Reactions To The President's Budget Proposal

It's been a couple of weeks since I've sent an update and there's a few things I need to make y'all aware of that could and will impact things back on the farm.

Good evening all,
Before I touch on the business side, let me share a quick update from the personal side - I'm feeling pretty good of late and have made nearly a full recovery after my bout with shingles - it definitely won the early rounds, but the tide has shifted. My dear son-in-law says I no longer look like a stroke victim; thankfully, visible signs of my improvement as well!

Easter brought my in-laws to Walla Walla for what was to be a week or so visit, they both still live on the family farm in central ND. Sometime during the night after their arrival, Jim suffered a pretty major stroke and had been hospitalized until late last week. He's here at home with us now and has been making steady progress with his recovery. We're very fortunate that he was here when it happened vs the farm, as well as our home needing very little to accommodate his current, wheelchair needs. Unfortunately, returning to live full-time on the farm and helping with those activities is no longer an option for Jim. Frankly, that has been the biggest hurdle for all family members to accept and realize to date. My uncle who's in his late 80's, has always said '...getting old is the pits and it ain't for sissies.' We're promised but life fully, every day.

2018 Budget Proposal - As many are probably already aware, President Trump submitted his proposed budget - I believe that was the source of the loud, unexplained thud many heard. Proposed cuts to USDA programs are numerous and deep, crop insurance was not spared. That said, the federal budget process is complex - submission by the president, Congressional hearings, various appropriations committees, etc. For reference and historic perspective, 9 of the last 10 budget proposals from the president proposed cuts to crop insurance. That said, we need to ready ourselves for the fight and remind our elected leaders what the 2014 Farm Bill established - crop insurance is the risk management tool to be utilized by all, do no harm to crop insurance. Here's a summary of the president's proposed budget:

...“designed to optimize the current crop insurance program so that it will continue to provide a quality safety net at a lower cost, as well as introduce a measure of means testing to the beneficiaries of the crop insurance subsidies:”

  • Capping the premium subsidy benefit at $40,000 per year per individual or entity, which would apply to all levels of coverage including catastrophic coverage (saves $16.2 billion over 10 years)
  • Eliminating the premium subsidy, A&O and underwriting opportunity for harvest price option coverage (saves $11.9 billion over 10 years)
  • Imposing a means test to target premium subsidies to producers with $500,000 adjusted gross income (AGI) or less (saves $420 million over 10 years)

Here are reactions to the president's budget proposal:


  • Senate John Cornyn, Assistant Republican Leader of the Senate: “Dead on arrival” NBC News
  • Senate Agriculture Committee Chairman Pat Roberts: “We’ve had a freeze, we’ve had a prairie fire, we’ve had another freeze, we’ve lost 40 percent of our wheat crop and you’re telling me there’s going to be large cuts to crop insurance? Come on. That doesn’t add up.” New York Times
  • Senate Agriculture Committee Ranking Member Debbie Stabenow: “The proposed cuts to important farm and family safety net programs, including crop insurance and the Supplemental Nutrition Assistance Program, are harsh and short sighted.” Senate Agriculture Committee website
  • House Agriculture Committee Chairman Mike Conaway: “As we debate the budget and the next Farm Bill, we will fight to ensure farmers have a strong safety net so this key segment of our economy can weather current hard times and continue to provide all Americans with safe, affordable food.” House Agriculture Committee website
  • House Agriculture Committee Ranking Member Collin Peterson: “I will continue to advocate for strong policies that ensure a strong farm safety net, including crop insurance, as well as programs that allow rural communities to provide critical infrastructure services like water and broadband access.” House Agriculture Committee website

Farm Groups:

  • American Farm Bureau Federation: “The administration’s budget proposal fails to recognize agriculture’s current financial challenges or its historical contribution to deficit reduction. It would gut federal crop insurance, one of the nation’s most important farm safety-net programs. Clearly, this budget fails agriculture and rural America.” Statement
  • National Farmers Union: “The president’s proposed budget is an assault on the programs and personnel that provide vital services, research, and a safety net to America’s family farmers, rural residents and consumers. It is deeply disappointing that the president would propose such cuts, especially in the midst of a farm crisis that has family farmers and ranchers enduring a drastic, four-year slide in farm prices and a 50 percent drop in net farm income.” Statement
  • National Corn Growers Association: “Targeting the federal crop insurance program is extremely shortsighted. It is especially harmful during an extended period of low commodity prices. NCGA members consistently tell us that crop insurance is their most important risk management tool. This public-private partnership helps farmers manage their risk, and it saves taxpayers money in the long run by reducing reliance on ad hoc disaster assistance.” Statement

Cathy McMorris Rodgers - The Congresswoman hosted a Farm Bill Listening Session in Davenport, WA, at the Lincoln County Public Works building from 8am - 9am on May 30th. I hope growers filled that room and made your voices heard and known, 2018 Farm Bill was the topic of discussion.

