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  • Population Change in Southern United States

    Population Change in Southern United States

    Population in the Southern region of the United States grew the fastest from 2010 to 2020, with a compound annual growth rate of 0.98%, according to the US Census Bureau. (The Pew Charitable Trusts, 2023). Between 2021 and 2022, the population in the Southern region grew by 1.08%. In contrast, the West grew modestly by 0.20%, while the Northeast and Midwest declined by 0.38% and 0.07%, respectively. 

    Texas experienced the highest growth in population (1.49%) in the South from 2010 to 2020, followed by Florida (1.37%), South Carolina (1.02%), and Georgia (1.01%). While Mississippi saw a small decline in population (-0.02%), Louisiana (0.27%), Arkansas (0.32%), and Kentucky (0.38%) experienced modest growth. All other states in the South gained population at a healthy pace. Nine of the 15 fastest growing cities are in the South according to the US Census Bureau. 

    The increase in population in the South between 2010 and 2022 was primarily due to state-to-state migration, representing on average 85% of residents who lived in a different state a year ago (see Figure below). It is noteworthy that state-to-state migration was prevalent across neighboring states. More recently, post-pandemic domestic migration gains have contributed to population growth particularly in Florida, the Carolinas, and near large metro areas such as Atlanta and Dallas (Rogers et al., 2023). 

    The average proportion of migration from foreign countries for the region was 13%. Texas, Florida, and Virginia had the highest share of total migration from foreign countries, representing on average 24%, 20% and 17%, respectively, between 2010 and 2022. Over a third of the nation’s immigrants overall live in the South (Budiman, 2020). Along with some Northern Plains states, the South generally has the highest fertility rates in the country. States such as Texas, Louisiana, Oklahoma, and Arkansas have particularly high fertility rates (CDC, 2022).

    Migration Flows in the Southern Region (2010-2022)

    Source : U.S. Census Bureau

    Notes:

    1. Other migration is the movement of persons from U.S. territories such as Puerto Rico and U.S. Islands Area.
    2. State-to-State Migration Flows were not available on the U.S. Census Bureau website for 2020.

    Summary and Implications

    Population in the Southern United States is growing, mainly in urban and sub-urban areas, compared to other regions of the country. This population shift has significant implications for land use, particularly in terms of residential housing and the provision of supporting services such as schools, libraries, hospitals, recreational facilities, and other systems. As the population move away from rural areas, the revenue and tax base may decline, requiring more resources to support these communities. To promote sustainable growth, communities need better planning, zoning, and resource management strategies to ensure a balanced approach to supporting residents while protecting natural resources and promoting environmental stewardship.  Social planners, policy makers and economic development practitioners can play a pivotal role in helping decision makers pursue higher goals by enhancing the rural-urban linkages to drive social, economic, and cultural transformation of communities.

    References:

    Biernacka-Lievestro, Joanna, and Alexandre Fall. 2023. Southern States Gain Residents the Fastest. The Pew Charitable Trusts.  https://www.pewtrusts.org/en/research-and-analysis/articles/2023/05/17/southern-states-gain-residents-the-fastest

    Blake, Suzanne. 2024. Americans are Flocking to These 3 Southern States. Newsweek. https://www.newsweek.com/americans-moving-south-top-states-1858742

    Budiman, Abby. 2020. Key Findings about U.S. Immigrants. Pew Research Center. https://www.pewresearch.org/short-reads/2020/08/20/key-findings-about-u-s-immigrants/

    Centers for Disease Control. 2022. National Center for Health Statistics. https://www.cdc.gov/nchs/pressroom/sosmap/fertility_rate/fertility_rates.htm

    Economic Research Service, USDA. 2023. Rural-Urban Continuum Codes. https://www.ers.usda.gov/data-products/rural-urban-continuum-codes/

    Karlekar, Indraneel, and Julie Laumont. 2024. The U.S. Sun Belt’s Ongoing Boom. Clarion Partners. https://www.clarionpartners.com/insights/sun-belt-apartments-multifamily

    Upendram, Sreedhar, Chrystol Thomas, and James Mingie. “Population Change in Southern United States.” Southern Ag Today 4(23.5). June 7, 2024. Permalink

