Session II: Agriculture

Trade and the Future of Industry: An Outlook on Agriculture

September 12, 2018 Chicago, Illinois

David Oppedahl Senior Business Economist 312-322-6122 david.oppedahl@chi.frb.org

Total farm share of 17.2%

U.S. output shares from farming, food manufacturing and services

Source: Calculations based on data from the Bureau of Economic Analysis

Federal Reserve System

7th District Agriculture Products (as % of U.S. total, 2017)

Source: Calculations based on data from USDA, National Agricultural Statistics Service

District output shares from farming, food manufacturing and services

Source: Calculations based on data from the Bureau of Economic Analysis

Source: Calculated using data from the USDA, Economic Research Service

Real net farm income edged up in 2017, but is expected to be down in 2018

2018*

*USDA forecast (excluding MFP)

Source: USDA, Economic Research Service

Farmland values for the U.S. and for Seventh District states ($, weighted by acres)

7th District

U.S.

Source: Calculated using data from the USDA, Economic Research Service

Banks Banks Participating in 7th District Land Values and Credit Conditions Survey

Annual change in farmland values in 7th Federal Reserve District

Source: Federal Reserve Bank of Chicago

Indexes of 7th District Farmland Values vs. Cash Rents (Adjusted by PCE price index, 1981=100)

Land values

Cash rents

Source: Calculations by the Federal Reserve Bank of Chicago

Farmland Price to Earnings Ratio for the Seventh District (2000=1.0)

USDA Index

7G Index

7th District Earnings to Price Ratio (left axis, 1981=1.0) vs. Real Return on 10 Year Treasury Bonds Percent

E/P Ratio

10 year bond rate

Source: Calculated from Federal Reserve data

Index of non-real-estate farm loan demand for the 7th Federal Reserve District

Source: Federal Reserve Bank of Chicago

Farm loan volume with “major” or “severe” repayment problems in 7th Federal Reserve District (at end of every second quarter)

Source: Federal Reserve Bank of Chicago

Interest rates charged on new farm loans in the 7th Federal Reserve District

Farm operating Farm real estate

Source: Federal Reserve Bank of Chicago

Real farm sector assets and equity still at levels above prior peak

2018*

Assets

Equity

Debt

*USDA forecast

Source: USDA, Economic Research Service

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