Good morning.
Think fast: go back to every children's book, pop culture reference, and piece of artwork you've ever seen about farming. What's the one object that's probably included?
A big red barn.
Where did that image come from? And why are they almost always the same color? If you have one of these on your own land, maybe you've even thought to yourself, "Wait, why is it red again?!"
Well, the story has to do with the structural details of 1800s barns, the Sears, Roebuck catalog, and just plain 'ole tradition.
Take a trip back a couple centuries for more on the original red barns here.
And take a trip on the scroll for more news of the week!
The News:
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Eggstraordinary Prices
- What Does the Debt Limit Mean for Ag?
- The U.S. Economy Mixed Bag
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Wealth Through Time, @PrettyCoolTim, Reddit
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Egg prices right now are nothing to yolk about, and people aren’t flocking as much to the egg aisle in the grocery store.
Egging houses is a thing of the past: Prices on eggs are up 138% year-over-year, and a couple of things are causing the shell-shocking price tags—like inflation and input prices, but mostly, the bird flu. A Wall Street Journal report says it’s the worst avian influenza outbreak in U.S. history.
Putting prices in persp-egg-tive, a dozen eggs in December 2021 cost $1.78. In December 2022, that jumped to $4.25—and even $7+ in some places. Consider our feathers ruffled.
Jayson Lusk, the head of the Department of Agricultural Economics (egg-onomics, if you’re really into puns) at Purdue University, says 11% of the total 2021 inventory numbers of egg-laying hens was hit by the bird flu in 2022. He says production is running 6-7% lower.
The egg didn’t fall far from the poultry: USDA says U.S. egg inventories are 29% lower in the final week of December 2022 than at the beginning of 2022. The bird flu has affected 43M egg-laying hens since February 2022.
Soundbite: "We've had a significant reduction in supply from depopulation this spring and again in the fall and winter," Lusk told Farm Journal. "Couple that with inelastic demand for eggs, and you get the price spikes we're seeing."
Border omelet: People are even poaching them from across the border. In El Paso, Texas, the U.S. Customs and Border Protection has seen a 108% increase in egg and poultry seizures from Oct. 1 to Dec. 31 last year. The chicken couldn’t cross the road because it’s illegal to bring agricultural goods into the U.S.
Sunny side up: USDA does expect wholesale egg prices to come down, especially as farmers are able to recover flocks. It all depends on the future of the bird flu, inflation, and demand.
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→ Lettuce hope… for an end to the flooding. After several "atmospheric rivers" pounded California with excess rain this month, Salinas Valley farmers are worried about flooding, which could impact the lettuce crops there.
→ Inside the strategy sesh. Ag Secretary Tom Vilsack convened several Ag Department leaders to talk through key messaging for the upcoming farm bill.
→ New legislation trucking along. House representatives introduced the SHIP IT Act, which would aim to ease trucking supply chain disruptions that have long impacted the ag industry.
→ More moolah. Dairy farmers will now have access to $200M more in pandemic assistance funding, after the USDA initially distributed $250M to 25K farmers in the program’s first round.
→ Planting optimism. Knock on wood, but the Fertilizer Institute says there shouldn’t be any fertilizer supply chain issues this spring.
→ Cash rules everything. Cash rent auctions for farmland are becoming increasingly popular—and are even yielding cash rent prices of $600+/acre in places like Illinois.
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What Does the Debt Limit Mean for Ag? |
The U.S. government has met its statutory borrowing limit, and the nation is now at risk of defaulting on its loans.
I thought Magnetic Ag was an agriculture news platform.
It is…
The basics: Last Thursday, the national debt reached $31.4T—the current legal debt limit. And until Congress gives the "green light," the government can no longer borrow money to pay its bills.
It’s not panic time… yet. Utilizing some accounting ninja moves, the Treasury Department can keep the lights on until sometime this summer.
Scary scenario: If the limit isn’t raised, the nation could default on its loans, and the world economy (which depends on the "full faith and credit" of the U.S. dollar) could spiral into chaos.
Okay. And this affects ag how?
Well, we don’t really know the full scope, but there would be ramifications:
Credit crisis: If the U.S. defaults, the world will face a credit crisis. Interest rates for operating loans and equipment could skyrocket. Prices of internationally-sourced farm inputs could rise (even more). Uncertainty could cause other price increases. And the list goes on.
The Bank of America says a default is "likely," but also said: "There is a high degree of uncertainty about the speed and magnitude of the damage the U.S. economy would incur."
Safe bet? Still, some economists point to ag as an investment saving grace. Even if things fall apart, people will still eat. So investments in ag companies may be a good move.
Where this goes: The Dems and the GOP are squabbling over a solution, and uncertainty will likely reign for several months.
We’ll have to wait, but there are hopes and options—even minting a $1T platinum coin to pay the bills… 🤔
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In 1837, John Deere produced his first single steel moldboard plow. Next month, the very last version of that plow will come off the line.
How much did John Deere sell his first plow for—and how much will his last cost?
Answer at the bottom of the email.
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The U.S. Economy Mixed Bag |
cacaroot from Getty Images
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The U.S. economy will slow down the first half of this year. And recession fears are high.
Meanwhile, inflation is making its way down, so things aren’t 100% bleak—but the ag industry still hasn’t completely dug itself out of the hole caused by the roller-coaster economy.
Now what? Although inflation may be easing, growers might not see much relief, because of the continued high costs of… almost everything else. Fuel, transportation, fertilizer: the list goes on for farmers’ high bills these days.
According to the USDA, farm production expenses surpassed $440B in 2022. That's an all-time high, and a $70B jump from the prior year.
More bad news? Not interested: Farmers will also be impacted by the continued interest rate hikes. Interest usually adds up to about 5% of a farm’s expenses—not to mention property values will also go down as those rates rise.
Okay, finally some good news: Commodity prices will likely rise. At least partially because of the ongoing crisis in Ukraine, there’s still uncertainty around the global supply of crops like corn, wheat, and rice—which could mean U.S. farmers have some opportunity to grow their income to balance out all that expense pain.
How much opportunity—and how much impact high costs have—could also depend on a farmer’s geography.
Soundbite: "We may see some pretty significant regional differences in how we actually experience farm income," said Nathan Kauffman, VP and Omaha branch executive of the Federal Reserve Bank of Kansas City. "If you’re a livestock operation somewhere that’s been really affected by drought… you may be in a very different environment than someone else that’s not experienced the same acute increases in costs."
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The first moldboard plows sold for $10-$12 each, while the final one will retail for $67,000. For a more detailed history of the John Deere plow, you can read more here.
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Written & Edited by Sheridan Wimmer, Kevin Cross, Rachel Robinson, Amelia VanLandegen, and Ashley Scoby
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