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  • More than Ever, Rural Communities Need Strong Third Places to Build Social Capital

    More than Ever, Rural Communities Need Strong Third Places to Build Social Capital

    Where do you go beyond home and work? Do you commute speedily between the two without much interruption, or do you take a detour to spend time at other fixtures within the community? The idea of the “third place” – where community members spend time outside of their home or workplace – has gained attention in recent years, viewed as a generator of social capital.

    Many rural communities have seen their traditional institutions – churches, bowling leagues, civic organizations, etc. – dwindle over the years, due to population decline and the increasing encroachment of digital connections over face-to-face interactions. Thus, the “third places” of today might not resemble those of yesterday, as bowling alleys and fraternal lodges have largely been replaced by gastropubs and axe-throwing ranges. 

    A recent study attempted to shed light on what rural third places look like and the community functions they serve.[1]Data collection included a survey, sent to all county Extension agents in Oklahoma, which asked a few basic questions about the kinds of institutions and businesses that strengthen the community and contribute to its sense of vitality. Among the numerous findings that came from the survey responses, one common theme was that of the third place: where community members gather to strengthen relationships and share information. 

    Responses from the survey highlighted both conventional third places, such as diners and coffee shops, and less traditional social fixtures, such as hardware stores, seed and feed stores, and even gas station convenience stores. The overall sentiment from the responses was positive, emphasizing the contribution of third places to the community. One response stated: “People like to gather there to meet up with friends, and its location is close to downtown.” Another response mentioned that the local coffee place is “where the community has come together.” Several responses described positive social aspects, such as gathering: “It has been in the community at least since the 1970’s…it’s like a school reunion on Friday and Saturday nights.” And conversation (or gossip): “If you need info about who, what, when, where, or how, stop in between 6-8 am and set down in one of the booths…it’s where the towns problems are all solved.”These comments reinforce the idea that such places are vital assets that rural communities cannot afford to lose. Rural stakeholders, such as local government and the small business community, must take steps to accommodate and encourage the flourishing of these spaces. The potential consequences of losing these valuable third places extend beyond mere financial considerations. Preserving these institutions helps safeguard the cohesion and vitality that tie rural communities together. 

    [1] A. Van Leuven, E. Hill, and S. Low. Redefining Local Economic Anchors: Not Just Eds and Meds. In progress.

    Van Leuven, Andrew J. “More than Ever, Rural Communities Need Strong Third Places to Build Social Capital.” Southern Ag Today 3(49.5). December 8, 2023. Permalink

  • Forecasting Discretionary Spending by the Commodity Credit Corporation (CCC)

    Forecasting Discretionary Spending by the Commodity Credit Corporation (CCC)

    The Congressional Budget Office (CBO) is every political budget analyst’s favorite punching bag.  Truth be told, they have an impossible job.  At its core, CBO is responsible for forecasting spending by the Federal government.[1]  In some cases, this involves forecasting macroeconomic variables and the resulting Federal spending.  For example, CBO forecasts marketing year average prices for commodities covered by the farm bill and the resulting Price Loss Coverage (PLC) payments.  In other cases, CBO looks into its crystal ball to estimate spending that Executive Branch agencies will undertake using discretionary authority granted to them by Congress.  For example, Section 5 of the CCC Charter Act vests USDA with eight categories of specific powers ranging from supporting the prices of agricultural commodities to increasing the domestic consumption of agricultural commodities.  While some of these authorities are used to carry out programs explicitly authorized by Congress (e.g., carrying out conservation or environmental programs authorized by law), the authority has been used to deliver a number of new programs at the discretion of the Secretary. CBO’s efforts to forecast spending under the latter is the focus of this article.

