0:05
All right.

0:05
Thanks, everyone.

0:07
I’m going to kind of do a few things here.

0:09
One will just be an aggregate farm economic update kind of where we’re at and then kind of move into crop margins, farm financial information.

0:16
And then I’d like to touch on tariffs because that’s in the news.

0:19
This is sort of the USDAs numbers for the 2025 forecast.

0:23
This is net farm income sort of after you paid for all your expenses.

0:28
And you can see if this is for 2025, the forecasting 180 billion, that’s the second highest in the last 50 years, the last one’s back.

0:35
during that 2022 COVID peak when we had high prices and large payments, it’s 26% up from last year, 45% above our 20 year average.

0:43
So that looks like, wow, we got a good year coming is what this says.

0:46
At the aggregate level, looking at it more specifically, this is cash receipts coming in from 23 and then 24.

0:55
This came out on February 6th and these are forecasts for 24 and 25.

0:59
But on the crop side, it’s down 8% from 23 to 24, then another 2.3% from 24 to 25 forecast.

1:08
On the livestock side, it’s the other way around.

1:10
It’s up a bunch from 23 to 24 and up a little bit more from 24 to 25.

1:15
You can see where corn is down about 4% more for this is cash receipts revenue coming in.

1:22
Soybeans down almost 7% from 24 to 25.

1:25
Livestock side, everything’s up.

1:27
I’m emphasizing the Wisconsin ones.

1:28
You know, cattle and calves are about flat in essence.

1:31
Dairy’s looking better.

1:33
Broilers are all looking up, not as, but not as much as they’re up from 23 to 24.

1:39
So you got this big jump in farm income and not a big swing here in the crop or livestock revenues.

1:45
There’s some drop in the crop and some up in the livestock, but it’s not huge swing.

1:49
So why are we getting all this farm income?

1:52
It’s this large government payments coming out here.

1:54
This is this.

1:55
This is our farm payments to farmers all through the last five years, plus the 2025 forecast.

2:01
You can see during the pandemic, we hit record levels.

2:04
This includes PPP loans as well as MFP and all these other programs we had in CFAP and all these things.

2:10
But we could be talking for 2025, we’re talking $42.4 billion.

2:14
That’s the second highest ever.

2:16
The only one higher was in 2020 during the early parts of the pandemic.

2:20
It’s almost all in that Gray box, these ad hoc payments.

2:24
There’s that 5 billion in conservation programs.

2:26
And then a little bit here in ARC and PLC is what this one is in 2025.

2:32
It’s very likely that a lot of Wisconsin farmers are going to see some payments for the 2024 for ARC and PLC, especially ARC these these numbers here for corn, soybeans and wheat, 3 to 4% given our prices we’ve seen for 2024 that this marketing year does not end until end of August.

2:51
So we got about, you know, most of the 2/3 of the year through or about a little over half.

2:56
I guess we’re going to see we don’t need big yield losses start triggering ARC payments because we’ve already seen price declines.

3:03
And so oats needs a little bit more, but it’s very likely and that’s what the USDA is projecting up $1.6 -$1.7 billion worth of these payments going out and all the ARC programs across the US.

3:14
But you can see I expect some here in Wisconsin.

3:17
So a big chunk, though is that Gray box and that’s all these ad hoc payments.

3:20
And so what happened here just before the end of the year, Congress passed the continuation of the farm bill and some extra support programs.

3:28
21 billion was for the disaster assistance.

3:32
This is primarily, it’s got all tons of different disasters listed for 23 and 24, But the primary focus is on these hurricane crop and livestock losses that we saw down there in the South.

3:43
We’re still waiting for details, but looking at Wisconsin, I just don’t anticipate a whole lot coming to Wisconsin farmers for that disaster assistance.

3:50
We’ll see though.

3:51
We don’t have anything announced yet.

3:53
The one that has been announced is ECAP, the Emergency Commodity Economic Assistance Program, $10 billion and that’s going to be per planted acre.

4:02
This one was out in the press a lot, so people were expecting.

4:04
It came out in the end of March.

4:07
You see the payment rates there.

4:08
They’re finally finalized, $43 for corn, 30 for soybeans and wheat are quite high for oats.

4:15
These are planted acres you got to go in and file.

4:17
You got until August 15th.

4:18
I’m guessing some people have already done it.

4:20
Just taking the planted acres and these payment rates, we’re talking 240 million could be paid out here roughly even a little bit more in Wisconsin if everyone goes in.

4:28
So these are going to be pretty significant.

4:30
These are because the farm bill has been so slow and they just kind of knew there was a crop issues going on.

4:35
So they put this in there as they got as they hopefully get a farm bill done.

4:38
But then of course, the farm bill was extended.

