1. Ag Cycles and Risk
Risk Council Meeting, Federal Reserve Bank of Kansas City
Kansas City, Missouri
Oct. 25, 2013
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. Iowa Corn Prices vs. Costs

3. Iowa Soybean Prices vs. Costs

4. Corn Prices and Recessions

5. Crop Prices for the Next Decade
Source: USDA-ERS

7. Iowa Land Values
Source: Mike Duffy, ISU

8. Iowa Land Values – Log Scale
Source: Mike Duffy, ISU

9. Land Values and Income
Source: Mike Duffy, ISU

10. Land Values and Income
Source: Mike Duffy, ISU

11. Crop Acreage
Source: USDA-NASS

12. Crop Shifts
Source: USDA-NASS

13. Farm Bill Titles Commodities IX. Energy
Conservation X. Hort. & Organic Ag.
Trade XI. Livestock
Nutrition XII. Crop Insurance
Credit XIII. Commodity Futures
Rural Development XIV. Miscellaneous
Research XV. Trade & Taxes
Forestry

14. Ideas on the Next Farm Bill
Let’s look at the common features from the House and Senate bills
Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE
The marketing loan program would continue
Livestock disaster programs would be reestablished

15. Reference Prices Senate: 55% of 5-yr Olympic average MYA price
House: Set by law
Corn $3.70
Wheat $5.50
Soybean $8.40
Corn
$2.95
Wheat
$3.62
Soybean
$6.29

16. ARC or RLC instead of ACRE
Revenue-based support program
Revenues based on 5-year Olympic averages for yields and prices
Yields and prices have cups (T-yields and reference prices)

17. AMP or PLC instead of CCP
Price-based support program
Reference prices establish targets
Works like CCP
Payment rate = Max(0, Reference price – Max(MYA price, Loan rate))

18. SCO Examples from Last Year’s Bills
Source: Congressional Research Service

19. GDP Growth
Source: USDA-ERS

20. GDP Growth
Source: USDA-ERS

21. Iowa Crop Shifts
Source: USDA-NASS

22. Source: DOE-EIA, Annual Energy Outlook

23. (Million Barrels Oil Equivalent per Day)
Liquid Fuel Usage
2007
2015
2020
2025
2030
2035
(Million Barrels Oil Equivalent per Day)
(Percent of 2007 Value)
United States
20.6
98%
100%
102%
104%
107%
Canada
2.3
96%
Mexico
2.1
105%
110%
114%
129%
138%
Europe
15.3
92%
88%
89%
90%
Japan
5.0
84%
86%
82%
China
7.6
132%
153%
178%
201%
222%
India
2.8
139%
154%
168%
Africa
3.1
113%
116%
126%
135%
148%
Central and South America
6.0
112%
117%
125%
133%
World
86.1
103%
121%
128%
Source: DOE-EIA

24. Population 2013 2020 2050 (billion) World 7.095 7.628 9.383 China
2020
2050
(billion)
World
7.095
7.628
9.383
China
1.350
1.385
India
1.657
1.221
1.326
1.304
U.S.
0.317
0.337
0.423
Indonesia
0.251
0.267
Nigeria
0.402
Brazil
0.201
Pakistan
0.214
0.300
0.193
0.212
0.291
0.175
0.208
Bangladesh
0.250
0.164
0.183
0.232
Russia
0.143
0.142
Ethiopia
0.228
Japan
0.127
0.126
Philippines
0.172
Source: U.S. Bureau of the Census

25. World Corn Markets
Source: USDA 25 25

26. Arable Land

27. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: