Hey. Good morning, everybody.
Good morning. How are you?
Good. Good. Randy, where are you dialing in from?
Meridian, Idaho.
Great. Well, how's the weather this morning up there?
Right now, it's nice. It's in the low 60s. It's going to be in the 90s. Too warm.
That's right. Well, hey, it won't be long before we're talking about how much snow is coming down and how cold it's going to be. So enjoy the 90s while you got them.
Yeah, I know. I know. I grew up back in the Midwest, and I remember seasons. We've had seasons here, but summer seems to get a little bit warmer.
Yeah. No, it's the same way. I'm outside of Washington, D.C., in Northern Virginia, and it feels like every year it's just a crapshoot. Is it going to be early fall, late summer? What are we going to get?
Yeah. Yeah. Yeah. It's changing, definitely, from when I was a kid, so.
Let's see here. I got to rename myself. I came in as Clay Sundberg.
Yeah. So do I. What's going on? Give me one second. Give me one second. Clay, you're back. Yeah. Why do I keep joining as Clay? How do I?
So go to your little screen and click on the three little dots, and you should see Rename at the bottom of that menu. There you go.
Do we just pick the most generic names to?
I mean, good on Clay for getting into rotation here. So everybody who joins is Clay Sundberg.
Yeah. There we go. Here, I'll put Farmer Mac after myself as well. Perfect. I'm going to bring it.
All right. Blaine, so I've got the USDA stuff up. I'm sure you do as well. So at 11:00 A.M., I'll start, do some introduction, and then you can start working on updating the numbers.
Yep. That's right.
Sound good?
Yep. Absolutely. I will try and.
It's over to you to go through the February release and then do the big reveal.
Yes. I will paste those in, and then while I'm focused on the top end, will you look at the income?
Yes.
The income? Okay.
Yeah. You do income. I'll do balance.
Yes. Yeah. Yeah. You got it. You got it. Exactly.
Yeah. So I'll vamp long enough for you to get. You just give me the high sign when you've got all the data downloaded, and then I'll send it over to you, and then I'll give you the high sign whenever I've got the balance sheet stuff.
Perfect.
Betsy?
Good morning.
Did you come in as Clay Sundberg as well?
Sorry?
Both of our names we came in when we joined was Clay Sundberg.
Nope. I was Farmer Mac.
I don't know. Clay's on. Good on you.
Maybe the link I sent you to join was probably in a calendar invitation someone accepted. I'm sorry about that. Sometimes they go to my calendar here and there, but okay. I think you two should be the only ones that happened to since I shared the same link with you.
Except for Clay, whenever he joins. He will be real.
And then Clay.
The real Clay Sundberg. Please stand up.
Jackson, I pinged you earlier today. We're good with you're going to run the slides, you or Blaine, and then I'll just hit record, and that's it.
That's it. We'll do it. Yeah. Blaine's got the slide deck up, and he'll share the screen. If you'll record and then you send the survey out afterwards, right, to everybody who came?
We're not going to do it during the session. Michael will send a follow-up email with a link to the recording and a copy of the, I'm sorry, and the survey, I guess.
Beautiful. Beautiful. Well, welcome, everybody. Thanks for jumping on early. It's a nice, it's always pleasant when we get people who don't wait till the last second to jump on. So welcome. Settle in. We've got about 10 minutes to go before the big drop, the big data drop. To me, this is the most exciting one of the year because the February one, while it's interesting, we know it changes a lot between February and August. And so this is the day that we get USDA's revision for farm income and T minus 10.
So I'll have the option to share as well, Jackson, right? Because I want to share the actual numbers on my side, and then we can walk through them together, right?
Yeah. Do you want to share the—you mean your prediction?
I'm absolutely happy to share my prediction. Should we wait until more folks jump on, or what's?
Oh, yeah. We'll wait until we get to 11:01, and then we'll record and do it all formal. But we have so many people jumping on early. It's great.
Yeah. The folks that show up early to class, you can tell who they are on these webinars.
You never know what you're going to get. I think me and Dave Kohl, the last one, we were just getting into it in the early session. You always get to hear a little bit extra when you hang in there. When you get there earlier or stay a few minutes late, you never know what kind of tidbits or hot topics are going to get discussed.
Did anyone at the USDA, Carrie Litkowski or otherwise, reach out and ask if they could do a cameo on our Farmer Mac USDA webinar?
Not to my knowledge, but that would be—we'll try to set that up before December. If we do this again in December, we'll offer maybe—I don't know—phone a friend to the team over at ERS. I think they are under pretty strict guidelines as to what they can and can't say and at what times they can and can't say it, which is why it's nice to have this session, which is completely unfiltered and unaffiliated with the USDA.
One of the things I want to look at with a close eye today is government payments. We can get into that, obviously, in a little bit. You know as well as I do, they're already talking on Capitol Hill about more government payments. For a certain subset of farmers, you've got tariff income that's coming in. It was just in, there was a news report last night. Should we just use some of that tariff income, give another round of government payments? They were already forecasting a huge government payment number for this year. I think the largest, was it larger than 2020, 2021? I'll look into that. If you're talking about another increase even coming this fall, I guess then it comes down to, is the USDA going to bake that into this year because they might not disburse it till January, February timeframe?
