U.S. farm acreage trends alarming

Agriculture acreage numbers continue to trend in an alarming direction, Cecil Williams told those attending the Missouri Cotton Production and Outlook Conference in Kennett, Mo.

“The number of farms in the United States in 2004 was estimated to be 2.11 million — six-tenths of a percent fewer than in 2003,” said the executive vice president of Cotton Producers of Missouri. “Total land in farms, at 936.6 million acres, decreased 2.25 million (2 percent) from 2003.”

The news certainly isn't all bad: major row crops did tremendously in 2004. Cotton, soybeans and rice all had record average yields nationwide.

“Soybeans were at 42.5 bushels per acre — much higher than we've ever averaged. Missouri alone averaged around 45 bushels.”

Cotton's average was the highest it's ever been by far: 818 pounds per acre. Missouri averaged 1,041 pounds per acre — the second highest in the Mid-South. Arkansas averaged 1,112 pounds — well over 100 pounds better than it had ever done before. Mississippi averaged 1,034 pounds, and Tennessee averaged over 900 pounds.

“Louisiana was the only state to drop in yield. Because of bad weather at season's start, it dropped to around 870 pounds.”

Williams looked up cotton yields for every state going back to 1965. At one point in the 1980s, he said, Missouri was averaging only 363 pounds per acre. “We've come a long way, baby.”

“One thing I want to touch on is counter-cyclical payments. Except for rice, the 2003 crops have all been cleared out. With rice, we don't know the final average yield until Jan. 31 each year. The marketing year is the same for rice: Oct. 1 through Sept. 30. But with cotton and other commodities, we know the average price received by growers by October, and, thus, we know what the final counter-cyclicals will be. That isn't the case with rice.”

Williams asked a NASS (National Agriculture Statistics Service) employee about this recently. “He said there are two reasons the rice crop is this way. First, the California crop is extremely late. Second, high percentages of the rice crop are in pools. The pools aren't known fully until January. As a result, we have to wait for the final price.”

What has rice to do with cotton? “Well, some cotton farmers also grow rice. And it's a good example of what happens if you get too much advance payment of the counter-cyclicals. That happened in rice just this year.”

The average price received by rice farmers was $8.08 per hundredweight — “considerably more than anyone thought it would be. The final counter-cyclical is the difference between the target price and the effective price. The effective price for any program crop is computed by taking the loan level or average price received ($8.08) — whichever is higher — and adding the direct payment to it ($2.35 per hundredweight of rice). That adds up to $10.43 per hundredweight. The target price for rice is $10.50 per hundredweight. That means for 2004, rice growers received a counter-cyclical payment of 7 cents per hundredweight.”

That would be fine, said Williams, except the advance counter-cyclical was 57.75 cents per hundredweight. The second counter-cyclical, in February, was 5.25 cents for a total of 63 cents. When the government “took back” 56 cents per hundredweight, he said, “it came as a shock to many.

“Theoretically this could happen to cotton growers. I don't think it will because prices are unlikely to go so high, but it's something to pay attention to.”

What are the counter-cyclicals that will be made in February for the various crops? “This information came out late (in early February). For corn, the total will be 28 cents per bushel. If you received the first payment of 14 cents, you'll be getting 14 cents more. For sorghum, you can get 9.45 cents. Anyone growing barley will get .0525 cents.

“On upland cotton, the first payment was 4.81 cents per pound, and the second will be 4.08 cents per pound.

“For rice, the first payment was 31 cents per hundredweight, and the second payment will be 21 cents per hundredweight.

“For soybeans, the first payment was 9.1 cents per bushel, and the second payment will be the same.”

Bush's budget

President Bush's proposed 2006 budget is also a hot topic, said Williams. “We don't know all the details, but one proposal is to lower the overall payments — the direct payments, the counter-cyclicals, the marketing loan and deficiency payments — from $360,000 per individual down to $250,000.

“Now, some folks say, ‘That might not be so bad.’ But if they do what they're planning, there would be no more three-entity rule.”

Everyone has a Social Security number, Williams pointed out. “What they're planning on doing is taking all your payments and attributing them to your number. If that happens, folks, there's no way to get around the payment limits. You can hire all the good lawyers you want, but it won't help.”

Of course, that's just part of it. “They're also flat-out downsizing.

“For the 2006 crop, compared to the 2005 crop, the reduction will be a little over $5 billion.

“The president proposes and Congress disposes. (Mississippi Senator) Thad Cochran says he's not inclined to lower that limit. It appears it will be a long, drawn-out battle. We may not know how it will shake out until December or early next year.”

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