4:40
So the ARC and PLC sign up is continuing and that’s until we got a few more days left, but farmers got till the 15th to get in & sign up.

4:47
My recommendations for people to continue with ARC CO, the county ARC program.

4:52
So that’s kind of the farm economic update.

4:55
The big news is in all the farm programs, the crops are kind of tight margins.

4:59
We’ll see that in a second and then the livestock is doing all right.

5:02
I’m focusing on the crops.

5:04
This is we’ll look at crop budgets.

5:06
These are the links for them, but I just want to look at the big numbers here.

5:09
What these are are the break even prices for corn and soybeans for the big states like Illinois and Iowa from their extension budgets and then Wisconsin here at the bottom.

5:18
And these are corn after corn to corn after soybeans for the two states.

5:22
And then they have soybeans and these are the full cost of production.

5:26
This is to cover land rent or opportunity cost for land, pay the operator, some management time and everything like that.

5:32
What you see is from 24 to 25, we’ve seen a decline.

5:36
Bigger ones in Iowa 5 to 7%.

5:39
Illinois got about a 5-6% for or.

5:41
I’m sorry, Illinois got big ones 5 to 7%.

5:43
Iowa’s about 5-6 percent for corn, not quite a percent for soybeans.

5:48
Wisconsin’s are a little in that same range, about 1%.

5:52
Most of this is just a little bit cutting back in cost and then there’s yield increases going on.

5:56
But you can kind of see these numbers.

5:58
We’re talking on the $4.90, $4.60 in Iowa, $4.83, $4.20 for corn after corn or corn after soybeans, beans a little over $11.

6:06
$12.00 plus here in Wisconsin, the projected prices for 2025 are much different corn depending on who you talk to.

6:15
At USDA, the baseline in early mid February was $3.90.

6:19
The Ag outlook forum later in February said $4.20 for corn, both of them agreed about $10.00.

6:24
For soybeans.

6:25
We take that $4.20 or $3.90 and that $10.

6:29
We’re looking at some pretty negative margins here in the state of Wisconsin, A buck to $1.30 for corn and somewhere around 2 1/2 to, you know, up to $2.80 for soybeans.

6:38
Now, I emphasize these are the full cost of production.

6:40
These are state averages.

6:41
Farmers need to figure out their own cost of production, not these aggregate average numbers.

6:46
That’s what those tools are.

6:47
The web page for the farmers and other people working with them understand their own cost of production.

6:53
And so you’ve got time to sort these out.

6:55
But yeah, margins are tight.

6:56
You can look at the the values we’ve seen and you look at back what we saw at the early teens like 11,12,13, 14, what we just saw in COVID.

7:04
And between those two we had we had the big price jumps in those years.

7:08
In between those were several years, a three to $4.00 corn and eight to $10 soybeans.

7:13
And I think we’re back in that kind of world until something pushes out of us out of that type of scenario.

7:18
That’s where we’re at, which I think is sort of the normal, it’s which is tight, negative, thin margins where you have to work hard to get your cost of production down.

7:26
And you have to do a good job of marketing to, to get your get the get as much as you can for the grains you do have.

7:33
And I always emphasize these are that full cost of production.

7:36
So that’s like I said, paying the owner and operator and paying for the land.

7:39
So this, these tight margins are really hard on people who are renting a lot of land because they have to pay that in some form.

7:45
They can’t just absorb it as an opportunity cost.

7:48
And the same thing.

7:49
If you are highly leveraged, you have a big mortgage, you have a lot of debt to put the operating loan, you’ve got to make those payments.

7:55
You can’t just absorb them as opportunity costs.

7:58
And the last one that’s pretty vulnerable are people who are sort of getting close to the end of thinking about retiring and they don’t have an obvious successor.

8:08
They’re kind of asking themselves, do I really have another four or five years until we get another bump up in prices?

8:13
That’s what it’s been like.

8:14
You know, that team, we had that 12/13/14 spike.

8:17
We had the 2020-2021 22 spike.

8:21
Can I wait for the next one to really make some money?

8:23
That’s those are the three groups I think are vulnerable, highly leveraged, highly rented and kind of ending of their career and trying to think about quitting, looking to pass it on and they don’t seem to have an heir.

8:33
Those are the three I really worry about.

8:35
So what can you do?

8:37
My advice to farmers on this one has been thinking about the stuff you can control.

8:42
Crop management’s The One and a lot of the extension people put together the 16 page publication.

8:48
It’s got lots of ideas on how to do a better job being economically sustainable or innovative and thinking about the future and moving forward, not just being in a shutdown mode and trying to minimize everything in terms of spending.

9:00
I’m not going to go through that.

9:01
I’m just mostly going to say take a look.

9:03
There’s 16 pages of it and there’s lots of ideas and they’re well over 100 of them.

