No big secret, life in Iowa is different. Taking a bus or the light rail to work shop or entertainment opportunities is as convenient and as practical and as likely as riding a dragon to those events. We are not among the highest compensated states for a number of professional service providers (Dr., Dentists, Lawyers, engineers, and the like) but also some of our costs of living are less. Basic food, housing and living costs are less in the rural area.
That doesn’t help when we Iowans cross the mighty Mississippi or Missouri rivers and venture to the coasts. The house of mouse and where the wizard lives amusement parks don’t provide a midwestern rate. Nor do the hotels or food establishments. But we have always known that.
Remoteness also doesn’t help on fuel. We are a driving society. We drive everywhere to get anything and to work. It appears that fuel costs for an average household is going up $2500 compared to two years ago. That that comes out of the vacation and capital improvement fund. Or they are going to turn to credit cards and HELOCS (Home equity loans), those are dangerous events that quickly erode financial stability.
Some economists think small communities nearer the employment and shopping centers may see an increase in demand for housing as rural populations grudging relocate to housing closer to the areas that provide the essential services they need. The question is, do they have the capacity and infrastructure, the lots and the incentives to welcome those who might decide a 20-mile drive is more palatable to the wallet than the 50-mile drive? Also, people who live in rural areas generally do so purposefully (whether by lack of resources to leave, family ties, or a desire to stay local). It may not be a mass exodus, but rather a slow migration if at all.
Combine this information with the realization that, while farmers rarely really retire, more than ½ of the 3.4 million American farm operators will be over sixty-five in the next ten years. While they may not want to retire, medical issues, financial concerns and family pressures may get some of these operators out of the driver’s seat in the coming years. The trend seems to be established operations, not new ones purchasing the retiring farmer’s capital assets. The result is even smaller school sizes in some communities as more farms become names on a yield monitor only instead of a household of people who consume and participate in the local economy.
New entrants into farming are rare as the mass transit options, we opened with. Not only is farmland (rent or purchase) rising in costs, but also fertilizer, fuel, seed and chemical are all on the upswing. Yes, weather and war are part of those costs, but the high prices that have offset these issues are not likely to last.
Congress, between grandstanding and gladhanding, is taking a look at barriers to entry and seeing what can be done to get access to capital for the young farmers. It starts with housekeeping at the USDA and perhaps speeding up the “speed of government” to make government backed loans more accessible and easier to obtain, perhaps in advance of actual purchase like commercial banks do. To the local FSA office’s credit, they have worked with bridge loans to allow the elder generation to acquire the ground with traditional financing and then resell to the younger generation when the FSA loans finally get approved.
Conversely, other Congress people are suggesting killing the PLC and ARC programs, removing subsidies for crop insurance and freezing all new enrollments in the CRP. The promise is nebulous tax cuts that will offset these traditional safety net features of farm programs. Those same members of Congress are also trying hard to divorce the farm bill from food programs (school lunch, SNAP, etc). The farm portion of the farm bill has long relied upon food (75% of the spending in the bill- which impacts everybody’s district) to make it pass the sausage making that is legislative action. The Midterms will likely shape the farm bill’s bent, with one party fanatically devoted to slashing government spending and taxes where ever it sees them and the other promoting policy agendas that may not always fit with modern production ag practices.
In a very old Simpson’s episode, the perennial square Martin is running against everyone’s favorite delinquent Bart for class president. Martin points out that the school has asbestos issues and isn’t safe, Bart replies by starting a chant of “MORE ASBESTOS! MORE ABSESTOS!” Which is immediately picked up by his flock of followers.
I think of this clip when the government tells any producer group, they NEED to do something, the result is usually movement the other direction. The USDA wants more oil seed and wheat to counteract shipping and other pinch points in those global markets. The corn market seems to have begun to chant “more corn” instead. Nonetheless, the USDA is kicking the tires on what it can do without a Congressional vote. To that, they are considering extending crop insurance planting deadlines, and offsetting prevent plant penalties to keep ground in production and allowing double cropping in an additional 681 counties. They are also considering allowing CRP early bird release in order to allow early fall tillage instead of waiting until 30 September for expiring contracts. Additionally, money is going to get thrown at fertilizer production and technical assistance for precision ag adoption and at one point, they considered crop loan rates. However, the chant seems to be drowning out these incentives.
The meat industry isn’t missing the chance to make gains in time of crisis by suggesting livestock auction companies to own small and medium packing plants. Hmm… No conflict of interest there at all… It turns out that the Packers and Stockyards act of over a 100 years ago identified that very issue as a conflict of interest and expressly prohibits it but now it appears that harvesting less than 2,000 head per day or 700,000 per year might be okay to let the buyer and processor be the same person. Of note, hogs aren’t really even auctioned off that much anymore and they are already owned from semen to cellophane by the same owner.
Words have meaning, just not the meaning you think or anybody else thinks.
No backbone, no problem!
In a clear case of judicial acrobatics of worthy of Ringling Brothers big top, California appeal’s court has some how extended protection to the western bumble bee, Franklin’s bumble bee, the Crotch bumble bee and the Suckley cuckoo bumble bee) using a statute designed to protect fish and other creatures of the sea. See section 45 of the CA game code says wild fish, mollusk, crustacean, invertebrate, amphibian, spawn or part of them. Bees are cowards and have no backbone. Well, one part of that is true. Therefore, they get rounded up under invertebrates, which science class members would tell you is a 97% of all animal life.
