where we're standing at this point. Then I would have said four or five months ago. That's for sure.

Dirck Steimel: Sam, what's your take on the outlook in Iowa?

Dr. Sam Funk: You know, I think the Jay brings up a lot of really good points and it's, you know, the tale of two farms I think is a great way to phrase it, but you've always got that pressure out through there. And I think it's a matter of timing for a lot of people. I mean, obviously 2020 was just an extremely challenging year. Everybody knows COVID was such a big driver. And so if I was a livestock producer through the earlier portions of COVID and didn't necessarily get to market all of my pigs, maybe I had some difficulty getting my cattle marketed out through the state. This was a really challenging year. And I think farm income for some of these producers and will show that it was a challenging year for some it'll, it'll be significant moving on even into next year, trying to recoup some of those losses on what to take in place this year. So, I think it's a matter of that, that timing aspect. If, if on the other hand I happened to be one of those producers who still had some soy beans that had marketed yet. And after these prices started to take their strides toward these multi-year highs here recently, I might feel really good. The farm income situation for me could be a completely one 80 from what I fear that it might've been because I've got a lot more market opportunity to be able to market that crop. So, you know, that's one of those aspects that, you know, if you could have projected that, we'd be having futures prices for soybeans that on the nearby contract would put us up in the, you know, 10.90 range. And if you would've thought that I could market beans directly from the field for close to $10 in several areas around Iowa boy, you were, you were a stronger marketer than most other is around there. You know, and this is on the tail of, you know, after we had phase one, and even though we had phase one agreement in place with China buying you know, all of these agricultural commodities that were scheduled to go out, but we didn't see prices increase for quite some time afterwards. So, I think it's a, it's a, it's a very much this, you know, the tale of two farms I think works or the tale of what time you know, what, what situations I find myself in there would be some producers out there maybe who had an investment in some of those pig barns. They may not actually have another loop pigs coming back in to fill up those barns. So, there's a wide variety of challenges which could take place. And, you know, we could talk about the aggregate numbers through there and how that comes to place. I think there were a lot of programs people could avail themselves to, but the farm income situation, I think will be very individualized for what does it mean to each individual farmer? In what situation they're going to face.

Dirck Steimel: Mike, how about on your side, the river?

Mike Doherty: Well Sam and Jay have really captured it well, a lot of the dynamics and they apply here to Illinois as well. However, there's some differences Illinois is much more grain dependent, corn and soybean rotation is 80% of our revenues, which is higher percentage than in Iowa or Nebraska, where they have more livestock. So, we're very sensitive here in Illinois, as far as overall farm income to those corn and soybean prices. And yes, to Sam's point. This has been a phenomenal turnaround late in the season. Something we rarely see with these cash soybean prices currently at around $10, 50 cents, a bushel here in central Illinois. And that is going to result in the highest net farm income for corn and soybean rotation since 2013. So, that's a good, the good news. And that was unexpected. On the other hand, we also have pretty much the same level of debt leveraging and working capital constraints and low working capital that we had liquidity levels being low that we had going into this year, that tier of farmers, according to the economic research has been done. Some of it I've reviewed that was done by Iowa State. It was excellent shows that the farmers who through the last five to seven years had tight liquidity, high debt to their asset levels, and on the verge of, or experiencing credit problems in terms of loan repayment, they will probably continue to have those problems going into 2021. The only difference is that they, that the ones that might've completely capsized will have maybe been saved by the high soybean prices. So, that speaks to what Jay is talking about, about tale of two farms. You've got the ones that came into this year, financially stressed, and they're going to largely, still be somewhat stressed going into 2021. And then you've got the other ones that were not all that stressed. And for them, these high soybean prices are really going to help their bottom line and, and hopefully really maybe even increase a little bit of their working capital.

Dirck Steimel: Thanks, Mike. Now let's think a little bit about farm credit conditions. Are there signals are of any issues that lenders are seeing as farmers get ready to talk to their lenders about loans for 2021, Jay, you got any, do you have a feel for that?

Jay Rampy: Yeah, you know, it's kind of interesting because coming into the year again, that we were seeing some signals that were a little troubling in the way of farm credit overall debt was going up, was growing our farm business association here in the state, showed that in their membership, a debt has increased over 40% over the last five years. And then we saw some creeping up of the loan repayment rates in terms of default on those repayments and some other signs out there that, that were just kind of a setting that we're seeing some more problems here. And then for Nebraska, unfortunately through at least the first half of this year, if you look from June 30th to the year prior, we had the second highest number of farm bankruptcies in the nation only behind Wisconsin. And I think Wisconsin's is related to the dairy industry there. I'm not sure exactly what's driving Nebraska's in that regard. Although I will say, I know Sam and Mike and their states, the Midwest we've, we've seen higher bankruptcy rates and relative to the rest of the country. So, at coming into the year as a little bit troubling, I did see some reports here in the last week or so that saying that the amount of loans is, is slowing down a little bit or the debt levels are slowing down a little bit and that they think that's an indication of both of the higher commodity prices and some of the government assistance programs. So, maybe we're kind of stabilized a little bit in that regard. And we've got a bit of a timeout in terms of where we're going to head from now on, but it's been, as Mike alluded to some of those debt to asset ratios and some of the other things we've been slowly creeping and getting worse over time and having some troubling trends. Now, when you look at historically, at least in Nebraska, we're still below where we've been in some, in some really troubling times, but still you'd hate to see those trends the way they were going.

Dirck Steimel: Mike, do you see the same issues there in Illinois?

Mike Doherty: Yes. So, in fact, we got a breakout on this from the Chicago Federal Reserve Bank. They do an index on loans that are either in or severe repayment issue status. And we found that in that analysis that the percentage of those loans in either major or severe repayment status issues that percentage doubled between second quarter of 2019 and the second quarter of 2020 and it's quite strong almost 12, 13% of all farm loans in the Western and Northern Northwestern part of Illinois. Now, the question is how much will those higher soybean prices help those troubled loans on those farms? We don't know. And the other thing we don't know is what percentage of those loans were livestock, particularly hog farmers who had suffered with very low hog prices through a good portion of 2020, and are just now starting to make up for that with higher hog prices. So, it's yet to be seen how this will wash out for 2021, but that measurement, that index of repayment issues with either major or severe repayment issues for loans in Illinois has been increasing every year, according to that analysis by the Chicago Federal Reserve over the past five years. So, so yeah, so it's, it's definitely a concern. We're also hearing a lot about the hog farmers that, that we'll wait and see how they come out at the end of this year. They are expected to show quite a bit of financial stress because of those low hog prices earlier.

Dirck Steimel: Sam, lot of hogs here in Iowa. How to farm credit conditions look here?