  • Examining Farm Bill Base Acre Proposals

    Examining Farm Bill Base Acre Proposals

    On May 30, 2024, we compared the farm safety net features of the House Ag Committee-passed version of the 2024 Farm Bill (Farm, Food, and National Security Act of 2024) with the Senate majority proposal (Rural Prosperity and Food Security Act of 2024). In today’s article, we focus on one of those provisions: the addition of base acres. While the Senate majority proposal would provide a “limited opportunity” to update base for “underserved producers”– and it remains to be seen exactly what that would entail – the House Ag Committee-passed bill would add up to an additional 30 million acres of base for farms where planted acres exceed base acres on the farm. While base is a wonky, often overlooked provision, is has the potential to be one of the more consequential in the farm bill, particularly as proposed by the House. 

    Previous Southern Ag Today articles (for example, see here) have explored the issue of base. While a seemingly straightforward issue, it’s actually quite complicated. First, base acres were established decades ago and there have been very few opportunities to update/add base. Second, because base acres are decoupled from planting history, what a producer was planting in the mid-1980s when base was established is not necessarily reflective of what is being planted on the farm today. Third, while the 2014 Farm Bill allowed for a “reallocation” of base acres – which did provide an opportunity for the base acres to be more aligned with what was planted on the farm, on average, from 2009-2013 – that “reallocation” did not allow new base acres to be added to the farm. In fact, the last real opportunity to add base acres occurred in the 2002 Farm Bill as soybeans were being added as a covered commodity. Consequently, land with no base (or with plantings that exceed base) have had virtually no opportunity to add base in the last several decades. Fourth, there are severe data limitations preventing thorough analysis, which means it’s difficult for policymakers to know the scope of the problem. Fifth, because of those data limitations, it’s difficult to advise policymakers on the implications of various proposals to change base acres. For example, one popular option adopted by the National Corn Growers Association would be for Congress to simply mandate a base acre update to recent plantings, but ascertaining who would add/lose base is almost impossible to determine, which puts Congress in a precarious position. Despite all of these challenges, based on our collective decades of experience in working on farm policy, just about every farmer we know has land without base (or that is “under-based”) and would be very interested in being able to add new base acres. 

    It is this last point that makes the House Ag Committee proposal particularly intriguing. It is entirely optional and, apart from the 2002 Farm Bill making soybeans a covered commodity, it would represent the single largest opportunity to add base acres since their initial creation in the mid-1980s. Under the House Ag Committee proposal, a farm would be eligible for additional base acres equal to the amount by which (1) the average number of acres from 2019 through 2023 that were planted or prevented from being planted to covered commodities (including “eligible non-covered commodities”) exceeds (2) the existing base acres on the farm. In other words, if you have a farm with plantings that exceed base (including farms where you have no base at all), you can add the missing base. There are a few key limitations/provisions of which to be mindful:

    • To avoid penalizing producers who may be in a crop rotation that contains certain non-covered commodities, the number of eligible acres may include the number of acres planted or prevented from being planted to non-covered commodities (i.e., the “eligible non-covered commodities” referenced above) other than trees, bushes, vines, and pasture. The acres of non-covered commodities that can count toward the eligible acres on the farm would be limited and may not exceed 15% of the total acres on the farm.
    • New base acres added under this provision would be assigned to covered commodities using a formula like that utilized for the base reallocation opportunity in the 2014 Farm Bill. The assignment would reflect the ratio of covered commodities planted on the farm from 2019 through 2023.
    • Following sign-up, if the total number of eligible acres across the country exceeds 30 million acres, the Secretary would be required to apply a pro-rata reduction to all farms to reduce the number of eligible acres to equal 30 million. For example, if USDA receives applications to add 60 million acres of base, everyone will see a 50% factor applied to their application (i.e., 30 million divided by 60 million). Regardless, assuming there are sufficient applications, this would result in a minimum of 30 million new base acres being added to the program.

    Bottom line: this is a significant change from previous law that we expect to be extraordinarily popular among agricultural producers.