Heavy duty trucks - Are you in the market for a new to you rig on the farm? If so, this article may be of interest to you...

Farm Income - A couple of weeks ago, KC Federal Reserve released their latest ag survey on the financial conditions for their district, follow this link.

Hail - A monster hail storm struck the front range of the Rocky Mountains earlier this month, the losses incurred are expected to be the most expensive in state history. Read about the devastation here

Hospitalization, chemotherapy, surgery - An interesting tidbit for a product that every home has, yet hospitals are in short supply and the manufacturers of such cannot source sufficient need through their suppliers...sodium bicarbonate

Livestock - It seems nearly every day various market analysts are talking about the US/China discussions and how quickly the agreement has taken place. To that end, some are suggesting that US beef could actually be entering into China as soon as early this summer. Beef exports are expected to be up 10% this year compared to last year. First quarter exports for were up 17% for pork and 22% for beef when compared to last year's first quarter results.

The markets have had quite the roller coaster ride over that past 3 weeks; hitting some lofty highs, only to give those gains up in 2 sessions. The market has recovered some of those losses the past week, as suggested earlier, I'd recommend looking at protecting these prices for your fall delivery calf crop.

Markets - The collapse of the Brazilian Real last week has had an immediate impact on the US bean market. This, coupled with the delayed corn plantings or replanting, has put additional pressure on beans as acres are expected to be converted from corn to beans. Some market analysts are suggesting as many as 1 million corn acres will be not be planted - lost to flooding, prevent plant or beans. There are areas of Eastern corn belt that are facing possibly replanting corn for the third time this season. Normally, 3% of the planted corn acres are replanted; this year however, that percentage is at 10% across all seed corn companies. The Eastern corn belt is seeing acreage replanting in the 30% -40% of planted fields. Needless to say, seed corn supplies are in short supply - a silver lining for local seed corn growers.

Weather premiums could start to build into the markets beginning this week, USDA will release it's latest crop conditions update on Tuesday, due to Monday's holiday. The Southwestern part of the US is extremely warm, in particular OK and TX, just in time for wheat harvest. Speaking of which, first reports of protein levels on new crop HRW have come in under 11%. This is helping build support in the Minneapolis spring wheat market (dns). Last week a sale of wheat was announced to Egypt, it's been over 2 years since that country has purchased any US wheat.

Crude oil had a significant drop on Friday, $50 per barrel seems to be the resistance level. Iron ore prices continue to sag and are expected to continue such given current supply and demand that exists worldwide.

The decline of the US dollar has helped with keeping export sales at a strong pace for all commodities. The dollar value is the lowest it has been since prior to the November election. The following link is an article talking about the 57 year streak of ag export about it here

Marketing meeting - Please circle and reserve Monday June 12th, 1:30 pm on your calendar. A marketing summit beginning at 1:30 and will be held at The McGregor Company Training Center on Airport Road in Colfax. Luke Swenson of The Money Farm, Kevin Duling of KDI will be two of the featured speakers, hoping to provide a agronomic update from R&T as well. Additional details will be forthcoming.

Personal autos - An item topic that we've discussed and shared information previously. In an effort to keep you, the reader, well informed...

Prevent Planting - For those of you that will have prevented planting claims, this weather link may prove useful if you don't happen to record your own weather data or might need such...

Weather - What a difference a year makes...the total US area that is currently classified as severe drought or worse, is only at 4%. This is the lowest such drought rating in the continental US in several decades. The current weather story is the other side of the coin, excessive amounts of moisture certainly in our region, but also the problems growers in the Eastern corn belt region are also enduring. The maps paint a pretty good picture of things across the country.

Drought Monitor 5 23 17

Drought index may 2017

Until next time, I hope you all had a safe Memorial Day Weekend. Thank you Veterans for your sacrifice and service to this county!

“A life is not important except in the impact it has on other lives.” ~Jackie Robinson

Curtis Evanenko
McGregor Risk Management Services, LLC
Cell - 509.540.2632
Office - 509.843.2599
Fax - 509.843.2583


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