    From fiscal years 2012 to 2017, Congress restricted the Secretary’s discretionary use of the CCC Charter Act.[2] Since the restriction was dropped in fiscal year 2018, both the Trump and Biden Administrations have used Section 5 of the Charter Act in a number of creative ways.  For example, in the midst of the trade war with China, the Trump Administration authorized a combined $28 billion in assistance to producers via the Market Facilitation Program (MFP).[3]  More recently, the Biden Administration has used Section 5 to fund over $3 billion in Partnerships for Climate-Smart Commodities[4] along with $1.2 billion for the new Regional Agricultural Promotion Program to “enable exporters to diversify into new markets and increase market share in growth markets.”[5]

    While CBO tries to reflect such spending in their regular baseline updates (for example, the January 2019 baseline explicitly listed $9.799 billion in spending for fiscal year 2019 under MFP), the baseline historically has not included an explicit (i.e., separate line item) forecast of additional spending.  That changed with the January 2020 baseline which – beyond merely reflecting significant additional spending under MFP – included a long-term forecast of $100 million per year in “Other CCC Spending” under the CCC Charter Act Authority. To CBO’s credit, it presumably was attempting to account for the likelihood that spending at the discretion of the Secretary would continue into the future – and continue it did, as noted in Figure 1.  As a result, in its May 2022 baseline, CBO increased the long-term estimate to $1 billion per year.  At this point, the main question is whether $1 billion per year is a reasonable/sufficient estimate of future spending.

    Figure 1. Actual versus Projected Spending under USDA’s Discretionary Use of CCC

    Source: actuals compiled from USDA’s Explanatory Budget Notes and projections from CBO’s May 2023 baseline.

    As noted in Figure 1, spending under Section 5 has averaged $10.7 billion over the last 6 years since Congress restored the Secretary’s full authority under the CCC Charter Act.  That is significantly higher than the $1 billion per year currently being forecasted by CBO.  Even if you consider the most recent 3 years under a different administration – while treating MFP as an outlier – spending still averages almost $4 billion per year, 4 times higher than CBO’s forecast.

    While an estimate of $1 billion per year would indicate CBO is projecting a return to “normal,” reality seems to paint a different picture. By our estimates, use of Section 5 authorities of the CCC has resulted in spending in excess of $64 billion over the last 6 years. If the current administration were re-elected, it’s hard to imagine a reduction in spending for the priorities noted above, indicating that recent spending levels could become the status quo.  Further, a second Trump Administration could result in an expansion of tariffs and elevated spending under Section 5 in response. Regardless of the election outcome, recent hearings before the Select Committee on the Chinese Communist Party have indicated a significant interest in a resumption of tariffs on Chinese products.

    All of this leads us to question the direction CBO will take in its Spring baseline update.  In light of recent spending and ongoing priorities, if the CBO baseline is intended to be realistic, we would anticipate a significant increase in forecasted spending under CCC Charter Act Authority.

    [1] It likely goes without saying that this understates the scope of CBO’s duties.  For example, on a recurring basis, CBO projects Federal spending as a “baseline” against which authorizing committees consider changes (e.g., farm bill).  CBO must also estimate the budget impact of those proposed changes, a process colloquially known as “scoring.”  All of this involves CBO predicting into the future.

    [2] https://crsreports.congress.gov/product/pdf/R/R44606/4

    [3] https://crsreports.congress.gov/product/pdf/IF/IF11289

    [4] https://www.usda.gov/climate-solutions/climate-smart-commodities/faqs

    [5] https://fas.usda.gov/programs/regional-agricultural-promotion-program

    Fischer, Bart L., and Joe Outlaw. “Forecasting Discretionary Spending by the Commodity Credit Corporation (CCC).“ Southern Ag Today 3(49.4). December 7, 2023. Permalink

  • Will Irrigated Soybean Area Continue to Expand in Eastern Arkansas?

    Will Irrigated Soybean Area Continue to Expand in Eastern Arkansas?

    The Mid-South region (eastern Arkansas, northeast Louisiana, Mississippi, and southeast Missouri) experienced a significant expansion in irrigated soybean acres since the beginning of the 1980s (Watkins, 2023). Irrigated agriculture in this region is highly dependent on groundwater from the Mississippi River Valley alluvial aquifer. Eastern Arkansas is the largest soybean producer in the Mid-South. From Census year 1982 to Census year 2017, Arkansas irrigated soybean area expanded by +2.108 million acres (USDA, NASS, 2023a). Every county in eastern Arkansas experienced an increase in irrigated soybean acres during this time, but counties experiencing the greatest expansion were those bordering the Mississippi River. Are irrigated soybean acres still expanding or are they beginning to level off in eastern Arkansas? Will irrigated soybean area expansion continue across the region?

