Farm Credit’s Monthly Meeting Highlights Need for Assistance
McLEAN, VA – At its monthly meeting on Thursday, the Farm Credit Administration (FCA) board received a quarterly report on economic issues affecting agriculture, together with an update on the financial condition and performance of the Farm Credit System.
READ: Quarterly Report on FCS Condition
Overall, the U.S. economy is recovering after its steep contraction in the spring and the nation’s unemployment rate continued to improve in August but remained elevated at 8.4 percent. Consumer spending is slowly coming back, aided by stimulus payments and the reopening of some local economies.
Grain markets have been shaped by large supplies and low prices this year as poor weather in parts of the Midwest and stronger than expected export demand has lifted corn and soybean markets recently. Crop returns could fall sharply next year if government assistance is significantly lower than it has been in recent years.
For the protein sector, the supply-chain disruptions from earlier in the year have waned, but large inventories and uncertain demand prospects continue to pressure prices. Despite stronger pork exports, the hog sector has been the most severely affected, with margins expected to be negative for the remainder of this year. Weather is also a concern, especially for cattle producers since pasture and range conditions have deteriorated due to intensifying drought (particularly in the West and Great Plains).
For the past several years, government payments have played an important role in the farm economy, accounting for a growing share of farm income. For 2020, roughly two-thirds of government payments have been from ad hoc and supplemental programs. While substantial ad hoc government payments are helping many producers in 2020, there is no guarantee they will receive the same level of support next year.
(SOURCE: Farm Credit Administration)