9:07
My encouragement is to find a couple, three of those that you’re willing to try on your farm to see if they work.

9:12
But that’s something you can control into your crop management, thinking about ways to be more cost efficient and or be more innovative.

9:19
The other one is in these commodity support programs.

9:21
I already mentioned ARC, PLC, ECAP, there’s marketing assistance loans and other loan programs you can use with FSA crop insurance.

9:29
That’s the things you can control.

9:31
You can figure out your even people.

9:32
Your crop insurance is you’ve got a few more days to change your mind until the 15th.

9:36
Well, wait no, that’s, that’s not that one.

9:37
That’s March 15th.

9:38
Sorry, crop insurance is locked in, but ARC and PLC got another few days.

9:42
ECAP is still open and this loan programs are still open.

9:45
The last one I emphasize is marketing.

9:47
We’ll talk again about the end about tariffs, but I think it’s very much a year that you want to have a good marketing plan or hire someone who can work with you to help you with your marketing.

9:57
So the next thing I want to push into is the farm financial situation.

10:01
And so starting off with land values, I think we’ve seen these are the red as Wisconsin, blue as the US, these are state averages or US averages for farmland.

10:09
We’re kind of done with the big jump in prices.

10:11
We had several years from 2015 to 2020 with very little happening in land values in the US or Wisconsin.

10:17
That’s during that time when corn is bouncing around between 3:00 and 4:00 dollars and beans from between 8:00 and 10:00.

10:22
Then we had the big jump here recently with the prices going up at the same time the land value shot up and we’re done with that.

10:29
There’s other, I can put up more slides on this, but I didn’t what you can’t as a farmer, operator, landowner, you just can’t expect land value increases to fix your farm balance sheet problems.

10:39
If you’re highly leveraged, you’re not going to have a big jump in land values to fix any problems.

10:43
If you’re losing money.

10:44
We’re done with that.

10:45
I’ve been emphasizing that it’s looks pretty clear with these margins and everything, we’re not going to see a big jump in land value on average across the state.

10:53
There are going to be individual specific situations that’ll change from that.

10:58
Interest rates are they’re just really slow to decline, but they have been declining slowly.

11:02
These the numbers.

11:03
The greenish 1 is the operating loans or orangish 1 is land loans or real estate loans.

11:08
This is in the 7th District of the Federal Reserve Bank part.

11:11
That’s 2/3 of Wisconsin and they’ve just been coming down slowly.

11:15
You can see those numbers there.

11:17
This is at the end of the fourth quarter.

11:19
So as of January 1st, they’ll be the new one coming out here for the first, for the first quarter of 25, will be out here.

11:25
It’s only April 10th, so I got a few more weeks so before that would show up.

11:28
But I anticipate it to be fairly flat to maybe down a tiny bit.

11:32
And I think everyone knows that the big issue is if you’re on some adjustable rate land mortgages or operating loans, or they are going to be due where you have to refinance or you’ve got your, you’ve got to redo them, you’re going to be refinancing them at higher rates.

11:46
If you had a adjustable rate mortgage.

11:49
And a lot of them, they’re surprised how many in terms of the data I’ve seen, a lot of farms are on these adjustable rate mortgages and need to, are going to have to redo them. Ag conditions.

11:58
I’m kind of looking at the time and keep moving here.

12:01
The blue means people are that’s dropping off loans are being repaid as much as they were a few years ago.

12:06
And the red means demand is up.

12:08
I’m thinking like operating loans or revolving lines of credit.

12:11
It’s not being paid off as fast.

12:13
The big parts of the blue is above the red is back when prices are high in the early teens and then just recently in the COVID years.

12:19
And now we’re back to that period

12:20
where the red line is above the blue line, meaning farmers are having a harder time paying back their revolving lines of credit.

12:27
These are farm income bankruptcy filings, Chapter 12.

12:30
This is at the national level.

12:32
Big spike there.

12:33
The COVID hit, things really slowed down and the prices shot up, but they’re starting to creep up.

12:37
Again.

12:37
This is from the Farm Bureau, but these are U.S.

12:40
court data.

12:41
I pulled just Wisconsin and we’re, we’re not seeing that.

12:43
We’re still at the very low level.

12:45
Only two farmers in 2024 were being foreclosed on in Chapter 12 bankruptcy filings.

12:50
We were leading the nation back there before COVID, but haven’t seen that spike here.

12:54
But we’ll just have to watch these court filings data to see.

12:58
So despite all these headwinds, farmers are pretty optimistic.

13:01
This is the farm barometer came out April first.

13:05
These are just sort of indexes, if you will, AG economies been since the election, farmers been pretty excited here on the left.

13:11
That’s those 152, 140 is a little softer than it was earlier during this is all during March.