    Area trend analysis was conducted to answer these questions. Irrigated soybean harvested acres data were collected for all 26 counties in eastern Arkansas for the period 1980 – 2018 from the USDA, National Agricultural Statistics Service (USDA, NASS, 2023b). Missing observations in the NASS data and additional acre observations for the period 2019 – 2023 were obtained from the USDA Farm Service Agency (USDA, FSA, 2023). 

    Figure 1 presents irrigated soybean acreage trends for the 1980 – 2023 period. Three basic patterns of acreage trends are identified:

    • Reached Plateau:

    Counties shaded orange represent counties that achieved a plateau at some point during 1980 – 2023 period. Irrigated soybean acres for these counties increased and then leveled off during the 44-year period. 

    • Declining:

    Counties shaded red represent counties where irrigated soybean acres initially increased until an acre maximum was reached. After the acre maximum was reached, irrigated soybean acres began to decline. 

    • Growing:

    Finally, counties shaded either light blue or dark blue represent counties where acres continue to grow and do not appear to have reached a plateau. The counties shaded light blue are counties with acres growing at a constant rate over time. The constant rate of growth ranged from +0.65 acres per year (Drew County) to +3.79 acres per year (Phillips County). The dark blue counties (Chicot and Mississippi) represent counties where the rate of growth is not constant but expanding over time, with the most recent rate of growth reaching +5.26 acres per year for Chicot County and +7.23 acres per year for Mississippi County.

    What information can be gleaned from these trends? Irrigated soybean acres in counties shaded red or orange are either declining (the red counties) or leveling off (the orange counties), implying irrigated area expansion in these counties has likely ended. Most of these counties are located in Critical Groundwater Areas where groundwater is being depleted faster than the rate of recharge (Arkansas Department of Agriculture, NRD, 2023). In addition, many of these counties have converted nearly all available non-irrigated soybean acres to irrigated acres. Counties shaded either light blue or dark blue are still expanding in soybean irrigated area. Most of these counties are located either alongside or within close proximity to the Mississippi River, where groundwater is more plentiful. Also, most of these counties still have a considerable amount of non-irrigated soybean area left for future irrigation conversion. These results highlight the importance of both groundwater availability and land availability to continued future sustainability of soybean production in eastern Arkansas and by implication the Mid-South region.    

    References and Resources

    Arkansas Department of Agriculture, Natural Resources Division (2023). 2022 Arkansas Groundwater Protection and Management Report. https://www.agriculture.arkansas.gov/natural-resources/divisions/water-management/groundwater-protection-and-management-program/

    USDA-FSA (2023). United States Department of Agriculture, Farm Service Agency, Crop Acreage Data. https://www.fsa.usda.gov/news-room/efoia/electronic-reading-room/frequently-requested-information/crop-acreage-data/index

    USDA-NASS (2023a). United States Department of Agriculture, National Agricultural Statistics Service, Census of Agriculture. https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Census_by_State/Arkansas/index.php

    USDA-NASS (2023b). United States Department of Agriculture, Quick-Stats. https://quickstats.nass.usda.gov/

    Watkins, B. (2023). The Rise of Irrigated Soybeans in Arkansas. Southern Ag Today 3(32.3). August 9, 2023. Southern Ag Today

    Watkins, Brad. “Will Irrigated Soybean Area Continue to Expand in Eastern Arkansas?” Southern Ag Today 3(49.3). December 6, 2023. Permalink

  • Feeder Bulls Discounted to Feeder Steers?

    Feeder Bulls Discounted to Feeder Steers?

    Long held tradition (and fact) states that feeder bulls will be discounted to feeder steers, obvious reasons.  Does this always occur and is it consistent?  It depends.  Observing USDA-AMS sale barn data from South Carolina between 2009-2023 for September marketings, when many calves are sold in the state, some interesting points appear.  Fig. 1. contains the movement of the price discount, or spread, between bulls and steers for two different weight classes, 400-499 lbs., and 600-699 lbs.