Clearly, word smithing and parsing to get to a desire result, protection of the bees, rules the day. some routine boiler plate language about fish and fish like things has been stretched far (probably b/c they don’t have backbones) to provide cover to the bees. Then again, that is what lawyers do use words made by the legislative branch (which is also filled with lawyers in many cases) against them later.
No doubt, the war in Ukraine has an impact on ag. As this is generated, India has put in a soft ban on wheat produced that isn’t already under contract. That further tightens global supply which makes wheat and as a result, all of its grain family friends, run higher in the market. John Deere still operates its Russian based facility but used GPS location devices to remotely lock access to looted Ukrainian based John Deere equipment. (That prospect is a whole another article waiting to happen, miss a farm operating note payment and have a new, non-movable yard ornament is something ag finance lawyers would likely love to see be thing).
What might not be the obvious connection to ag is the planning and invasion itself and what lessons can be applied to the ag community. First, I am pro Ukraine on this and have been since my dad went on an exchange trip in 1993 to help them calibrate western farm equipment to make the move from collective farming. Having said that, despite the apparent shellacking that Russia is taking, it wasn’t that stupid of a plan from their prospective. Before the invasion, the Ukrainian President had a 31% approval rating with no military background and no long-standing political training. He was no Winston Churchill. He was saddled with a government that still had plenty of Soviet era corruption. The Ukrainian Army had a lack luster performance in Crimea and was bogged down in the eastern front with a static style defense, not a maneuver-based force that modern warfare generally calls for. Polling indicated that up to 40% of the respondents indicated that they would not take up arms in the event an invasion, many of which didn’t think would actually happen. Many citizens spoke Russian as the primary language and had close relatives in Russia. The Russian Army had undergone modernization following their Georgian invasion in 2008 and the results in Crimea and Syria pointed to them adopting to modern tactics techniques and procedures. The result, on paper, was pre-ordained. The proof in the pudding appears to be quite different. Outstanding performance from the president and its highly trained army, citizens that don’t give an inch of ground and massive aid from a previously somewhat indifferent Western Europe along with inept leadership from the Russians with on overrated under maintained and trained military have shaped a far different outcome so far.
Coming up for air from that geopolitical military analysis, what is the connection to ag. Sometimes, things just don’t pan out the way they should on paper. The best laid future plans on succession of the operation, wealth distribution and expansion can and will hit unexpected. Sons and daughters die, divorce and change career goals. Long term landowners who always treated you right go to the nursing home and promises to be first on the hit list to rent or buy go out the window when the out of state niece shows up with a smart phone and a land value calculator app on the phone. Markets change, tornados touch down and the railroad changes its mind on who gets priority shipping. The list goes on.
The ag operator and farm family must both be aware of the only thing constant in life is change and the only thing certain is death, taxes and change. Take the time to review succession plans now. Consider what assets you truly need to continue to hold onto to maintain your operation and lifestyle and which ones are just more gold on the pile. Consider reducing the pile of gold now by strategic gift giving. Contemplate a disaster and what the alternate plan is. Do you have the resources or access to capital to recover? How much property insurance do you have and what does it really cover? Does skimping on coverage to save premium really make sense? What happens if your daughter doesn’t (or does) want to milk cows when you are gone. Do you really care that much about continuing the farm? Do your kids? Is it reasonable to continue to operate the way you operate?
Wills, trusts, rights of refusal and first rights to purchase, LLCs and corporations all have a place at the table depending on these questions and your response. What you do now to shape your battlefield.
The two classic, Academy of Motion Pictures snubbed films of the late 70s, Convoy and Smokey and the Bandit (but not the sequels which we should never speak of) celebrated the essential portion of the America economy, the over the road trucking industry. The struggles of the trucking industry highlighted in the films, over burdensome regulatory environments and relentless pursuit by multiple enforcement agencies for infractions large and small remains unchanged.
The fight has broadened from speed limits and illicit cargo concerns to environmental concerns. California, the republic’s leader in overburdensome legislative endorsed value signaling, has decreed that starting 1 Jan 2023, with some narrow exceptions, all semi-trucks conducting over 1,000 miles in its state with engines with 2007-2009 emission specs will be prohibited. The enforcement agencies will PRESUME that all 2008-2010 trucks are in violation of the ban. In a perversion of the innocent till proven guilty concept, the citizens can prove their compliance by filling out forms and submitting photo evidence of their compliant engine to the bureaucrats, who suggest such obedience well in advance of the registration date or you will face delays. Out of state vehicles will face fines and impoundment. California officials gleefully pointed out that in state trucks will be policed by registration, leaving more “smokeys” to patrol the boarders of the state to enforce the regulation against out of state trucks.
It would appear that over 75,000 VIN’s with some activity in California would be impacted. This comes at a time when truck drivers are scarce, and the supply chain and its fragility has gone from the visibility of the lone student interested in library science in a small town to the captain of the varsity squad. And it’s in a state where many goods are off loaded into the US economy.
This regulatory action by a sister state will once again throw waves across the entire fruited plain of the US. The result will be higher prices, more delay and additional barriers to entry into the trucking market. I do wonder if the environmental good that the state seeks to promote adequately outstrips the impact on the citizens of the United States.
In other transportation news, Union Pacific railroad is announcing that because of delays, non-UP cars are going to be limited on its lines. They did this back in 2008 prioritizing rail space to the fracking areas to haul out product over grains and fertilizer transport. Ag depends on the rail system, the trucking system and the waterways of the US to move its products. The industry needs to remember that the railroads are also a verb (railroading) that has negative impacts on Ag and its ability to thrive.
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