13:16
And then you see the future and the current conditions are both better than they have been in a long time, but they’re starting to, the shine

13:23
is coming off the new administration.

13:25
But I would argue it’s kind of getting tempered a little bit.

13:29
So let’s talk about tariffs.

13:30
That’s been in the news.

13:32
And it’s it’s frankly, as an academic working in this field, it’s, it’s hard to follow.

13:36
So on to get off again, tariffs.

13:38
What tariffs are in effect today?

13:39
I don’t know.

13:40
I had to, I went and I found the CNN article from this morning.

13:43
And what’s going on right now?

13:45
Supposedly there’s a 10% universal tariff across everything, a 25% tariff on imported auto, steel and aluminum.

13:52
And then some goods from Canada and Mexico have a tariff on I don’t know how much and which goods.

13:58
And then the only one that’s different than those numbers is the 125% on Chinese imports.

14:03
And then China’s just recently put on 80.

14:05
It’s totaled 84% tariff on US imports.

14:08
US and China in a trade war, we’re slapping tariffs on each other’s stuff.

14:11
So things that go from US to China are being having a high percentage tariff.

14:15
Things going from China to US are being high percent tariff.

14:19
In a lot of ways.

14:19
I think from a farmer’s perspective, tariffs are like the weather.

14:22
It’s just completely out of your control.

14:23
There’s just something going on.

14:25
When we have bad weather, we focus on yield.

14:27
I think during this tariff time, people are going to focus on price.

14:29
It doesn’t matter what’s going on or all these things.

14:31
Look what’s local price, what’s happening. This year

14:34
I especially recommend having a marketing plan and putting some floors on your prices.

14:37
If the market’s going to collapse, it’d be nice to have a floor in there.

14:41
A lot of stuff, these tariffs are about trade balance and a lot of stuff is driving it.

14:46
The figure on the left is when I really want to emphasize the these are just AG stuff.

14:50
Now this is not the full economy, just the agriculture.

14:52
Red is imports and blue is export.

14:55
So you see we have a negative trade balance.

14:57
The imports are above the blue line here as of the end of the year.

15:01
But the part I want to emphasize that light green color, the mint green, that’s the exchange rate, how much the dollar is worth against sort of the world currencies, the major ones, that’s an index.

15:10
So it could have got all the euro and the Chinese and Brazilian and the brush the all the major currencies around the world.

15:16
What you see though is these tariffs are a lot like a exchange rate where the dollar is very strong.

15:21
So if you look back 15/16/17 in those areas, when when the blue line is above the red line and they’re about equal, the dollar is a little weaker.

15:31
And then it got stronger.

15:32
And then what’s the thing that happened?

15:33
And the dollar got strong, exports went down, imports went up because why imports are cheap.

15:38
We could buy foreign goods real cheaply and people buying our stuff, the dollar is strong.

15:43
So they had to do the exchange rate.

15:45
These tariffs are a lot the same way a 10% universal tariff, it’s like pushing that green line green or mint green stuff up another 10% higher, which is roughly what it is from the like the 15/16/17 until current times.

15:58
So a lot of this is that’s what I expect to happen.

16:01
What are the things that are being negative trade balance on the stuff?

16:05
The bulk stuff is the dark or that blue line at the top that’s corn and soybeans primarily.

16:10
That’s still a we’re a net exporter.

16:12
But everything else is kind of we’re coming in a net importer.

16:15
And this is that the exchange rate problem.

16:19
The more expensive stuff, high value this, that and the other thing, high value, semi processed, high value raw, that’s fruits and vegetables and livestock, high value processed, that’s processed meat made into something or the processed foods, all the higher value stuff, the exchange rate is hurting it.

16:35
That’s what’s coming down.

16:36
So I expect bulk commodities to keep going.

16:39
That will come down some, but they really will hit these high value things.

16:42
The things like the the soybean meal and the meat and stuff like that.

16:48
Here’s our trading partners on agriculture.

16:50
Mexico and Canada number one and two, China’s number 3 has been declining.

16:54
I expect this trade war to push that red line down further.

16:57
Let’s hope the EU, Japan and South Korea will pick it up.

17:01
And so the last thing I’ll say that I’m done is the farmers expect help if the tariffs crash the market, commodity markets.

17:08
This is 65% suggest that they expect some sort of compensation program like the market facilitation program that’s on the left from that farm barometer from Purdue.

17:17
Then a couple of articles, New York Times, the top, Des Moines register at the bottom back at the early part of the month saying we expect, farmers expect help if they just like before, if they’re the economy, the farm economy or the crop markets are crashed by the tariff war.

17:33
So I’ll pause there and I’ll take questions in the box and give Francisco some time.

17:37
Thanks.