Feature

Mainstreet on the Rise

Written by webadmin on .

Creighton’s Rural Mainstreet Index reads rural economic condition

As 2012 arrived, mainstreet was giving off signs of new life. The Rural Mainstreet Index was on the rise for the final three months of 2011. In fact, December’s reading from a monthly survey of bank CEOs in agriculturally dependent areas in a 10-state region climbed to its highest level since June 2007.

According to Creighton University economist Ernie Goss, “Growth in the areas of the region and country tied to agriculture and energy are outpacing urban areas.  Our survey is detecting a very healthy rural mainstreet economy with the gap between urban and rural widening. Despite our strong December report, I expect Eurozone problems to slow growth in agriculture and energy due to a strengthening dollar and weaker exports. This will tend to push agriculture and energy commodity prices lower in the first half of 2012,” said Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton.

Still, despite world market volatility, the RMI farmland price index rose to a record high in December 2011, climbing to 84.1 from November’s very strong 75.4. “This is the 23rd straight month the index has been above growth neutral. The farm equipment sales index expanded to 73.8, its highest level since February 2008, and up from 68.4 in November,” said Goss. For the December survey, bankers provided the current average cash rent per acre in their area. Across all 10 states, the average cash rent was $191, ranging from $105 in Kansas to $269 in Illinois. Approximately 22 percent of bank CEOs reported average per acre cash rents above $250.

Overall, December’s RMI hiring index advanced to 54.6 from 53.4 in November. “Year over year job growth for rural mainstreet communities is approximately 1.4 percent compared to 0.8 percent for urban areas of the region,” said Goss. And, the economic confidence index, which reflects expectations for the economy six months out, climbed to 61.8 from November’s 57.5.

But silver linings come with touches of gray: the failure of financial derivative giant MF Global has affected agricultural producers in the region according to Goss. Approximately 23 percent of bankers said that the firm’s bankruptcy had a negative impact on their agriculture customers.  On the other hand, 52 percent indicated no impacts while the remaining 25 percent reporting that the impacts were unknown at this time.

“I expect the fallout from this bankruptcy to play out in the weeks and months ahead with negative impacts growing as the unknown becomes known,” said Goss.

The survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The RMI covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives a current real-time analysis of the rural economy.

Today’s Farmer country breakdown

IOWA
The RMI for Iowa slipped to 51.7 from 54.6 in October. The farmland price index increased slightly to 69.3 from 69.2 in October. Iowa’s new hiring index for November declined to 52.5 from October’s healthy 57.5. Iowa’s rural mainstreet employment was up 0.8 percent since the recession began in Dec. 2007.

 

KANSAS
After increasing for two straight months, the RMI for Kansas declined to a weak 49.1 from October’s 52.9. The farmland price index was unchanged from October’s 64.5. The state’s new hiring index dropped to 50.1 from 56.4 in October. Dale Bradley, CEO of Citizens State Bank in Miltonvale, reported, “The farm economy is still holding up well in our area of Kansas.” Kansas’ rural mainstreet employment was down 4.6 percent since the recession began in Dec. 2007.

 

MISSOURI
The RMI for Missouri slumped to 35.8 from October’s 52.6. The farmland price index for Missouri declined to 41.1 from October’s 66.8. The state’s new hiring index dropped to 38.4 from 56.2 in October. Don Reynolds, president of Regional Missouri Bank in Salisbury, reported, “Though crop yields were below last year they were better than expected, and with strong prices income appears to be good.” Missouri’s rural mainstreet employment was down 10.8 percent since the recession began in Dec. 2007.

Eye on the sky

Written by Nancy Jorgensen on .

Farmers love to talk about the weather. After all, your living depends on it. Meteorologists find it difficult to accurately predict weather for more than seven days. But we asked Tony Lupo, a climate scientist from the University of Missouri, to go out on a limb and forecast trends in MFA’s region through the spring planting season.

“With La Niña leaving us, our spring should be a bit warmer and dryer than normal,” said Lupo, department chair and professor of atmospheric science. For most farmers, his forecast represents a welcome relief from last year, when wet conditions in some areas delayed planting and lowered yields. 

Lupo’s outlook comes with a warning: “Spring and fall are hard to forecast because they are transition seasons.”
La Niña may bring fairly normal spring

Like Lupo, Ed O’Lenic of the National Oceanic and Atmospheric Administration makes long-range forecasts. But O’Lenic’s forecast varies slightly—he sees a normal to slightly wetter-than-normal spring for Missouri and surrounding states.

