Good morning.
We love potato farmers. But especially today.
Because March 14th is the day of celebrating America's #1 snack food: National Potato Chip Day. (Don't get salty about it, Oreos.)
Here's hoping this special day eventually gets extended to a full week. Because you can never have just one (day of celebration, or chip).
The News:
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Farmer Outlook: Gloomy
- Rebalancing the AgTech Balance Sheet
- USDA Fertilizer Funding Rolls
P.S. After you grab your bag of potato chips, sign up for Magnetic March Madness. Today is the last day!
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The weather forecast isn’t the only thing farmers are labeling as "gloomy" these days. Purdue/CME Group’s Ag Economy Barometer was recently updated for February and the results weren’t anything close to "sunny and 75."
Why so sad? Exports. Producers are growing less confident in the future of U.S. ag exports with each passing day.
Last month’s survey yielded the dimmest outlook on future exports since the survey began in 2019.
Three years ago, almost 72% of those surveyed thought ag exports would increase in the next five years. The optimism has quickly and consistently slipped since then.
Soundbite: "This month, that was down to just 33%, so one out of three people in the survey think that ag exports are going to increase in the next five years," Purdue’s Jim Mintert said.
Oh and this… Producers are also worried about increasing input costs, decreasing output prices, and interest rates, which are only going up these days.
Slow growth/no growth: Nearly half (49%) of respondents said they had "no plan to grow" or were planning to exit/retire within the next five years. Of those expecting growth, 19% anticipate their farm growing less than 5% annually, while 22% said they will grow 5-10% annually.
Also worth noting: 72% of farmers said it’s a "bad time" to make large investments in their business, citing the increase in farm equipment prices and crazy new construction costs, coupled with climbing interest rates.
Two years ago, the Ag Economy Barometer was 165. Last month it dropped to 125.
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→ Burden of proof. A Texas Supreme Court ruled in favor of an ag retailer by saying a farmer would need to prove not just crop damage because of herbicide "drift," but also economic damage from lower yields.
→ New GFI prescribed. Most feed and farm stores will no longer offer antibiotics after the FDA issued a fresh Guidance for Industry that says animals will need veterinary oversight to receive drugs that were previously available OTC.
→ Fertile funds. Farmers who want to improve soil health but need help transitioning to cover crops will get support from $95M of grant money from the USDA and ag and wildlife groups.
→ Seeding competition. The USDA will partner with several other federal agencies to form a working group aimed at improving competition in the seed and ag input sector.
→ Home on the RNG. There’s been a slowdown of the race to purchase land—particularly dairy farms and landfills—where companies can gather renewable natural gas.
→ Fight for your right (to repair). The American Farm Bureau Federation agreed on an MOU with CNH Industrial to allow farmers and independent technicians access to tools, software, and documentation to make their own equipment repairs.
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Rebalancing the AgTech Balance Sheet |
AgTech startups didn’t exactly have a bumper crop of bucks in 2022: funding was down 44% year over year. Maybe this will be a hot topic at this week’s World Agri-Tech Summit? Time will tell.
Climate cultivates funding: The bright spot for ag venture capital was climate AgTech—think indoor ag, bioenergy, and precision ag. Inflation, food insecurity, and labor shortages all drive interest in AgTech, with heightened attention paid to climate-related technologies.
By the numbers: Compared to 2021,
- Ag Biotech funding was flat in terms of number of deals—but reached $2.7B compared to $2.5B
- Bioenergy and biomaterials funding was up 15%
- Precision ag saw a decline in number of deals but total funding reached $1.7B compared to $430M
- Consumer-facing categories, such as eGrocery, declined 73%
Deals or no deals: A lack of high-dollar deals has driven downstream declines. Since 2016, at least one $1B+ deal has gone through every year (besides 2020). In 2022, the biggest deal on the books didn’t reach that mark, topping out at $768M for food delivery company Getir. Overall, the number of deals was down 22%.
What’s next for AgTech: One investment expert sees opportunity for changing value pools and handling professional needs in the ag industry. While much innovation in the industry to date has been focused on products, there’s opportunity to address services for the industry, too.
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Let’s stay on the potato chip grind…
What percent of the U.S. potato crop is used to make potato chips?
Answer at the bottom of the email.
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USDA Doles Out Fertilizer Funds |
JKBowers, Getty Images Signature
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Agricultural producers received a sunny announcement on input prices last week.
The rundown: USDA Secretary Tom Vilsack announced more funding to boost domestic fertilizer production to producers at the Commodity Classic in Orlando on Friday.
Eight independent fertilizer businesses across Alabama, Colorado, Massachusetts, Missouri, Ohio, and Washington will split $29M in funding from the agency. The funding comes from $500M the Biden administration had already reserved for domestic fertilizer expansion.
Background: Fertilizer prices more than doubled between 2021 and 2022 due to rising inflation, Russia’s invasion of Ukraine, China’s phosphate fertilizer ban, and other factors.
Luckily, record prices didn’t last. Wholesale and retail prices backed off in the fourth quarter of 2022 and continued in 2023 as producers balked at prices. Elevated input prices could still dig into farmer profits.
Soundbite. "I know that increased costs for fertilizer and other inputs have put a strain on farmers and cut into the bottom line. The Biden-Harris administration and USDA understand the importance of taking on the root causes and need to invest in the agricultural supply chain here at home to create a resilient, secure, and sustainable economy for the long haul," Vilsack said.
Is it all sunny? While ag groups welcomed the funding announcement, Tom Haag, president of the National Corn Growers Association, told Agri-Pulse that the funds have a limited scope. But he said the measure is better than nothing.
Still, the ag industry could see a near-term impact on the 2023 and 2024 crop years.
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Written & Edited by Amelia VanLandegen, Kelsey Faivre, Dawson Schmitt, Travis Martin, Ashley Scoby
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Kansas City, MO 64153
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