Dr. Sam Funk: It's obviously been one of these aspects that it's not just because of COVID that we've had these farm income aspects, which have spilled over into some credit conditions that haven't been favorable. We are in, in Iowa, we're actually in the Chicago Federal Reserve district as well. And so not just looking state by state, but in the whole district out through here. I mean, we've got those farms that are as Mike had alluded to in that difficult situation. I mean, we're at the highest we've been since before 2000, as far as for the number of farm loans, which are showing that higher level distress, if you will. So, it's really important that we start to think about really what's been driving that, yes, we've been seeing increasing numbers of farm bankruptcies. Now those farm bankruptcies typically are somebody that they could be looking for a restructuring there's all sorts of different aspects that people use that a farm bankruptcy, the, the code that's out there in order to restructure, maybe gain some foothold to be able to start back. So, there's a lot of things that drive different reasons why you might think about some of those, those numbers out there that out through you know, so it hasn't been a challenge for a lot of people has been a challenge without a doubt. I mean, we're talking about, you know, years now, year on year of lower farm commodity prices, especially for those Midwestern crops and the livestock that we've had in through here with, with some, you know every once in a while, you'll have those blips they'll happen because of some sort of supply in, in some major exporting country in the world that gives some sort of hope to be able to lift up those markets. So, you know, there's a lot of different things that come in through here, and you've seen a lot of folks who have gone into their lenders and they've taken what had been short-term debt and converted it over into some sort of a long-term debt because of borrowing against what had been a very strong land value base that they've got. And when they take those assets and they start to borrow against them, you make what had been a one-year issue. And in order to continue farming, you made it to a multi-year issue. So, it, it's not that it was a wrong move, but it can be a challenging move to work your way back out of that in a lot of different regards, but, you know low cost of money, as far as for a lot of interest rates that hadn't been increasing as much as some might have projected the ability to transport to a land evaluation use that land asset. There's, there's a lot of things that have changed in agriculture and a lot of issues that could come back to potentially need to be worked out of over the next couple of years.

Dirck Steimel: Ad hoc government payments have made up a big share of farm income the last few years, there's a whole alphabet soup of them, MFP, CFAP, CFAP2. Do you believe that farmers are prepared for a reduction in those payments in 2021 and beyond Jay? What do you think?

Jay Rampy: That's been one of the, the trends over the last two or three years that we've been watching, and it kind of concerned me a little bit when you look at the underlying sources of income for farmers and ranchers, and whether the deriving it from the market or the government. And we're seeing here in Nebraska, potentially this year, somewhere between 35 and 40% of the farm net farm income will be government assistance, payments that. So, as we look to next year, I hate to say this, but I don't think the majority of farmers have thought about that yet. They're in the process of trying to get there, their crops out of, get harvest completed and get things taken care of. At this point, I don't see where a lot of them have thought about, okay, what about next year? And how do we cashflow things? And they'll start those conversations with their bankers here, have this year and start having, figuring that out a little bit. Again, I think those, those ones that are, are setting pretty well financially it's not much of a concern them because they got things under control, regardless, it's those on the, on the other end of the scale that have probably it'll tip the balance one way or another, I think next year on, on some things.

Dirck Steimel: Sam, Iowa got the most of those payments the largest share that we've seen of any state. How about a withdrawal of those payments? How will that affect farmers in Iowa?

Dr. Sam Funk: Well, you know, it really depends on what the markets are going to look like going into next year. I mean, I think that's the, you know if you will, that's the a hundred billion dollar question, right? If we have strong markets that are improving for corn and soybeans, and if we see some strength in livestock markets through here for hogs and for cattle and if the dairy markets can decide to say strong, instead of being able to do this Yogo levels out through there, we could have some producers who were able to make substantial gains and be able to improve their financial situation, both with the number of farm lows we see out there as well as building that working capital that Mike had mentioned earlier, and really improving that overall net farm income picture. I mean, if we don't have, COVID slowing down our economy, if we have strong market movements with now that we've got, you know, if China's really going to get to the phase one, if we're going to have USMCA working as we hope it would for exports of agricultural products both to the North and South to Canada and Mexico, if we can continue to keep you know, some high value beef and pork moving to Japan moving into Korea, but all of these countries, I mean, Japan, stage one chorus, which is the U.S. Korean trade agreement. If these things all come to play and we can keep these markets strong and going there is a potential for the export market and the domestic market in order to support farm income through here. And that's what frankly most producers that I know of would like to be able to see those markets continue to ramp up. Now, there's a lot of questions that come into that when we get to what's going to happen with the ethanol markets, what's going to happen with biodiesel, you know, and really where do we go is COVID going to have, you know, this broad sweeping change coming back in here through this fall and into the winter is, is it going to be an issue? Are we going to see people get back and start driving and using more transportation fuel so that we'll have strong demand for corn going to ethanol markets? There's a lot of questions that come up, but right now, at least there's actually some very strong potential and opportunity. And if people would make some marketing plans right now utilizing the futures market, that's out there and available right now, there's potential, lock-in some market-based prices for lease are Ford soy at this point in time, going out into future years.

Dirck Steimel: Mike, I'll go over to you. And let's talk a little bit about international trade, as Sam mentioned. What's the outlook as you see from a, from a crop standpoint, since Illinois is so heavily with crops?

Mike Doherty: Well, it's a, it's a good question. And there's a lot of concern over what that outlook is after about March to April of next year, and to Sam's point, you know, so much depends on how much demand we're going to have for corn and soybeans and what that, and keeping those prices up. There's a scenario that is not very optimistic on that going in, in, into the middle of 2021, when you know that you've got Brazil estimated to expand their soybean acreage by 3% in their plantings over this coming winter, it'll be their summer. And nowadays when they expand soybeans by 3%, they're expanding their Saprina corn crop, right along with it used to be you only worried about the soybean side of that equation. Now you got to worry about the expansion of both corn and soybeans. They are pulling a lot of their corn off and feeding it into new corn fed ethanol plants. However, that means we don't, we lose our ethanol export market to Brazil. So, we've got that potential depressing effect on prices. Probably be somewhere between March to May of next spring for our corn and soybean prices. Then on also at the same time, you could have a curtailing of this China demand about that same time, and they could start picking up those Brazilian supplies. So, we're really quite concerned that there could be a, a sharp ball off in these prices. And you could see that in the futures market, the lack of carry on those contracts, that's what the market's telling us that that's a valid concern. You've also got the long-term trend here to be aware of that our corn and soybean farmers have continued to outproduce demand overall, and that's been much talked about, and this year, yes, we had high prices, but it came with a much lower production than predicted in Iowa. So, Illinois has benefited from that along with a less or a somewhat of a surprise level of demand on the corn side in China. So, that's sort of like getting lucky for a year. What's going to happen next year? If we get back to more normal conditions they have a good crop down in South America and Iowa has a good crop, our biggest competitor, corn, soybeans, domestically. We could end up right back to some pretty low prices. And, and with that some lower farm income.