“We’re in a La Niña weather pattern, which tends to make it wetter and cooler in the northern U.S., and warmer and dryer in the South,” said O’Lenic, chief of the operations branch for NOAA’s Climate Prediction Center. “Missouri lies in between, but our models favor slightly above normal precipitation, at least for eastern Missouri, through spring.” By slight he means 0.1 to 0.2 inches more than normal—not much. States to the east, like Kentucky, should see greater increases. It’s more difficult to forecast precipitation than temperatures, he added.

According to O’Lenic, we’ve had 20 La Niñas since the 1950s, and each has involved stronger-than-average Trade Winds pushing warm tropical Pacific Ocean currents to the West. “La Niña is expected to last through spring,” he said. “After that, forecasts become more difficult.” 

Still, we managed to squeeze a summer forecast out of Lupo. “We’re in our second year of a La Niña,” he said. “It seldom lasts through a third year.” Normally, an El Niño replaces a La Niña. El Niño brings warmer-than-normal sea-surface temperatures to the tropical Pacific Ocean. “If El Niño develops as expected, we should see a little more moisture than normal this summer, and it won’t be quite as hot,” he said. “El Niño has always suggested a more favorable growing season for Missouri—a mild summer with ample rain.”

Average annual rainfall varies considerably across our region. Missouri ranges from 35 inches in the driest area, the northwestern corner of the state, to about 52 in the Bootheel, the wettest, southeastern corner. Neighboring states closest to Missouri reflect this variation. Iowa averages 34 inches statewide, and Arkansas, about 50 inches. Eastern Kansas receives about 40, and eastern Oklahoma, 56.

Lupo says that La Niña doesn’t bring any more or less rain compared to El Niño—it depends on where you’re located. “During La Niña, the bigger storms are further north in Missouri and across to New York and New England,” he said. “During El Niño, the bigger storms are across southern Missouri, Tennessee and Virginia.”
States to the west and the south, like Oklahoma and Texas, shouldn’t expect relief from their drought until summer at the earliest, Lupo added.

Storm clouds ahead?

After last spring’s devastating tornado in Joplin, Mo., along with media coverage of other major tornadoes, hurricanes, blizzards and ice storms, it might seem like we’re seeing more extreme storms.

Lupo thinks part of that impression is due to the nature of media coverage. In his view, we don’t always hear about tornadoes until they affect large groups of people, like in Joplin. “Cities make up only about two or three percent of the land mass in the U.S.,” he said, adding that he believes that storms like the Joplin tornado are actually happening less frequently. “After 25 to 30 years, statistics catch up with us, and major cities get hit.”

As an atmospheric scientist, Lupo studies large-scale atmospheric dynamics. He specializes in something he calls blocking, where the jet stream stalls over large areas—usually the ocean, but sometimes over large landmasses like Asia. “We see the effect of blocking more in the West where the jet stream stalls and causes cooler and wetter weather, and in the East where we see colder weather,” he said. “In Missouri, we get an indirect effect.” 

In coffee shops and sale barns across the country, farmers are known to express strong opinions about the weather. No matter where you come down on trends in storm intensity, La Niña and blocking, chances are you might agree with Lupo’s final observation about weather in these parts: “Missouri tends to be a place of extremes—we either get too much moisture or too little.”

What can you do?

You can’t change the weather, but you can prepare for it. Zach Paul, a meteorologist for mid-Missouri TV station KRCG, offers advice on using apps available on your smart phone to track the weather. Paul recently provided a guide to such apps, including the Weather Channel, Accuweather and WeatherBug. MFA Incorporated’s Agri Services sites host live weather with a click-to-animate option that is helpful to anticipate the good news (or bad news) of coming precipitation.
For the apps, “The good news is that the free versions of these apps do a good job of providing basic weather information,” Paul said in a recent online column. “For most smartphone users, these apps will give you everything you are looking for—a forecast, current conditions, radar and severe weather alerts.” He also pointed out that KRCG offers WeatherCall Mobile.

“What I use most are the radar apps,” Paul said in a recent interview with Today’s Farmer. “If you’re willing to spend a couple bucks, both Pykl and RadarScope are great applications for tracking rain and storms.” Radarscope dominates the iPhone market and recently became available for Android, he added.

For a weather app designed for farmers, Farm Progress offers online mobile alerts. Visit farmfutures.com/customPage.aspx?p=291

These types of applications, also available for your computer, will notify you in case of National Weather Service alerts. NOAA also offers its radio service as a phone app. The alerts include severe weather watches, when conditions are favorable for severe weather; and severe weather warnings, which indicate severe weather in the immediate vicinity.
Paul pointed out that most apps don’t offer real-time updating. “This means that the delivery of an important message can be delayed,” he said. “The best product in my mind is WeatherCall, compatible with any type of phone, not just smart phones. I strongly believe this product is very successful at saving lives.” WeatherCall, which costs $10 to $12 a year, uses technology to closely match the warning with your location. For more information, visit www.weathercall.net.