    Fischer, Bart L., and Joe Outlaw. “Examining Farm Bill Base Acre Proposals.” Southern Ag Today 4(23.4). June 6, 2024. Permalink

  • Building Equity

    Building Equity

    It may seem that barely covering expenses with little positive net farm income means a business is “treading water.” Ideally, a farm would generate revenues that exceed total expenses each year and have cash and other resources to reinvest into the business. However, agriculture can be highly variable from farm to farm and year to year. Reaching incremental financial goals can help producers hit economic targets and minimize risk. To think of financial well-being as a ladder, the bottom rung is financial loss, and the highest rung is maximum profitability. Each rung that is attained is a higher position and further away from financial harm. 

    It may not be flashy, but a farm that can generate revenues to break-even and pay down debts has indeed climbed several rungs on the financial ladder. It may not afford much extra cash or the ability to expand the operation, but the business is still making progress. To think of the equation total farm assets – total farm liabilities = farm equity, covering all variable and fixed expenses means the farms equity is continuing to grow. Over time, the owner(s) continues to own more of the business until an ownership change or business dissolution. Either way the owner has accrued increased net worth over time. 

    Of course, there are other items that impact total farm assets or total farm liabilities. Asset values can change from year to year. In some cases, they could be quite volatile depending on the valuation method. For discussion, we’ll assume an adjusted cost basis with no major adjustments. Fixed asset accounts can decrease because of depreciation, but we assume this expense is a fixed cost of the business. Liabilities are useful and, in some cases, necessary, but a farm taking on unnecessary liabilities can tip the scales away from the owner, allowing creditors to own more of the operation. Liabilities such as bank loans allow the business to leverage resources to increase production, profitability, efficiency, and other measures. If the farm incurs aliability but the increase in assets is greater than the liability + interest over time, then it will add to the farms’ equity. It’s not always possible to understand the impact of a decision right away, it may take several cycles before seeing the resulting change in farm equity. For an asset purchase with a loan, the initial impact on equity will likely be zero. $100,000 farm asset increase – $100,000 farm liability increase = $0 change in farm equity. However, the influx of cash resulting from the asset’s productivity, allowing the business to cover the depreciation of the item, interest, and debt payments, can have a positive impact on farm equity.

    It is important to consider context, too. A farm with successive losses but is now at break-even would seem to be making progress. A farm that has had big years but is now at break-even could signal a downward trend, or it could be merely a speedbump resulting in a short-term modest return.  In general, a business that is paying down debts is contributing positively to farm equity and adds financial resiliency to the business. Should the operation need to borrow again in the future, end up with a financial loss one year, or eventually sell out, the farm will be in better financial position because of the previous farm equity contributions made. 

    Burkett, Kevin. “Building Equity.” Southern Ag Today 4(23.3). June 5, 2024. Permalink.

  • Humanely Processed Chicken May Bring a Premium Price

    Humanely Processed Chicken May Bring a Premium Price

    In 2023, food scientists from Auburn University’s Poultry Science Department conducted a survey to ascertain the perception of poultry processing, specifically stunning processes, among American chicken consumers (“Consumer Perception Survey of Animal Welfare in Broiler Stunning.”, Linda Barahona; Sungeun Cho, Ph.D.) The full survey data are currently being evaluated, but some preliminary findings are especially intriguing on the economic front. 

    The following two survey questions were of specific economic interest: A. “Humanely processed (chicken) are animal derived products from animals that have been treated ethically. Are you willing to pay more for humanely processed(chicken)?” – to which respondents could answer Yes, No or Maybe. The next question related to the previous by asking: B. “If the answer to the previous question was ‘Yes’ or ‘Maybe’, how much more are you willing to pay?” Respondents had six choices for B: Less than 10%, 10-50%, 51-100%, 101-200%, 201-300% and Greater than 300%.

    Of the 986 respondents, 699 of them (71%) answered Yes (358) or Maybe (341). Of those 699 Yes/Maybe’s, almost 85% were in the first two categories and willing to pay at least 10% more, with half of those willing to go up to 50% more in price for humanely processed chicken. To put the choice ranges in perspective, at the time of this writing, the average regular pack of boneless/skinless breast in the Southeast U.S. was $3.21 (USDA National Retail Report – Chicken, May 17, 2024.) Using the upper end of the ranges above, the respective increased prices someone might be willing to pay chicken would be: $3.50 (<10%), $4.81 (10-50%), $6.42 (51-100%), $9.63 (101-200%), $12.84 (201-300%), or $14.45 (>300%, estimated at 350% increase). Applying these prices to the results would suggest only 15% of those willing to pay more would accept more than an additional $1.60 ($4.81 compared to $3.21) per package of humanely processedchicken breasts. 