Dr. Sam Funk: Let me tail in there to Mike's point about thinking about how things have come together. The first thing to do to look for what we expect prices to do, obviously an easy one is to look at CME contracts out there for soybeans and corn. And frankly, right now, for soybeans, it's telling you take that crop to market. Now don't store the soybeans. There is no carry in the market, so there's no premium built in the market for being able to hold it out month. It's saying deliver it now. So, that risk that Mike is talking about with having more production coming out of Brazil, you know, not just that, which that's a physical, tangible risk for production down through there. But the market itself is telling you, bring that crop in and sell it right now. So, that's what basis levels, that's what everything else is telling us. You need to get that crop sold. Now at the same time that we're talking about getting that crop sold the basis levels between what's a typically higher basis for us here in Iowa, along that Mississippi river. And now we see that we're getting strength into the basis level in the interior of Iowa. And that's partly even for corn, because they're saying, you know what, we can't let all of our corn go down the river to export. We need to have that corn here in the state to be able to fuel our ethanol production and to be able to feed to those livestock. So, there there's a lot of changes they're telling us, but it doesn't say don't market it. It says you can market it by the way, we're going to be part of it just to stay right here. So, there, there's a very strong market signal. Now let's talk about some of the things that are driving. Some of these shifts out through here. And I made this comment just a couple of months ago where I had graphics that looked at how many soybeans that China was getting out of Brazil. Even though we have the phase one agreement. If you were to look at it they were buying so many soybeans out of Brazil to head toward China. They are either one having more hog production after ASF and the devastation to the largest swine herd in the world, which exists in China and still does they've either recovered from that and they need more feed or they're building up strategic store houses again, which they've been known to have multi years’ worth of storage for crops like soybeans in China. And just, you know, that already seen a lot of our corn, and they usually take a lot of sorghum as well. So, China's rebuilding a lot of that demand. And then not only did they drive up prices in Brazil, guess what? They're driving up prices for the United States continue to take exports out of here as well. So, it is a very important aspect that right now the markets are fresh. The markets are calling for our brains our oil seeds. So, we need to fill those up and take advantage of what some potential, maybe even for out years, to be able to lock in some more favorable prices that we've seen for quite some time. So, it's important that we put in a marketing structure right now to look at that plan for not just the immediate, but also going off into the future. And it can be difficult to do, to think about right when we're still in the middle of, you know, a very busy harvest season, but it's important that we do such now will Brazil bring more grain in? The next question is they've got the beginnings of a La Nemea weather pattern and they could be dry. They have been dry. So, could they have some planning difficulties, maybe what we get as a one year reprieve to this whole thing that we've got this marketing year that we can be able to move stuff. You know what that one year preview something we need to mark it off of and be able to, you know, give ourselves some room so that we continue to operate with our farms here. So, it's important that we consider all these aspects but longer term Mike's exactly right. I mean, we just had our market study trip from Iowa Farm Bureau and Dirck. You went on that trip with us in the middle of Brazil and to Mato Grosso. And we know they have more productive capacity to bring online, and those could be longer term strategic challenges for us. So, we already saw this last year that Brazil shipped three times more corn to Mexico than what they had prior. Guess what Mexico is our number one core market. We sure don't want to lose that. Do we Jay? I mean, it's important that we, we have that access to that export market potential, because again, Mike mentioned it we will outproduce the market in most times, and then it's a matter of, do you want to depend on somebody having a strategic production fall back in order to have market stability? That's not market stability, that's more market risk with what's taking place. So, what we've got is more production taking place across the globe, trying to get those export markets. Now we're blessed with a very strong domestic market, a lot of feed utilization. You're welcome, Mike your producers in Illinois. We're glad that we're able to feed that to a lot of birds. We're glad we're able to feed that production to a lot of cattle and a lot of pigs, but at the same time that we've got that really strong production. We want to have enough available for domestic needs. We're generally going to produce more that we need. They have the export markets in places as well. And so that's an important aspect that even in the middle of COVID, although we may not be traveling, you know, around the world to look at those markets, we need to make sure that we understand how those export markets come to bear for all of our producers, whether it be an Iowa, Nebraska, Illinois.

Dirck Steimel: Jay livestock is especially cattle are big in Nebraska. How do the international markets look for livestock and meat exports?

Jay Rampy: Well, that's, that's been one of the bright spots this year in terms of ongoing growth in, in the export markets. And I agree wholeheartedly with what Mo both Mike and Sam said in regards to corn and soybeans, because obviously we're, we're keen on those commodities and exports as well. But Nebraska is the largest beef exporting state in the nation because we have this such a big processing sector in our state and not only beef products, but also the awful and the hides and skins and the like is as important to the state as well. And what I, when I look at more of the protein sector, the, the beef and the pork, I look more in Asia and what's happening there because our biggest markets are over there. We've got Japan, South Korea, Vietnam, and of course, China China's not so big on the beef side right now. We'll try trying to grow that market. We just got some access to it over the last couple of years, but obviously this year they've been, they've been really buying up a lot of our pork because of what Sam said earlier about the ASF and their pork production. And so they have really been in, in the, in the pork markets this year. And looking ahead to next year, if we can, if the economy can stabilize, we can get beyond this COVID for, for some of the protein sectors, I tend to look more at the underlying income, can get conditions, economic growth conditions, and the population growth in those countries, because as they grow and to get more wealthy, they want to spend their disposable income on, on higher value foods and products. And that's where our meats come in. So, I think there's a tremendous amount of potential there. There, right now, it looks like we're going to finish this year with some uptick and some exports to those countries in overall, both in beef and pork, but and then next year, there's the projecting some potential growth there, because of there's a sense that we're going to get back to some sense of normalcy in terms of economic growth. We'll get through this, learn how to, to live with this COVID and adjust to it and, and adapt and move forward. And I think I was just watching a webinar yesterday on the processing sector and how they've learned to live. And I think that'll help us in retaining those export markets overseas and keeping the product flowing overseas.

Andrew Wheeler: We've already covered a lot of ground here, and that's just part one. We plan to release part two later this week where our esteemed economists will dive deeper into how farming is changing in their respective states and how COVID-19 has impacted the ag landscape over the past few months to listen in to part two, as well as part three of the series, be sure to subscribe to the Spokesman Speaks podcast in your favorite podcast app, and don't miss those episodes. And with that, we'll wrap up this episode of the podcast. We truly appreciate all of you for tuning in including our neighbors from Nebraska and Illinois. Thank you for doing the work that strengthens agriculture across the Midwest and throughout the entire country. And thanks for listening to the Spokesman Speaks.

Narrator: Thank you for listening to the Spokesman Speaks a podcast by Iowa Farm Bureau. Check out more podcasts and articles from the Spokesman at iowafarmbureau.com/Spokesman. You can also find and subscribe to the Spokesman Speaks Podcast in the Apple podcasts, Google play, and other popular podcast apps. We appreciate your ratings and reviews and welcome your feedback at podcast@ifbf.org.


Click here to view the part 2 transcript +
Narrator: Since 1934 Iowa's farmers have turned to the Iowa Farm Bureau Spokesman as their trusted news source. Now the Spokesman Speaks. Listen in and hear from leading experts on topics important to farmers and agriculture. Now here's your host.

