Even without a new Trans-Pacific Partnership, U.S. agriculture producers have deep ties to the 11 other countries involved in the potentially historic new trade deal.
About 45 percent of the nation’s farm exports already have these nations as their destination, and as the U.S. Congress decides whether to approve the TPP, one of the deciding factors could be this: Will this deal open up key foreign markets even further, for the benefit of the nation’s farmers and ranchers?
How will falling commodity prices impact the Midwest? All of the region’s major commodity crops — corn, wheat and soybeans — are going to be priced right around the cost of production for the next year, North Dakota State University agriculture economist Frayne Olson told lawmakers this summer at the Midwestern Legislative Conference Annual Meeting. And for the first time in many years, farmers will be losing money on their crops. The U.S. Department of Agriculture has predicted that net farm income will be down 36 percent from 2014 and reach its lowest level since 2002.
The causes of this hit to the farm economy range from a slowing global economy and a stronger U.S. dollar, to higher grain reserves and the weather. But what will be the broader effects of this fall in commodity prices on the region’s states?
The biggest impact will likely be felt in North Dakota, South Dakota, Iowa and Nebraska, states where farm income provides more than 18 percent of gross domestic product and where one in four jobs are tied in some way to agriculture.
Through the summer of 2014, the news about rural employment was not good. While the U.S. economy as a whole was recovering from the recession, the number of people employed in rural areas remained weak, lagging more than 3 percent behind totals for 2007. And between the second quarters of 2010 and 2014, rural employment had grown only by 1.1 percent (compared to 5 percent in urban areas).
Though the number of people unemployed in rural areas was decreasing, that was due in part to factors such as outmigration and aging populations. Actual jobs had declined or stayed the same in the majority of non-metropolitan counties from 2000 through most of 2014.
But there has been a turnaround of late, especially in many of the Midwest’s rural counties. Over the past year, the rate of job gains in rural America, 1.2 percent, has come close to meeting those in urban counties, 1.8 percent.
In his home legislative district, Ohio Sen. Cliff Hite knows well the dilemma facing local agricultural producers: Their tax bills are skyrocketing (by an average of 62 percent this year), he says, while returns are declining and operational costs are rising.
But finding a legislative fix to the problem is much easier said than done.
“Discussion on use value could backfire on farmers,” says Hite, noting that Ohio, like most states, has “an increasingly urban electorate and legislature not understanding why farmers should get a tax reduction.”
In Ohio, and most other Midwestern states, farmland is appraised using a formula based on “current agricultural use value.” Based on factors such as commodity prices, soil productivity, rental rates, production expenses and interest rates, the state determines the income that a farmer can be expected to earn on his or her land.
A highly contagious strain of “bird flu” hit the United States this year, and parts of the Midwest have been the epicenter of the outbreak. As of early May, highly pathogenic avian influenza, H5N2, had been identified in 17 states, with outbreaks at more than 60 farms in Minnesota alone and the loss of more than 28 million birds. Bird flu has also been reported on farms in Iowa, Kansas, North Dakota, South Dakota, Wisconsin and Ontario.
Earlier this year, a headline in The New York Times set off a firestorm in both the livestock industry and the research community. “U.S. Research Lab Lets Livestock Suffer in Quest for Profit,” the headline read. The laboratory at the heart of the story was a U.S. Department of Agriculture facility in southeast Nebraska where research is conducted on farm animals. The goal of the USDA’s Meat Animal Research Center is to improve the efficiency of production while also maintaining the quality of meat products.
But the article raised questions about whether the welfare of animals at the facility was being compromised — for example, by breeding research that has led to “weakened or deformed” calves and crowded conditions that are causing piglets to be crushed.
In response, animal-welfare organizations called for shutting down the facility and even ending all animal agriculture research across the country. And federal legislation was introduced to include farm animals under the Animal Welfare Act, the law that governs research use of laboratory animals.
In the not-so-distant past, “non-existent” would have been an apt term to describe the Midwest’s farm winery and craft beer industries. As recently as the year 2000, only 300 acres were in grape production.
But today, ethanol isn’t the only alcohol being produced in this region. There has been big growth in the beer and wine industry, a trend that is allowing for more diversity in farm production and helping expand local and statewide agri-tourism.
The winery and craft beer industries are moving out of the hobby stage and making an estimated $10 billion contribution to the economies of Midwestern states. More than 12,000 acres of grapes and 600 craft brewers now call the Midwest home. This growth has been fueled not only by the development of winter-hardy varieties of grapes, but also by more-supportive government policies.
In Iowa’s largest city, Des Moines, the local water utility operates the largest nitrate-removal facility in the world. It runs any time nitrates reach levels above the federally mandated limit of 10 milligrams per liter. The cost of operating the facility, Des Moines Water Works says, can be upwards of $7,000 a day. Now, the utility wants some local drainage districts in surrounding rural counties held accountable for the costs associated with treating what it calls “extremely high concentrations of nitrate” in local rivers. (The costs were approximately $900,000 in 2013 due to severe rain events, but less than half that figure in 2014.)
At a time when commodity prices are the lowest in years, agricultural producers have been looking for ways to increase demand. One answer to the market problem, it turns out, could be just 90 miles away from the U.S. border. That is because agriculture — a major Midwestern strength — stands to be one of the biggest potential beneficiaries of President Obama’s plan to ease economic and trade restrictions with Cuba.
Can voters in California dictate how Midwestern farmers house their hens? If the farmers want to sell eggs to California, the answer could be “yes” — unless an appeal filed by Iowa, Nebraska and four other states is successful. Beginning Jan. 1, egg farmers in California must comply with Proposition 2: a new law, approved by voters in 2008, under which hens must be able to stand up, turn around and spread their wings without touching their cage or another bird.
The ballot initiative came in response to criticism of conventional cages. According to groups such as the Humane Society of the United States, which organized the effort to put the measure on the ballot, the cages are cruel. Critics also say the stress and confinement make hens more susceptible to diseases, including salmonella.