    While this survey seems to suggest that consumers are indeed willing to pay for chicken that was processed in a perceived more humane fashion, several questions remain. The above prices in dollars were not shared in the survey, those are extrapolations of this author. Further work is planned to evaluate consumer choices with products visually before them with the dollar prices clearly marked, and with one package clearly labeled and understood as “Humanely Processed”. Would the breaking point remain at 50% price increase, or would consumers make different choices with more information? Some of the current survey data suggests increased knowledge of poultry production in general leads to willingness to pay more. Would a clearer understanding of a specific “humane process” in question also impact willingness to pay? All of these are questions being considered for further expanded study.

    The results of this work will be important for poultry companies as they consider implementing processes that might be considered more humane, like controlled atmospheric stunning, but can be costly to implement and have increased management requirements. If consumers are willing to pay enough, it might be possible for poultry companies to work with their wholesale and retail customers, like grocery and fast-food businesses, to pass the increased cost of production directly to end consumers. 

    Brothers, Dennis. “Building Equity.” Southern Ag Today 4(23.2). June 4, 2024. Permalink

  • Corn Yields and 2024 Projected Linear Trendline Yields in Southern States

    Corn Yields and 2024 Projected Linear Trendline Yields in Southern States

    Calculating trendline yields can be a useful tool for budgeting or developing a crop marketing plan. Using trendline yield estimates at the start of the production year can assist in determining potential profitability, at current market prices, and determine if additional sales or price risk management is warranted. Projected yields should be periodically revisited during the production year to make adjustments to management practices and marketing strategies to improve the likelihood of positive financial outcomes. This article examines differences in linear trendline yields for corn across Southern States.   

    There is tremendous variability in average USDA NASS corn yields across the Southern States (Figure 1).  Over the past five years (2019-2023), Arkansas had the highest average corn yield at 179.8 bu/ac followed by Kentucky (177.6 bu/ac) and Mississippi (176.2 bu/ac). The lowest five-year average yields occurred in Texas (121.2 bu/ac), North Carolina (129.2 bu/ac), and South Carolina (129.8 bu/ac). 

    Projected linear trendline yields in 2024 for corn, using USDA NASS data from 1980-2023, vary tremendously (Table 1). The slope coefficient, in Table 1, provides the annual average increase in yield for each state from 1980 to 2023. The constant in Table 1 is the initial yield at the start of the linear trend line. For example, on average from 1980-2023, corn yields in Mississippi increased 3.33 bu/ac per year from a starting trendline yield of 43.57 bu/ac. An easier way to think about this is that over a ten-year period, average yield in the state of Mississippi increased by 33.3 bu/ac. Increases can be a result of production practices (such as irrigation) or technology (genetic improvements). In the past ten years (2014-2023), the increase in annual yield improvement for most Southern states has slowed.  R2 is a measure of the proportion of variation in the dependent variable (yield) that can be explained by the independent variable (time). Across the Southern U.S., we see tremendous variation in the R2 for linear trendline yields, ranging from a high of 0.926 for Mississippi to a low of 0.285 for Texas. Low R2 values indicate that the independent variable (in this case time) does not explain the variation in yield, thus other variables need to be considered when projecting yield.  

    Ideally, projecting annual yield should be conducted at the farm or field level using producer data. Crop insurance records or yield monitor data can allow producers to analyze, and project, yield and production to guide management and marketing decisions.

    Figure 1. Corn Yields in Southern States, 1980-2023 

    References

    USDA NASS Quick Stats. Corn Yields, 1980-2023. Accessed at https://quickstats.nass.usda.gov/  

    Smith, Aaron. “Corn Yields and 2024 Projected Linear Trendline Yields in Southern States.” Southern Ag Today 4(23.1). June 3, 2024. Permalink