Andrew Wheeler: Welcome to this special November 12th edition of the Spokesman Speaks podcast. I'm Andrew Wheeler. And today is our second part of a three-part series with three Midwestern Farm Bureau economists, Iowa Farm Bureau, senior economist, Dr. Sam Funk, Nebraska Farm Bureau, senior economist, Jay Rampy and Illinois Farm Bureau, senior economist, Mike Doherty. Our three economists got together for a virtual meeting in late October to discuss the important economic insights for their respective states in 2020, as well as their predictions looking ahead, further out into the future. We recorded the audio from that meeting and split it into three parts. We released part one on November 9th. We're giving you part two today and part three will be released on November 16th. If you subscribe to the Spokesman Speaks in your favorite podcast app, you'll be able to catch all three episodes. In part one, our economists talked about farm income conditions in each of their respective States, farm credit conditions, government assistance, the international trade environment, and much more today in part two, they'll get into topics like the changing nature of farm production, farm ownership, and farm management in Iowa, Nebraska, and Illinois, along with other topics like the impact of COVID-19. So let's get down to it. Spokesman editor, Dirck Steimel is moderating the discussion.

Dirck Steimel: Mike, how has the state commodity mix and operating environment changed in Illinois over the years? And do you expect that to keep changing?

Mike Doherty: Actually it has not changed very much. It's been amazingly stable. If you look at the 2017 and 2012 census of ag, you'll find the same percentage of total revenues on farms are derived from corn soybeans and a bit of wheat as they were 10 years ago. And the livestock side, which is about 20% of our farm revenues that has stayed the same. We did have a dropdown. You go back 15, 20 years and look at the census of ag. We had a decrease in that livestock income. So we used to have a little bit more livestock income, but in terms of the structure, the other aspect of structure is to talk about farm ownership, right? And how large the farms are and things like that. And what we've seen is really been a very slow rate of change in consolidation of farms. And I'm not sure, you know, there's people out there who will say that we're in for a wave with these low corn and soybean prices if they come about not the current ones, but come about next year at 2021. And we have a lack of ad hoc payments will create this wave of consolidation. I'm not so sure because this seems like we've had a, I guess I'll call it a shadow type of consolidation going on over the last 10 years in Illinois of the new model for farm ownership. The business itself is a multi-generation ownership and management with two or three different families involved, sometimes as many as 10 different people, having some degree of management responsibility over that farm and with these farmers sometimes spread out over two or three counties. So even though they, they are still a family farm and I'm not saying this is true for all farms. We have a lot of farms that are exactly the same sort of structure they were 10 years ago. But on the, as far as the, the edge that's changing on these large farms, that's what we're seeing is kind of a joining together of various family members still oftentimes related to almost always related to each other and taking on different roles on these much larger and more complex farms in terms of the marketing. So I think that's a trend that might just continue and we might not have some big wave of consolidation.

Dirck Steimel: Sam, do you see the same in Iowa?

Dr. Sam Funk: I think that if we look at where we're producing in what we're producing, obviously Iowa's a tremendously productive when we think about corn and soybeans, those primary row crops, cattle production, and hog production face their own challenges. You know, as even sometimes even with crops, you get your conservation issues, you get some of those other challenges that come forward. But I I'm with Mike as far as for some of the changes that we see in agriculture. I think one of the strong points about Iowa agriculture is the attractiveness for the rural lifestyle across the state and the ability still to have people who are going to be engaged in production agriculture, and might be looking for all farm employment even. And we see those Metro centers and the university towns and those areas providing you know, great levels of employment in the state. And that's part of the reason that we've seen this very gradual increase still yet the population for the state, but it's not uniform across the state. Some of our rural counties actually have a population decline while we've seen large growth in some of those areas, just on the edge of some of the Metro areas. So it's important that we think about exactly what opportunities are going to be available to farmers across the state what's going to happen with high-speed internet access. I think that's always one that comes up into several areas, whether we're talking about, you know, coronavirus and some of the impacts on employment levels, or if we're talking about just in general for, you know, quality of life and being we'll have telemedicine and other factors and, you know, being able to participate in you know, precision agriculture aspects, whether it be in the field or, you know, being able to access some of the markets that you need to have that high speed internet available to you, to participate in, in all sorts of rigorous aspects on the farm or in an all farm related employment. So I think as we look at some of those numbers, I mean, it's also possible that by 2030, and we've done this projection before, we might actually have fewer and consistently fewer than 10,000 farms in the state of Iowa who are producing 85% of the production as far as for a dollar value from the state, which you know, it's significant when you start to think about some of that level and frankly, the level, the change in efficiency and we're producers are able to far more ground themselves, maybe they're looking to bring in, you know, seasonal help, maybe they're just, you know, they've got the equipment and the capability to handle more ground themselves also. So it's a lot of changes that are coming in agriculture. There's a lot of technology shifts out through here. And at the same time, there's going to be a lot of farms that are going to find new ways to adapt and to continue to thrive in that system. But kind of going back to that tale of two farms that Jay mentioned, there're going to be challenges in that changing farm landscape too.

Dirck Steimel: Jay, do you see the same thing in Nebraska?

Jay Rampy: Yeah, I really do. It's, it hasn't changed much. We're still pretty much a corn soybean and beef dominated state. I have seen a little bit of it's kind of interesting in the last few years, a bit of a Renaissance, if you will. And some of the other livestock sectors in the state of Nebraska, we were fortunate to have a Costco project come in and locate in Fremont. That's a poultry processing facility and did their mandate or manufacturing or processing a certain bird with certain splits specifics that they want for that bird. And because of that, we're seeing a growth of poultry barns in the Eastern side of the state within 150 miles of that project, the same time near Grand Island, which is about halfway or central to part of the state of Nebraska. We've got a egg laying operation that are going up there then. And so we're seeing some different changes and growth. We had to change a lot a couple of years ago to allow packer ownership of hogs. We had a prohibition against that until about four or five years ago. So we're seeing some more contracting in the hog industry right now here in the state of Nebraska. So it's kind of satisfying see that diversification, if you will. And oftentimes these are crop farmers that are taking on these additional enterprises as a way to diversify and maybe generate some more value added to their, to their operation. So I think that's been good to see Nebraska is a little unique in that, on the Eastern side of the state, we're probably a lot like Iowa and Illinois in terms of our rain fall and typography and then the soil capabilities in life, but you don't have to get too far West and the changes dramatically. And by the time you hit the Western part of the state, where were, were pretty dry and arid, and it's, it's tough to raise a crop out there. So they, they've got a lot of different cropping mixes up already in the panhandle with sugar beets and dry beans and edible peas and Millett and those kinds of things. And we're seeing, to some extent, because of the plant based proteins that, that are being come on the market, we're seeing a little bit of growth in that segment I think out in Western Nebraska that are fulfilling those needs for plant-based proteins to help in that. So obviously you were watching that issue very closely because of our animal protein segment in the state, but it's having a bit of a positive impact there in the Western part of the state in terms of the cropping mix, too.

