CoBank Releases Quarterly Rural Economic Review

DENVER, Oct. 13, 2014 /PRNewswire/ -- Shifts in the global economy, continued favorable crop developments and record-high animal protein and dairy prices are signaling transitions ahead for all agribusiness sectors according to a new report released today by CoBank's Knowledge Exchange division.

After many years of strong growth, U.S. agriculture is facing greater market uncertainty and new challenges, including rising interest rates, a strengthening U.S. dollar, diminishing political support, larger global harvests and rising commodity carryover inventories, notes the rural economic review titled, "Toward a New Pricing Paradigm."

"The changing market conditions will likely spur shifts in farmland values, rental rates, balance sheets, and the competitive landscape. However, most agricultural producers and processors are in solid financial positions today and should be able to weather the coming changes without undue stress," said Leonard Sahling, director of CoBank's Knowledge Exchange division.

Looking across a variety of critical industries in rural America including agribusiness, power and energy, communications, and water, key findings from the report include:

• Payouts under the new Farm Bill will buffer the decline in farm income, but these farm program outlays could end up far exceeding Congress' expectations. 
• Grain and oilseed markets are transitioning from a prolonged period of extremely tight supplies to one of growing carryover inventories, intensifying the current infrastructure woes as export and feed channels become the dominant demand drivers .
• The animal protein complex is at an early stage of what promises to be an aggressive expansion of meat supplies. Milk production continues to grow steadily worldwide, and a more favorable feed and forage cost environment is likely to accelerate this pattern.
• An all-IP network is a necessity to meet soaring broadband demands as increased consumption of video, cloud offerings, and the impending explosion of the Internet of Things propel Internet traffic to new heights.
• Following record-large natural gas storage injections during the summer, the power and energy markets seem confident that natural gas prices will remain stable through winter.
• Federal funding for water and sewer systems has dropped 80 percent since 1980 and this trend is not likely to change, reinforcing the role private capital will play in updating the nation's water and wastewater infrastructure.

CoBank's Knowledge Exchange Division is a knowledge-sharing practice that provides strategic insights regarding the key industries served by CoBank. Knowledge Exchange draws upon the internal expertise of CoBank, deep knowledge within the Farm Credit System and boots-on-the-ground intelligence from customers and other stakeholders to enhance the collective understanding of emerging business opportunities and risks.

For a full copy of the report, click here.  

About CoBank

CoBank is a $101 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture and the nation's rural economy. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

For more information about CoBank, visit the bank's web site at www.cobank.com.

SOURCE CoBank