News affecting dairy producers' bottom lines includes:
- Farm bill allowed to expire
- GDT index moves up 1.2%
- October FSA interest rates down for third month
- Weaker income expectations lower farmer sentiment
Farm bill allowed to expire
At midnight on Sept. 30, lawmakers allowed the current version of the farm bill to expire.
A new farm bill needs to be approved every five years. Last year, Congress voted to extend the 2018 Farm Bill for another year, carrying it into 2024.
Without a push from lawmakers to pass a new bill or an extension prior to the deadline, programs enacted in the 2018 Farm Bill will begin to elapse.
Many key programs will maintain funding through the end of this calendar year, while some programs like crop insurance, some disaster programs and the Supplemental Nutrition Assistance Program known as SNAP will not expire because they’re permanently authorized.
If a new farm bill or extension does not materialize, farm policy would revert to “permanent law,” sending crop supports back to policy from the 1938 and 1949 farm bills.
For more on Congress’ battle to enact a new farm bill, read: Delayed farm bill punted until after election with Congress stuck on how to pay for it
For an analysis on what will happen without a farm bill, read: What happens when a farm bill dies?
GDT index moves up 1.2%
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform improved again in an auction held Oct. 1. Since falling steeply midsummer, the index has had a positive change in five of the last six trading events.
Compared to the previous auction, prices for individual product categories were mixed. Lactose was up 6.7% and buttermilk powder was up 5%. Cheddar cheese and whole milk powered increased by 3.8% and 3%, respectively. Mozzarella was down significantly by 7.7%, while butter, skim milk powder and anhydrous milkfat fell by 1.4% or less.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Arla (Denmark), Arla Foods Ingredients (Denmark), BMI (Germany), Kerry Dairy (Ireland) and Solarec (Belgium).
The next GDT auction is Oct. 15.
October FSA interest rates down for third month
The announced interest rates on loans through the USDA’s Farm Service Agency (FSA) have lowered in each of the past three months. As we begin October 2024, interest rates for operating and ownership loans (compared to September) are as follows:
- Farm operating loans (direct): 4.875%, down from 5.25%
- Farm ownership loans (direct): 5.375%, down from 5.5%
- Farm ownership loans (direct, joint financing): 3.375%, down from 3.5%
- Farm ownership loans (down payment): 1.5%, unchanged
- Emergency loan (amount of actual loss): 3.75%, unchanged
The FSA also offers guaranteed loans through commercial lenders at rates set by those lenders. For more information, producers can contact their local USDA Service Center.
Weaker income expectations lower farmer sentiment
Declining income expectations helped to push farmer sentiment down again in September, according to the latest Purdue University/CME Group Ag Economy Barometer.
“These were the weakest barometer and future expectations readings since March 2016, when the farm economy was in the throes of an economic downturn. The current conditions assessment very nearly matched that of April 2020, when COVID concerns were top of mind for U.S. farmers. Weak output prices combined with high input costs were key problems cited by survey respondents in September,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
The September survey included several questions focused on cover crop usage among corn and soybean producers. Consistent with prior year’s surveys, over half of respondents reported that they currently plant cover crops on part of their farm. Farms using this conservation practice are also increasing the proportion of their farm’s acreage devoted to cover crops.
The Ag Economy Barometer provides a monthly snapshot of farmer sentiment regarding the state of the agricultural economy. The survey collects responses from 400 producers whose annual market value of production is equal to or exceeds $500,000. Minimum targets by enterprise are as follows: 53% corn/soybeans, 14% wheat, 3% cotton, 19% beef cattle, 5% dairy and 6% hogs. Latest survey results, released Oct. 1, reflect ag producer outlooks as of Sept. 9-13.