Dr. Sam Funk: You know, Jay, you mentioned some really good points out through there with some of the similarities that our States enjoy. And that's part of the reason about getting together with, you know, three Midwestern State Farm Bureau economists. If you think about Western Iowa and Eastern Nebraska, we're kind of a little codependent out through there. You know, we appreciate having Omaha available for a lot of off-farm employment. And I know a lot of people who drive across that river every day. And I know a lot of farmers who tend to take corn of both sides of that river whether it's for export markets or for ethanol markets. And so you mentioned about that poultry processing facility that went into Nebraska. Thank you very much. We have a lot of Iowa producers are raising birds to go into that facility as well. And that's been something that you know, we've had a lot of our young farmers engaged in raising birds to go on through there. And so it has been a difference maker for a lot of people to think about where are those new facilities locate and what opportunities they present for a young or beginning farm family to be able to diversify, to have another income stream, if you will. That if it's, if it's something that can help them to be able to grow and to provide for that family living, that's a very important aspect. And, you know Mike and I have had these discussions throughout the years as well. I mean, obviously when we get start talking about the Eastern side of Iowa in that Western side of Illinois, there's a lot of similarities there. And so, and obviously that export marketplace and, and where that grain is going to flow it's a, it's a very important aspect for thinking about just how things are shaping up and changing out through there. So that, that again shows you just how interconnected a lot of our States are for the economic activity in general, but then specifically for the agricultural economic activity.

Dirck Steimel: Certainly COVID has been the big story so far in 2020. Mike has COVID had a long-term effect on agriculture there in Illinois?

Mike Doherty: Not yet, or not so much it did through the markets, obviously. So the way COVID effected Illinois, and I think it's going to be the same across the corn belt was how much it reduced driving, which to reduce gasoline consumption, reduced ethanol and that weakened our corn prices considerably. The other one on the COVID impact was how it disrupted the meat processing sector. So for awhile, we had extremely low pork prices and beef prices with that supply piling up waiting to be able to fit, be fed through a meat processing plant that was either shuttered or partly shut down be out of health concerns for the workers having COVID. So that was the way it affected us now that has turned around. And you know, we've gotten to some extent, except our ethanol plants are still up and out of the corn belt and Jay and Sam can speak to this more probably than I can, because they've got a lot of ethanol out there on their side of the corn belt, but those ethanol plants are still producing about what I've heard is 10% less than they would have been at this time if it were not for COVID. So that's a weakness there on those prices. So now the other thing I wanted to ask about, and I would love to hear the input from Sam and Jay on this question is how much risk does COVID present to off-farm or non-farm income in some of these rural counties, and especially with our young farmers who 50%, at least here in Illinois, 50% of their household expenditure is covered by non-farm income. And we're having a big resurgence in COVID-19. And we have our governor has already announced some partial shutdowns or restrictions on business throughout Southern Illinois and in Northwestern, Illinois. So we're keeping a close eye on that too.

Dr. Sam Funk: That is a really good question to think about that Off-Farm employment aspect for COVID specifically let's, let's focus in on that you know, those age 35 and younger, we took a strong look at what was going on as far as for all employment, more than 58% of our young farmers, age 35 and younger actually work 200 or more days off the farm. So it's important for a lot of producers. Exactly what kind of employment aspects are available if you were to look at all the farmers across the state of Iowa on the most recent census of agriculture, which is 2017 you've got just right. You know, you're sitting there, it's this bi-modal distribution, if you will, you've got a significant portion who work zero days off the farm. And then you've got about the same number who work 200 or more days off the farm. So a significant portion who depend on off farm employment, whether it be for the benefits, whether it be for actual salary level to bring in, to be able to provide for family living at the end of the day, what a lot of people need to understand who aren't necessarily engaged in production agriculture, all the time farms are there to provide for somebody's economic living, right? They're there, they might be an employer base for a number of families and employees, or, or if it's just a sole proprietorship, it's there to provide for that individual or that family for that family living. And so it's very important, but some of these operations, frankly, when we become so efficient in agriculture, that you can do more with you know, fewer people that they, they depend on all farm employment to be able to weather through. Why, why were farmers able to be able to survive this period of low prices? A lot of them, it was because of the ability they had to still borrow against land. A lot of them it's because they had the opportunity to go out and find off-farm employment, to be able to supplement family living. And I think we should never forget the importance of that. And we talk about it here in Iowa, a lot, which again comes back to the availability for high speed internet on the farm, not just for precision agriculture, but also to be able to participate in that all farm employment sector. So it is very important that we think about that. And so when COVID shuts down a lot of the economic activity, a lot of these producers weren't going to go into an office. They were going to work off the farm. If you don't have the access, like we have this technology here and I can look straight into this computer. And, and if we had everybody available to look on this, we could do a webinar together and, and just be able to report it and be able to have these meetings. I've had more teams meetings, or go to meetings or zoom meetings than I ever could have imagined before it. And it's not because we weren't doing something it's because we were probably more active in doing things because we needed to have meetings to get information out, though, to a broader base, to be able to share information. So if you don't have the high speed internet out there, and if that office job isn't available to you, because that office is closed down because of COVID, then you're really stuck not having that opportunity to participate in. What's become more and more a virtual marketplace for off-farm employment.

Andrew Wheeler: We hope that you learn something new there with parts one and two in the books. We've already covered a lot of ground, and there's much more to come. And part three of this three part series, including a discussion about farm demographics, the impact of consumer and farm land owner preferences on farming practices, how the next generation of farmers is changing things up and much more we'll release part three on November 16th. And again, you can catch that episode by subscribing to the Spokesman Speaks in your favorite podcast app. I also want to remind you that this three-part podcast series is a precursor for an economic webinar series that I will Farm Bureau will be offering in 2021. If you listen to our last episode, you heard Dr. Sam Funk talk about that webinar series. And of course we'll have much more for you on that as we get closer to 2021, with that, I'll wrap up this episode of the podcast. Thanks again to all of you for tuning in, including our neighbors from Nebraska and Illinois. Thank you for doing the work that strengthens agriculture across the Midwest and throughout the country and thanks for listening to the Spokesman Speaks.

Narrator: Thank you for listening to the Spokesman Speaks, a podcast by Iowa Farm Bureau. Check out more podcasts and articles from the Spokesman at iowafarmbureau.com/Spokesman. You can also find and subscribe to the Spokesman Speaks Podcast on Apple Podcasts, Google Play, and other popular podcast apps. We appreciate your ratings and reviews and welcome your feedback at podcast@ifbf.org.


Click here to view the part 3 transcript +
Narrator: Welcome to the Spokesman Speaks. A podcast for farmers and ag professionals by the Iowa Farm Bureau, bringing you the news, experts, and educational insights that matter most now, here's your host.

Andrew Wheeler: Welcome to our November 16th edition of the Spokesman Speaks podcast. I'm Andrew Wheeler and today's episode is part three of our special three-part series with three Midwestern Farm Bureau economists, Iowa Farm Bureau, senior economist, Dr. Sam Funk, Nebraska Farm Bureau, senior economist, Jay Rempe, and Illinois Farm Bureau, senior economist, Mike Doherty. Sam, Jay, and Mike got together for a virtual meeting late in October to discuss economic insights and future projections for their respective States. We recorded the audio from that meeting and split it into three parts. We released part one on November 9th and part two on November 12th. Of course we're releasing part three today, and you can find the entire series on IowaFarmBureau.com/podcast, or in your favorite podcast app part one dealt with farm income conditions in Iowa, Nebraska, and Illinois farm credit conditions, government assistance, the international trade environment, and more. Part two got into the changing nature of farm production, ownership, and management. Along with other topics like the impact of COVID-19. And today in our final installment of the series, our economists will wrap things up with the discussion about farm demographics, the impact of consumer and farm land owner preferences on farming practices and how the next generation of farmers is changing things up. So here we go. Spokesman editor, Dirck Steimel kicks off the discussion in part three of our Midwestern farm economist series.

