A contemplated change in how the Renewable Fuel Standard (RFS) is implemented could cost Nebraska corn producers $421 million. A policy brief by the Iowa State University, Center for Agriculture and Rural Development (CARD), suggests the policy change, a cap on the prices of Renewable Identification Numbers (RINs), could result in a price loss for corn of 25 cents per bushel. A 25-cent loss in price would equate to a loss in the value of Nebraska’s corn crop of $421 million, or 7.6 percent, based on the 2017 estimated crop value of $5.5 billion.
When you think of cattle what do you think of? Most might say something along the lines of steak or hamburger, but have you ever thought about the everyday products that may use some other less obvious parts of the beef animal? By-products are secondary items that are produced in addition to the main product. For as long as humans have used animals as a food source, their by-products have been just as important. For cattle-the obvious main product is meat, but cattle provide numerous byproducts that we use daily. Through manufacturing processes, parts of the animals such as the hide, bones, hair, and fatty acids can be made into important industrial, household and health products. In fact, 99% of the beef animal is utilized!
The other day I decided to treat myself to a large bowl of ice cream. I was feeling like it needed a little extra something, so I decided to add some chocolate syrup and whipped cream. When I looked at the can of whipped cream, I had somewhat of an epiphany when I saw a bold label that said, “No Artificial Growth Hormones.” I stared at the label as an agriculturalist and an advocate for the industry and began to understand why there is such a distrust between consumers and producers.
“The Big Mac and the Dollar” may read a bit like the title of a children’s fairy tale (i.e. Jack and the Beanstalk), but it isn’t. Instead, it’s an agricultural economist’s not-so-clever way of introducing a discussion on the value of the dollar. Nebraska agriculture relies on exports, and the value of the dollar is a key determinant in determining the competitiveness of Nebraska agricultural products in international markets.
Nebraska crop producers received $646 million in Price Loss Coverage (PLC) and Agriculture Risk Coverage—County (ARC-CO) payments last fall for the 2016 crop year. In total, the USDA distributed $6.9 billion in payments to participating producers under these two programs.
The USDA expects prices for corn, cattle, and soybeans to be off a bit in 2018. Prices for wheat and hogs are expected to be higher. Given the large production levels of all these commodities in recent years, prices, while soft, have been stable due to relatively strong demand, boosted in part by robust export markets. The strong demand needs to continue, and, thus far, signs point to demand remaining strong. For example, Jim Robb, director of the Livestock Market Information Center, recently said the average American is expected to eat 219 pounds of red meat and poultry this year, the highest level since 2007.
Two tax code changes in the tax package passed last December by Congress are receiving much attention in the countryside. The first change concerns the tax treatment of producers’ sales to coops. The second concerns the loss of the Section 1031 exchanges for farm machinery and equipment. Let’s examine these changes in more detail.