Beyond phone and computer apps, you can prepare for the weather in other ways:
•    Weather radios will also notify you of National Weather Service alerts.
•    You can track recent weather in your area at a University of Missouri weather station. Visit agebb.missouri.edu/weather/stations.
•    You’ll find NOAA’s long-range forecasts online at www.cpc.ncep.noaa.gov
•    Buy a generator to keep the lights on in case the power goes out.
•    Manage weather risk by purchasing crop insurance.

As Missouri’s state climatologist, Patrick Guinan tracks historic climate trends. He shared a number of them with Today’s Farmer.

“These historic trends provide snapshots of temperature and precipitation patterns over the past century, as well as the year-to-year, decadal and multi-decadal variability of Missouri’s climate,” said Guinan, assistant professor of climatology with the University of Missouri Extension Service in Columbia.

Warmer over past 13 years

Missouri’s most recent warm annual temperature trend began in 1998. Ten of the last 13 years have been above normal. The 1930s ranks as Missouri’s warmest decade on record.

When you look at seasons, Missouri’s winters have experienced the greatest warming trend. Fifteen of the past 23 winters have been above normal, and four out of the five warmest winters on record have occurred since 1991.

Of the four seasons, springs show the second-biggest seasonal warming trend. There have been only two colder-than-normal springs since 1998.

The 1970s still rank as Missouri’s coldest and snowiest decade.

But spring frost dates defy the other warming trends. The median last spring frost date in Missouri has occurred about three to four days earlier over the past 30 years compared to the long-term average.

Prior to the past couple of years, Missouri hadn’t witnessed an exceptionally hot summer in 30 years.
While winter temps may be warming overall, the cold snap from Jan. 1-10, 2010, was our coldest 10-day period in more than a decade. Similar cold periods occurred in 1996 and 1997. Missouri saw some of the coldest winters on record from 1976 to 1979.

Precipitation above normal
Beginning in the early 1980s, an unprecedented wet period evolved. Since 1982, 20 out of 30 years have had above normal precipitation.
2008 was Missouri’s wettest year on record, with 57 inches of annual precipitation.

Over the past few decades, all four seasons have witnessed more above-normal precipitation years in Missouri—most notably in winter. Twenty out of the past 29 winters recorded above-normal precipitation.
Since 1970, 68 percent of the years have experienced an above-normal number of days with measurable precipitation compared to the long-term average.

The past few decades have seen an above-normal trend in heavy (more than one inch) and extreme (more than three inch) precipitation events compared to the long-term average.
Twenty-eight co-op weather stations have been reporting daily precipitation for 116 years, since 1895. Half of these stations have broken all-time 24-hour precipitation records since 1973.

Natural disasters more prevalent
Over the past decade, we have seen an uptick in natural disasters due to ice storms, tornadoes, floods and snowstorms, but that doesn’t mean the trend will continue.

Missouri recorded 65 tornadoes in 2010, the eighth-highest on record since 1950. In 2006, we recorded the highest number, with 102. On average, the state experiences just over 30 tornadoes a year.

About 50 percent of our tornadoes occur during April and May, but tornadoes can occur any time of the year.
Tornadoes can occur any time of day, but 83 percent come between noon and midnight.

Last April’s Joplin tornado was one of the most devastating in world history. It took more than 160 lives and cost more than $2 billion.

Missouri sits on a line between the cold north and the warmer south, and we frequently see ice storms as a result. In January 2008, an ice storm of historic proportions hit northwestern Missouri, with ice as thick as one inch on trees, power lines and vehicles.

Storms that deposit ice from .75- to 1-inch thick are rare, occurring about one in every 50 years. A similar ice storm hit southwestern and south-central Missouri in January 2007.

For more information, see Guinan’s summary of significant weather events during the 20th century, www.climate.missouri.edu/sigwxmo.php

When Wall Street was bombed

Written by Steve Fairchild on .

MFA founder, William Hirth, leveled his pen and wrote with fire

Update: Cold weather and increasingly thin patience from state and city officials have dampened the OWS movement since we first wrote this article for the magazine, but we expect more fun in the election year upcoming. 

The Occupy Wall Street demonstrations survived its first test of mettle when a snow storm hit the eastern United States in late October. Members of the movement continued their rancor as the snow melted and temperatures rose in November. Whether the mob has thinned by the time you read this is more prognostication than the editors of a monthly magazine are willing to chance. But one thing is certain as tomorrow: Wall Street has been the target for malcontents through the ages.