Dirck Steimel: Jay, what's the farm population look like there in Nebraska? Is it changing and how is that affecting farmers?

Jay Rempe: Yeah, it's definitely changing as we move through time. It's we're gradually the farm population in Nebraska and I'm sure it's happening in Illinois. And I want to do is growing older. I think in the last sentence where the average age was about 56 years. And when you look at the number of younger farmers involved, It's fairly stable over the last few years. Anyway, from some of the data I've looked at interestingly though, and this kind of touches on a point that Mike brought up earlier, when you look at the total number of operators or producers that are active in the farming, operations is staying fairly stable. And so that tells me what's happening is what Mike said earlier is that we're seeing these, the number of farms are decreasing, but we're seeing these larger farmers, this family farms, a lot more people active in, in the farming operation. So, so things are changing. We're going to see a transition over the next 10 or 15 years from one generation that as everybody knows from one generation to next, but really struck me as I read something the other day about how the different generations view things for millennials, the generation X and the like, and it really got me to think of it as farm economist and farm organizations, what those folks, as we move through the next few generation or the next couple of generations, what they're going to demand of us. And because they value different things. They're looking for different things. They are much more embracing of technologies. They are putting them on their operations. They want to interact that way. And so, we're going to see a big change. One of the things that in terms of the demographics and changing that we're seeing is a lot of these farms as they transition the ownership stays within a family that ownership doesn't necessarily live on the farm or that ranch. And so I'll turn them as non-ag ownership. And so we're going to have this much more of a folks that are outside of agriculture, owning the assets, but the operators on the ground are going to be leasing the assets. They're going to be bringing the equipment. They're going to be bringing them the marketing expertise and all the other production expertise to bear on that. And so that we're going to see that changing over time. And I think it's going to celebrate here in the near future.

Dr. Sam Funk: So in Iowa, and we've got the Iowa State University card group who do the survey on farmland ownership, one of the fastest growing age categories for those owning farmland is over 74. And if you think about a more senior generation owning that ground, and they may have an affinity for that ground, maybe they farmed it. Maybe they're still farming it because we're, we're healthier living longer being able to do more. But at the same time, there's that question of when does that ground shift and how does that ground shift when we're still seeing very strong returns right now, before we have this increase in prices for corn and soybeans, we probably were looking at a lot more farm families who were no longer living on the farm who thought about selling that land in order to be able to achieve a certain amount out of it because they might've been seeing downward pressure on cash rates. All of a sudden when you get soybeans above $10 and you get caught up there closer to four, it, there may not be quite that downward pressure on cash roll rates across the state. And so that might give you somewhat of a slowdown for what people may have been thinking about doing, for selling those agricultural land assets. So, I think that's for us to think about just exactly how is this ownership and control of agricultural ground and the farms that some of the non-owner operators might be engaged with. And when you look across Iowa, those who own all of the ground that they farm tend to be at least for acres wise, the smaller farms you know, they might be a lifestyle farm whatever the case may be. Those who tend to be the larger size crop farms out a little bit of ground and lease ground as well. So, you know, it's an important aspect to look at those changing dynamics of what's occurring, which also leads us somewhat into the what, what different needs do those groups have. And I think you hit on something there Jay for, for what kind of information flow will this next generation of farmers have. And frankly not just the next generation of farmer, what about the next generation consumer and what they will demand from these farms for what they want to see with the amount of information with the production practices you know, with, with a number of different factors that come up with how farms interact with society, not just through the product, but through that farms, very existence,

Mike Doherty: Sam you've opened up a big chest there of different questions and issues. I just like to put, add to those. So yes. You brought some very good points. One is the growth in the conservation addendum has been attached to farm lease to perform land. I don't know if you're seeing that over in Iowa, but that's a sign of the times. These millennials, as they become landowners are wanting these long, the long-term conservation practices to take place on the farmland that they're renting out to a farmer. And as you know, at least here at Illinois, our leasing system is all year to year predominantly. So we've got kind of a collision of values there. You've got a farmer looking year to year and how much he can afford to, or she can afford to pay in cash rent. And you've got the land owner progressively moving into a square of looking at some very long-term environmental benefits. They want to lock that renter into. So some of the, something's got to give there, and the other thing that, or there's going to be a tug of war here, a values. And I think the other one, not to say the farmers aren't don't have the value of conservation, but they have a different timeframe time horizon based on these lease lengths. So something looks to me like it's got to change on the length of these leases. If we're going to move toward a more environmental and conservation determined form of leasing farmland. The other thing is you've mentioned is about the cash rental and the rental rates in general. In central Illinois, a lot of people don't realize we have as a counties that 85% of the crop acreage is rented by the farmer. Only 15% is owned, and there's a high degree of competitiveness between farmers to rent that crop acreage. So, they're reluctant to tell a landowner, I'm sorry, I just cannot afford that level of rent, you know, or especially if it's a cash rent because they're afraid somebody else might, somebody might outbid them. And so, as a result, we end up with this high cost to production. We're locked into here and I'm waiting for that. At some point, it seems like somebody got to blink. And what happened this fall, as far as farmers began to the negotiation season with land owners over their cash rental rates well, what happened? We had high soybean prices and we had those ad hoc payments. So once again, in a way the can got kicked down the road and we ended up with no decrease in land prices and no decrease in cash rental rates, but one of these years we're going to have a collision I think, or where we're going to end up with very low farm income. And we will have already locked in that year to some pretty high cash rental rates. That's a concern I have.

Dr. Sam Funk: So Mike, when you talk about, you know, that they go year to year with these cash rental contracts and we do as well. There's a certain time when you have to, you know, if you're going to get out of that cash rental agreement that you've got to do it you know early enough, they've got opportunity to flex into that next year. But it's important that we think about the opportunities that we may have now, and not just the challenges that, you know, maybe some of these recent prices are going to support cash flow rates, but maybe this is an opportunity to go in and start talking about a flexible rental arrangement where that cash rent might alter based on what the returns are for the following year, or maybe it's that as we think about these conservation protocols that need to be, or that are desired to be put in place by the owners, that we start to think about some sort of a share agreement, again, with them helping to fund those practices they want the place because they know we'll remain with the farm. Maybe they help to benefit the farm for being able to keep you know, soil in place. Maybe they're helping for, you know, managing some of the water runoff, a lot of different factors that come into place, but this may be the perfect opportunity to be able to try to get those alternative lease structures in place. When we talk about agriculture and production agriculture being so much more complex with the level of technology with precision planning, maybe it's time we get somewhat more complex in our flexible rental agreements, so that we are able to manage our way with a period of changing prices for commodities and for the potential higher cost for some of those practices that are desired to be in place that the land owner may desire to be in there. That's not necessarily in the operator's immediate benefit. So I think there's an opportunity to build in there and to look for that flexibility as well.

