Agricultural Policy Review: Volume 2016, Issue 3
In 2015, Iowa corn producers marketed approximately 2.5 billion bushels of corn and 554 million bushels of soybeans (USDA 2016). As part of their marketing strategy, some crop producers make use of pre-harvest pricing tools such as forward contracting and hedging with futures contracts.
The crop and livestock markets have experienced signiicant swings over the past few years—record crop prices in 2012 and 2013 were followed by record livestock prices in 2014. Since then, prices have tumbled across the board. In most cases, price reductions have been driven by increases in supply, as opposed to drops in demand.
In early 2013, farmers in Iowa and across the Midwest braced for a difficult corn market, with prices declining from $7/bushel in late 2012 to $4/bushel in early 2015, and finally settling at $3/bushel. Shielded from the world market, corn producers in China enjoyed a steady elevated corn price of almost $10/bushel from 2011 until 2015—largely a result of China’s obscure price floor corn policy. While China’s corn production is mainly used for domestic consumption, policy changes in China’s corn markets have trade implications for the global corn, beef, and pork sectors.
Gasoline prices are the lowest they’ve been in a decade, and according to recent data from the Department of Energy, Americans are buying more gas than ever. While low gas prices are good for consumers, they may be troublesome to those who worry about greenhouse gas emissions. Meanwhile, two important federal policies are pushing ahead to decrease transportation sector emissions by increasing vehicle efficiency and the use of renewable fuels: the federal Corporate Average Fuel Economy standards and the US Renewable Fuel Standard (RFS). Both policies have substantial impacts on consumers’ vehicle and fuel choices as well as on their fuel spending.
Given the current demographics of beef cattle producers in the United States, a significant turnover of productive assets will likely occur in the industry over the next decade. The 2012 Census of Agriculture reported that 35 percent of US beef cattle and ranching and 28 percent of US cattle feedlot principal operators are over the age of 64 (USDA NASS 2014). An additional 27 percent of beef cattle and ranching principal operators and 28 percent of cattle feedlot principal operators are between 55 and 64 years of age (USDA NASS 2014). Yet, according to the 2015 Iowa Farm and Rural Life Poll, among farmers who plan to retire in the next ive years, only 55 percent have identiied a potential successor (Arbuckle and Baker 2015).