Tidbits From the Kansas City Fed – Part 1
As many of our readers know, we tend to quote the Kansas City Federal Reserve from time to time. They have a very good website with several quarterly reviews of the ag economy and farm land prices. They recently put out a report titled “Outlook for the Rural Economy” that has several interesting tidbits that I will share in a couple of posts over the next few days.
Although farm income is higher than it was several years ago, it has been on a little bit of a roller coaster ride. From 2005 to 2011, the net change from the year before is as follows:
- 2005 – Negative 12%
- 2006 – Negative 29%
- 2007 – Positive 20%
- 2008 – Positive 21%
- 2009 – Negative 30%
- 2010 – Positive 25%
- 2011 – Positive 16%
As you can see, over the last seven years, farm incomes have increased in four of the years and decreased in three of the years. The total net decrease is about 71% and the total net income is about 82%.
All of the four major Federal Reserve surveys of farm land prices from the fourth quarter of 2009 to the fourth quarter of 2010 showed a healthy increase in prices. Southern US areas such as Texas and Oklahoma only saw about a 5% increase. This is probably primarily due to the drought in these areas. The core corn belt states all saw prices increases greater than 10% as follows:
- Illinois – 11%
- Iowa – 18%
- Nebraska – 17.6%
- Kansas – 19.5%
- Minnesota – 19.3%
- South Dakota – 9.8%
- North Dakota – 23.7%
Another interesting contrast is the amount of household expenditure that is spent on food by certain countries. The USA is blessed with only about 7% of the average household having to spend their income on food. In Pakistan this number is closer to 46% and most of the middle east countries spend at least 40% or more on food. This is probably one of the key reasons for the turmoil in the area.
This is just a couple of tidbits. I will have more in the next few days.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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