Jay Rempe: Sam that's an excellent point because I think we're in Nebraska, we're starting to see a bit of that creep in a little bit, at least what I'm hearing anecdotally from some of our members and talking to some of our folks is that they're starting to work with the land owners to provide a little flexibility in those lease agreements. Like, like what you guys already said were largely year to year. And a lot of those are verbal as well. There's not a whole lot in writing either. So they're going from year to year, but I think we're starting to see a little more structure around it. A little more flexibility. One of the things oddly in Nebraska that I understand is driving a bit of this is our property tax situation because we've seen those climb very rapidly over a short period of time, a few years back. And so that's driving a little bit of that. And so I think we're seeing some of that I'd be cured. I had not heard Mike about the tying to the, to the lease agreements, any of the conservation major, but I just be curious, one of the things that I am hearing a little bit here in Nebraska is because of what you said earlier, Sam, as the consumers are demanding more transparency, more sustainability that we're seeing through some of the marketing channels work back into demands of the producers that things be produced in a certain way. And can you verify that and provide some data to show that it was, it was produced in that fashion. And I, and I see that, I know sometimes we worry about the government regulating certain kinds of conservation practices or ways of doing things. I almost see some of those things happening, but it's coming through the marketing channels and not the government. I do get curious if you guys are seeing the same things.

Dr. Sam Funk: We have seen those types of pressures coming through for various marketing channels. So we saw Unilever have a large push for a certain environmental practices and sustainability measures that they put into place. I mean, when you look at some of our larger scale agriculture companies, our input suppliers who now have a corporate sustainability officer and several people who work in those types of offices, they see that there's this growing push from the consumer side. In fact, it'll be December 1 here of 2020 that the Chicago federal reserve is going to have an online event where they're going to talk about some of these consumer desires and through there. So I just happen to know a couple of economists who are going to be participating in that event. So that's growing in the, in regards to the fact that there is stronger consumer sentiment. If you think about in the United States, when we talk about COVID where we might've had these significant drops in economic activity and GDP, I mean, to the tunes of, you know, double digit percentage decreases, and then globally, you had single digit decreases and it's like, well, okay, shouldn't, they still be able to know when you talk about a single digit decrease and you're barely able to come up with enough money to eat. You just want to eat. And a couple of a couple of pennies a day can mean the difference between my belly was full and my belly was not full. And so when you think about some of those changes, they don't have, maybe they would rather that something was grown in a certain way. They're more concerned about can they eat? Did they have enough to actually put on the plate for their family that day? So I think we've got a, you know, a very strong market, a very strong marketplace, but there's a reason that demand is used in two ways, the economic demand of what somebody wants and the I demand something else. And if you're able to vote with your dollars, then that's a question are your dollars going to support somebody to be able to take off potentially what could be a higher production cost activity to be able to provide you that level of food that you're looking for?

Dirck Steimel: Mike, you've got a big city over there in Illinois, in Chicago. Are you seeing that kind of pressure for, from consumers over there?

Mike Doherty: I would say yes. The desire is there in terms of it actually being implemented into the, for farm lease arrangements, not so much, I mean, it's starting, but it's still a very small percentage. I think, of farm leases that are affected. And that would be the way in which they could exercise that pressure or influence the most directly was by tying it to the farmers. As far as the consumer goes, remember our corn and soybeans largely goes to the feed livestock or on the corn side, livestock and ethanol plants. So it's all being converted through animal species and then consumed. So it does help us a little bit there to kind of like, I think that in some ways maybe that dilutes the consumer's focus or ability to influence this, cause how is the consumer consuming those products? Well, ultimately they're consuming them, but when they, when they barbecue that prime rib out on the grill, you know, so I don't know, I don't know how they could really have that much influence except through maybe as active shareholders of some of these agricultural companies. I don't know.

Dirck Steimel: We're also seeing some different management strategies farms today as younger generations come in and they're trying new things. What, what kind of strategies are you seeing in your areas? Jay, we'll start with you.

Jay Rempe: As the younger generation comes in. I'm seeing a lot of operations looking at ways to, to look at new enterprises for the farm operation that just relies so heavily on the corn soybean rotation or the cattle operation, or they're looking for different ways to add value on the farm or ranch, and then maybe market a little bit some directly to, to the consumer. And that, I, I think one of the things that a lot of farmers they're talking about right now is do we continue to, prior to produce a homogeneous commodity like corn and soybeans or, or cattle? And if so, then we've got to adapt some management strategies to be the low cost producer out there in order to compete, or are we going to look at something like we were just talking about? Do you know if the consumers are demanding something like an organic product or some other kind of attribute to that, are we willing to put in the infrastructure and the cost structure, and Sam said to the higher cost, really to produce that and try to meet that market. So I think a lot of those different kinds of management strategies are going on. Now, the other thing I see is a lot of turning to thinking about managing the farming operation or the ranching operation as a business, and thinking about it in terms of managing human resources and liabilities and risk management and all those kinds of things. I think we're just the trends to the larger operations. The multi-generational, you're getting more people involved. They're looking at all those kinds of different issues that they have to manage for now that whereas they were sole proprietorship or if they were smaller, didn't have to worry about that so much, a few years back.

Dirck Steimel: Sam, same question for you, different management strategies you're seeing here in Iowa.

Dr. Sam Funk: So I think it's a multi-pronged aspect. You've got some who are looking at if you will thinking about some of the traditional ways of having a diversified operation, maybe that they can find some way to be able to achieve higher returns from it. Maybe they're looking at setting up a bed and breakfast that overlooks the dairy parlor. We're continuing to see new and inventive ways that producers are looking for trying to achieve higher returns. Maybe they're looking at direct marketing to consumers with some of the food stuffs, and that's very difficult off of an if you will, a modern agricultural production enterprise to be able to do that kind of direct marketing with that kind of aspect. Now, that being said, there are those who do it. We don't have a Chicago, but we've got our own set of those strong areas that have direct marketing to consumers available to us. And we can try to focus in on those. You find a lot who are looking at a way to try to achieve some sort of a benefit with sustainability criteria. Maybe they're looking at the alternatives for how do we get into a system which will pay us for sequestering carbon. There are those opportunities that have available to themselves. And we're aware of, you know, obviously, you know, some of the bigger brand names now that are establishing themselves, and those things can change with policies and those opportunities can change with consumer desires. Maybe we align ourselves as being more preferred producers because of certain aspects we've gotten. Sometimes it's just because I happen to be close enough to a demand center and that ethanol plants operating. I've got a place to go with my corn, that I can get 10 cents higher than anybody else. And that's important to think about all those operations, but I think you find that just with the technology and we've got that next generation. I mean, how many of us have said that, you know, my two year old knows how to run that TV or better than I do now. So It's kind of the same thing now where, you know, when I speak with the younger generations, I talk about the things that they can probably do because of their experience on a computer and how that technology will shift and enable them to do more things in certain regards. There are risks and rewards that are a potential all the way through many of these decisions. And I think part of what we need to do in what we try to provide is some sort of service to look at some of these alternatives for what they can meet, even if it's bringing together a group of people to hear some of these various alternatives that are available to them. And I think sometimes it's just learning more about them and hearing from it from a credible system or somebody who has experience being in those systems. And I think that's one of the greatest things I've been able to do is to hear from farmers who have been engaging with some of these activities and what are their experiences, because that's part of that best learning activity is what somebody has already been able to go through. And they know some of the pitfalls. So they know some of the advantages through those systems.