While today’s occupiers have been peaceful for the most part, their dissatisfaction with what Wall Street represents brings to mind a much less peaceful incident. On Sept. 16, 1920, unidentified bombers killed 40 people and wounded 300 more with an improvised bomb consisting of dynamite and window weights. While no one was arrested for that attack, after years of investigation, the most likely suspicions pointed at Italian anarchists—acting out of revenge for three of their cohorts being indicted for murder.

Historically, the flag of anarchy has been hoisted among disaffected radicals. While the Wall Street bombing of 1920 was never truly resolved, anarchists had been at work in the United States and Europe in the preceding years, and, indeed, decades. Their activity ranged from peaceful to explosively violent. Anarchy being a general term, it was (and is today) difficult to describe. But if you want it from Webster, anarchy goes like this: “a utopian society of individuals who enjoy complete freedom without government.” We leave to you the delightful contradiction of the fact that labor unions and socialists of MFA founder William Hirth’s time had a family tree heavy with anarchist vines. 

2012 Agricultural Outlook

Written by Nancy Jorgensen on .

We asked three experts to offer their thoughts on what’s in store for agriculture in 2012, and how producers can best take advantage of industry trends. 

Will good prices for corn and soybeans translate into profitability? 

Boehlje: High futures prices indicate a profit for commodities. It might be a good time to take advantage of futures markets to lock in these prices. What’s unknown is whether supply will balance with demand. If we continue to have a short supply, prices will continue to be strong. But rebuilding stocks will result in lower prices. Remember, a short crop has a long tail.

Henderson: Crop producers should enjoy strong profits in 2011, and if price levels are maintained over the next year, they should enjoy another year of strong profitability. The question for 2012 is, while crop producers may lock in current prices on the revenue side, how will they manage rising costs? Seed, fertilizer and fuel costs increased dramatically in 2011. The risk in 2012 is that higher prices will trim margins.

Oldvader: Today’s prices do not always convert into tomorrow’s profits. Profits come from positive margins. Limited stock carryover, plus reduced domestic production, multiplied by robust domestic and foreign demand, equals bull markets for major grains. Key variables that could tether this bull include the dollar’s value, export demand, trade agreements and sovereign debt outcomes.  .... story continued.....

What is it worth?

Written by Steve Fairchild on .

Survey respondents gauge land prices in Missouri

A survey collected in mid-summer 2011 shows what the evidence around your place has been telling you—land prices continue to climb in the central Midwest. The survey, conducted by University of Missouri agricultural economist Ron Plain and co-author Joyce White, sought land price estimates from landowners, lenders and other rural thought leaders throughout Missouri. While there is no state or federal reporting of land prices in Missouri, the annual survey provides feedback from people who are affected by rural land prices. Of the 220 persons responding in 2011, 72 percent were lenders, 13 percent were rural appraisers, 5 percent were MU extension specialists, 4 percent were broker/realtors, and 6 percent were in other related occupations. They provided their opinions to questions concerning current farmland values and trends. Respondents were asked to exclude from their answers tracts smaller than 40 acres or land being converted to development or commercial uses. Respondents were asked to give their estimates of land values as of July 2011. Classification of land was left to the judgment of each respondent. You can find a full map set for the survey at agebb.missouri.edu/mgt.

{gallery}decjan12/value:210:270:1:1{/gallery}According to the survey, this year cropland values increased in 17 of the 20 areas of the state, with the state average for good cropland increasing by $347 to $3,235 per acre. Pasture values increased in 14 areas, with the state average for good pasture up $125 to $2,067 per acre. Non-crop/non-pasture land values averaged higher in 8 areas but statewide averaged 1.5 percent lower.

Land with timber was up $59 at $1,645 per acre, while hunting/recreation land was down $107 at $1,418.

Who is buying?

Survey respondents thought 66 percent of farmland buyers planned to farm the land themselves—a 3-point increase over 2010. The number planning to rent out increased 1 point, and the number planning to use the land for non-farming purposes declined

4 points to 12 percent.
According to respondents, high corn and soybean prices, low interest rates and the limited amount of high quality land available were primary factors in the increase in cropland values.

The ethanol subsidy and crop insurance guarantees also were cited as supporting cropland values. Profitability encouraged more renting of land and higher rents. Higher returns also attracted more outside investors.

Weakness in the general economy was cited as having a negative effect on values for land with little capacity for growing grain. Pasture prices were somewhat supported by good cattle prices and comments from cropping areas indicated a possible shortage of pasture could be a positive factor there.

A report from the south central area noted an increase in timber sales, but most saw a stagnant land market there.

As for the future, most respondents expect cropland values to increase about 4 percent over the next 12 months and pasture to decrease slightly—about 0.6 percent. They expect the value of other types of rural land will decrease about 1.9 percent. Some indicated the possibility of lower grain prices, a reduction in the ethanol subsidy, or a poorer-than-expected harvest were considered in their cropland.

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