    Fig. 1. 

    Source: Livestock Reports – South Carolina Department of Agriculture. (n.d.). 

    Using the price data between 2009-2023 three points are noticed.

    • The 2014-mid 2015 had a significant increase in the discount rate from steers to bulls for the heavier calves.
    • 2021, COVID-19 timeframe, recorded a collapse in the spread discount between lighter and heavier feeder calves.
    • Moving from 2021 to 2023, with higher marketing prices year by year, the discount spread increased. 

    What to expect?  For feeder calves in the 400-499 lbs. weight class the average discount for feeder bulls to feeder steers was $5.43/cwt with a minimum discount of $1.25/cwt and a maximum discount of $10.00/cwt.  The feeder calves in the 600-699 lbs. weight class the average discount for feeder bulls to feeder steers was $12.30/cwt with a minimum discount of $6.07/cwt and a maximum discount of $26.60/cwt.  The bull calf discount changes based on overall market conditions and feeding profitability.  High prices may lead to a larger discount in some cases, see 2014 and 2015, due to the production risk on these calves.

    So does this help?  A discount of feeder bulls to steers does exist for the 2009-2023 marketings.  In none of the years did the discount disappear but, the discount varied widely.  The spread on the discount between heavier and lighter calves can depend on prices movements toward or away from historical averages and impacts on cattle markets outside the expected. 

    Fischer, Matthew. “Feeder Bulls Discounted to Feeder Steers?” Southern Ag Today 3(49.2). December 5, 2023. Permalink

  • Why are Peanuts Bucking the Declining Crop Price Trend?

    Why are Peanuts Bucking the Declining Crop Price Trend?

    As we proceed through the 2023/2024 marketing year, crop prices are expected to decrease generally compared to the previous marketing year. While prices of corn, cotton, soybeans, wheat, sorghum, and rice are expected to drop this marketing year, peanut prices are expected to increase to a marketing-year average of $550 per ton, reaching their highest level in over a decade according to the USDA (Figure 1). This would be the fourth straight year of increased peanut prices and a $14 per ton increase from 2022/2023. While the other crops are seeing increases in their ending stocks, peanut stocks look to remain stable. 

    Figure 1: Peanut Prices by Marketing Year

    Data Source: USDA Economic Research Service. Oil Crops Outlook: November 2023.

    On the production side, yields are projected at 3,740 lb. per acre, which would mark the lowest level since 2016. This would fall well below the 10-year average of 3,942 lb. per acre. Severe drought in 2023 across the predominant peanut-producing regions of Alabama and Florida — two of the top-four peanut-producing states— has led to forecasted 24% and 26% yield decreases compared to 2023 for those two states, respectively. This comes in a year that was expected to achieve a significant boost in peanut production, due to a 16% increase in planted acres. Now, peanut production is only projected to increase by 8% over last year and reach 2.99 million tons.

    Accompanying the bullish production estimates, peanut demand is also looking strong. This is driven by a 4.5% projected increase in peanut exports and a 3.7% increase in domestic food use. If production and disappearance projections are realized, this would mean carryover at the end of the 2023/24 marketing year would remain almost unchanged at 1.02 million tons, providing support for continued strong peanut prices. 

    Figure 2: Peanut Production, Disappearance, and Ending Stocks by Year

    Data Source: USDA Economic Research Service. Oil Crops Outlook: November 2023.

    Sources:

    USDA Economic Research Service. Oil Crops Outlook: November 2023. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/j098zb08p/8g84p626f/hx120116v/oiltables.xlsx

    USDA. World Agricultural Supply & Demand Estimates: November 2023. Available at: https://www.usda.gov/oce/commodity/wasde/wasde1123.pdf

    Sawadgo, Wendiam. “Why are Peanuts Bucking the Declining Crop Price Trend?” Southern Ag Today 3(49.1). December 4, 2023. Permalink