Dirck Steimel: Well as we wrap up that's a kind of a good place to, to go. What's the role of Farm Bureau economists in this changing time and kind of a, a turbulent market and how do you see that role? Mike, do you want to start us off?

Mike Doherty: Well, a monthly, I advise our board of directors and also internal staff specialists and committees on what's the status of farm income in Illinois and what's the outlook. I provide a heads-up basically if there's trouble on the horizon, in a particular part of the state or with a particular section of the industry, a strata of the industry, whether it be generational or be the livestock versus grain production. That's one area in which I serve the Farm Bureau in my state. And then also as kind of a go-to person, when people ask the questions that don't come up all that often, but people need an answer to regarding economics and the sources of information and the kind of research bases that are out there you know, to provide that insight of based on that information from other economists to a large extent, I act as a connector for Illinois Farm Bureau with the economist at University of Illinois so that I can communicate with them the farm doc team, which is excellent at University of Illinois. We're blessed. All our States are blessed with our land grant universities and our extension economists. And I find myself acting as a conduit getting that information, refining the question, and then providing the answer back to our decision-makers.

Dirck Steimel: Jay, how about you? How do you see your role?

Jay Rempe: So, part of my role is what Mike mentioned is being a connector. I think between some of the academic and the research and things that are done in the Aggie economic field. I view a little bit as a translator. You have the academic side of things that speak a little different language than you do our farmers and ranchers that are members. So I, I try to translate some of the research and the work that's done at our universities and bring that to our, to our farmers and rancher members so they can know what's happening, what be on the edge of some of the research, because I do think there's some value there on some of that research. The other thing I try to do is inform some of the decision making we make as an organization and our elected Farm Bureau leaders make in both the policy development process and the policy implementation process. I try to bring resources and information to that. So when they make a decision on a policy, they are informed in that regards. And then when we're trying to implement it, I obviously try to add some data and some statistics that help it make our argument to our elected leaders. And then the last thing I tried to do a little bit, and this relates back to what Mike and Sam were talking about earlier about what the markets are telling folks to do right now in terms of selling grains and soybeans. But it I play a little bit of devil's advocate. I try to get our, our members and our staff to look at the underlying trends. What's the market doing? What's the market, trying to tell them and use that in their decision making and try to help them give them the information that they need to have sustainable operations.

Dr. Sam Funk: Sam, we'll close with you.

Dr. Sam Funk: Well, and obviously we are blessed with you know, a very strong team, both here in the state and then our surrounding States and at AFBF. So part of we tried to do here is to really just bring that information that's available and try to synthesize it into, so what does that mean for an Iowa farmer, Iowa farm family and our Iowa economy? I mean, at the end of the day, what we're trying to be is that that resource for our members. So then got that information clear. I mean, we think about all the information that's out there. I mean, you've got a lot of free information on the internet. You've got just a, you know, tremendous volumes of information from USDA and other government sources. And it's almost impossible to have anybody any group, much less a single person to understand to synthesize all that information. What we try to do is to try to get the most relevant information that is applicable for our Iowa producers directly brought to bear for them so that they can synthesize it quickly. I mean, you know, Dirck, we think about the information that comes out from the spokesmen or in this case, the Spokesman Speaks podcast out through there. And there's so many different venues that we try to take place to bring up the information so that people can grab it and are ready to consume format out through here. And I'm very thankful for Mike Doherty from the Illinois Farm Bureau and for Jay Rempe from the Nebraska Farm Bureau, joining us here in Iowa. And I hope that this material will be useful for our producers here in Iowa, but also for those in Illinois and Nebraska who were able to try to gather some of that information. And just, just to know, where do we go for a lot of information. You've heard us say a lot about the you know, the federal reserve bank. And there's a lot of information that comes directly from there. You've the Kansas City Fed has an Omaha branch. And so there's a lot of information that's available to producers through that area as well, and very talented economists at least one of which was actually an Iowa state grad who's over there at Omaha. So got to put the plug in for Dr. Nathan Kaufman over there, but you know, there, there is a lot of information out through there, and I think It's important that we're available and the producers know that when those questions come up, we'll try to get information back to them and a lot of different formats. So while this world looks a whole lot different as we're going through COVID, and then hopefully as we're out of COVID, I mean, that's my open prayer. But at the same time, we're going to try to provide all the information we can so that producers can look at the opportunities and understand the environment they're in.

Andrew Wheeler: Plenty of information to consider, and a good reminder that Farm Bureau and its economist at the state and levels are here to help farmers make sense of changing conditions, to make the best decision for their respective farms. We hope that you enjoyed this three-part podcast series. And again, I'd like to remind you that this podcast series is a precursor for an economic webinar series that I will Farm Bureau will be offering farmers in 2021. So if you're interested to hear more insights from leading economists in Iowa and around the country, you'll want to stay tuned for that. Of course, we'll be sharing more information with you about that webinar series through the Spokesman newspaper, this podcast, and IowaFarmBureau.com as we inch closer to 2021, with that, we'll wrap up this episode of the podcast. I'd like to conclude this episode by offering a sincere thank you to our participating economists, Sam Funk, Jay Rempe, and Mike Doherty for taking time to share their expertise and perspective with us. We truly appreciate that. And we'd like to thank you, our podcast listeners, for following along through the series, including our friends in Nebraska and Illinois. If you enjoyed the series, we hope you'll subscribe to the podcast and catch our next episode on November 30th, your work to strengthen agriculture across the Midwest and throughout our entire country inspires all that we do here. And we'd like to thank you for that work. And thank you for listening to the Spokesman Speaks.

Narrator: Thank you for listening to the Spokesman Speaks a podcast by Iowa Farm Bureau. Check out more podcast episodes IowaFarmBureau.com/podcast. You can also find and subscribe to the Spokesman Speaks podcast in the Apple podcast app, Google podcasts, Spotify, iHeartRadio, and other popular podcast apps. We appreciate your ratings and reviews, and we welcome you to email us your feedback at podcast@ifbf.org.


About The Spokesman Speaks Podcast
Since 1934, The Iowa Farm Bureau Spokesman has been Iowa’s leading agriculture news source, and today it has the largest readership of any ag newspaper in Iowa. While The Spokesman newspaper is available exclusively to Iowa Farm Bureau members, The Spokesman Speaks podcast is available publicly, providing the ag news and farmer education that matter most. You can find episodes of the podcast here or subscribe and listen in your favorite podcast app, such as Apple Podcasts, Google Podcasts, Spotify, iHeartRadio, Stitcher, TuneInRadio, or Radio.com.


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