SHERIDAN — A report published earlier this month by the Federal Reserve Bank of Kansas City, which tracks the region that includes Wyoming, determined that farm incomes in the district have continued to decline.
According to Wyoming Farm Bureau Federation Director of Public and Governmental Affairs Brett Moline, that trend holds true in Wyoming, but to a lesser extent than in some of the other states in the region.
The report, which was written by Fed Economist Courtney Cowley and Assistant Economist Ty Kreitman, concluded the deterioration of farm income in the region accelerated in the third quarter of 2018 due to falling crop prices and continued uncertainty about U.S. trade. The report, though, had limited survey data from Wyoming and, as a result, lumped it in with Colorado and parts of New Mexico as a “Mountain State.”
Moline confirmed that crop prices have dropped in Wyoming over the last quarter, particularly wheat prices, but noted that Wyoming is not as reliant on the crops that have seen the largest drops.
The state has also benefited from steady cattle prices. Much of the agricultural production in Sheridan County deals with cattle and David Garber, who is a local rancher and serves as the president of the Sheridan County WFBF said he has not felt the effects of the dip in farm income.
For the state as a whole, however, input prices — like parts, farm equipment, seeds and fertilizer — have increased at the same time that crop revenue has dropped.
Ironically, Moline said, this year’s high crop yield has contributed to the dip in commodity prices.
Wyoming farmers simply have more crops than they can sell, and because farmers around the world have also had strong years, U.S. agriculture exports have dropped.
“We base on what we think the prices are going to be, and then we’ve had some really good crops,” Moline said.
That drop in exports may be exacerbated, though, by the United States’ ongoing trade war with China. The Fed report identifies uncertainties about international trade, caused primarily by U.S. tariffs on Chinese imports, which China has retaliated against by halting many U.S. imports. Moline said those effects have been mitigated in Wyoming because the state does not rely on the crops most affected by the tariffs.
Farmers who produce soybeans have been hit hardest by the tariffs, as China is the largest buyer of American soybeans in the world. Wyoming, however, produces next to no soybeans.
That does not mean Wyoming has been entirely insulated from the effects of the trade war, but Moline said the tariffs, which are intended to discourage Chinese trade practices President Donald Trump has called unfair, could benefit agriculture in the long run.
“We think the right thing is being done on these tariffs,” Moline said. “Now we just need to see if we can get it done and have true fair trade where it’s equal across borders…If we can go dollar for dollar (with China), we’ll come out pretty good.”
The decreased income this year, Moline said, is also part of a natural cycle. Uncertainty is inherent in agriculture because so much of agricultural production in a given year is determined by the weather.
“Production is cyclical,” Moline said. “It’s always been the way ag is and it always will be.”
Moline also mentioned that farmers are benefiting from low interest rates on loans, which have allowed farmers to supplement some of their lost income without leveraging their futures.
The Federal Reserve Bank of Kansas report also raises the long term possibility that the drop in income will hurt the value of farmlands, as the weakened output and increased debt would diminish the liquidity of those lands. In Wyoming, Moline said that is somewhat of a concern, but Wyoming farmlands are not as vulnerable as lands in other states.
He explained that most of the large chunks of land in Wyoming are ranches and therefore sold for scenic, rather than production, value. Land values in areas of the state with irrigated farming grounds — such as the Big Horn Basin, the Wind River Basin and lands around Torrington — could be hurt if prices don’t improve, however.
But, Moline said, the state’s agriculture producers are taking the changes in stride.
“Farmers and ranchers are either the most pessimistic optimists or the most optimistic pessimists I’ve ever seen,” Moline said.