There's all these threads to this, but government payments was the reason for the big increase in February, and we're talking about more this year. There's a lot to unpack in that line item alone.
It came in, their original February forecast was just under. It was about $3 billion under the 2020 $45 billion, which was, I believe, a record.
Man, so we're right on the edge.
So it stayed under that 2020 level, which was combo, right? That was stress in the marketplace plus stress coming out of COVID and combined for about $45 billion in one single year with a little bit on either end, right? 2019, 2021 had some tails of that big deal. So yeah. Is it going to be more? I mean, these are the questions we have. And USDA, hopefully, I'm assuming, has more insight into it than we do as they've got access to other resources across the federal agencies.
For sure. For sure. Yeah, and I don't know. That's just one of the numbers that I'm really thinking.
That's the driver of why there was that February pop, and again, sorry to get into—you guys are going to hear this again if you got here early, but you know that when you show up early, you're going to hear maybe something twice as your speakers prepare for their session. This one's kind of fun because we can't prepare for it because we got data coming at us live. You're going to see us react to never-before-seen information, so a little bit of a different format this time.
Let me grab a cough drop.
It's true. We got 30 people already on. That's great.
I know we're going to be talking a lot. So let me grab a cough drop so I don't lose my voice during this call.
It is that season. I'm balancing myself.
I'm on the tail end of it, thank God.
If you're just tuning in, welcome. We're going to get started here in about five minutes. Get yourself something to drink, something to snack on. I know it's early, and some of us are joining early in the day. Some of us closer to lunchtime. So if you're like me and Blaine, you got to have your water and cough drops handy because it is the season for children to bring home all sorts of nasty bugs and viruses.
Is it in the office, Betsy? Slow on Wednesday, or?
It's pretty quiet here today. I think a lot of people had their kids' first days of school, so they are working from home today. But there's a decent amount of people here, but just not as many as usual. How about your office?
It's slow in my office, I'll say. But about average for a day. Yep.
You're at your parents' place, or are you at your place in Minneapolis?
I am at my parents' place up on the farm and was able to help, obviously, a little bit this long weekend harvest, canola crop coming off, and I think farmers—I'd be curious. We didn't set this up to do a survey of the bankers that are calling in, but I would be curious if they're picking up on some of the sentiment of farmers all summer long watching prices drop, and it was getting more pessimism, more pessimism. In fact, the Purdue Ag Barometer just came out yesterday and a huge drop. Now that tune is changing a little bit as farmers up here started combining, and they're seeing, "Wow, we have bigger crops than we even expected." It's still less than ideal on the price side, Jackson, but they're looking now at the revenue, and now that it's combined, they've got that concrete number like, "Okay.
It's not as bad as we thought. Still not great, but it's shifting back towards a little bit of happiness," so.
You got the real-time Ag Barometer in your family then. I guess that is one of the benefits of having family farmers.
There's a saying about not being able to exist in two states at once, and I feel like farmers do occupy two states at once. They're simultaneously optimist and pessimist at times, and that's fortunately and unfortunately.
I love it. Quantum physics, Heisenberg's uncertainty principle. Yes. Yes. Yes. Yes.
I rely on you for connecting the dots on some of my grasping at these concepts that I only vaguely am aware of. So thank you for piecing that together.
You know me. I love a good quantum physics parallel to ag landing in the economy.
In your free time, you were AI before AI became AI, so.
That's right. The original Cliff. Well, people still jumping on. Welcome, everybody, to the live feed. We're going to get started in about three minutes. We'll wait for everybody to get settled in, and then we'll hit the go button. Until then, enjoy some witty banter by your economists of the day, Blaine Nelson and Jackson Takach. The dulcet tones of Farmer Mac economists.
Let's try and share my screen just to make sure that's working since we're not.
Great idea. That's a good use of our prep time here.
I'm sure that that's what we're supposed to be doing and whatever.
Not talking about canola crops, although some might find that more interesting than slide sharing.
Absolutely. Okay, so I'm assuming you can see it's not full screen yet, but you can see this. Is that right?
Yep
You can go ahead and share it.
Let's try to go full screen, and I knew this.
Oh, we got the wrong screen. Yep. There you go. Swap it.
I'm going to need on my other side, my other screen. Let's bring this over here. Perfect.
We're one minute away. One minute away. Do you think they're going to drop? They have it timed, right? They drop it right at the minute. This is like - that's only atomic clock 11:00 Eastern Time with one second in. Boom, it's done.
There was. I believe you're right. And I believe that there was a trading case where the WASDE is the market mover, right? And wasn't there the who governs the high-frequency traders? Is it the CFTC?
Yeah. CFTC. Yeah.
CFTC. Okay. Yep. See it? Again, thank you, AI, Jackson, for helping me out there. But they were having to govern because the high-frequency traders were able to get into the USDA system so quickly after their news drops and trade on that and make money. So.
See, I'm old enough to remember going to the USDA Ag Outlook Forum and seeing the traders in the back on their big cell phones, right, and calling, the USDA says, "It's the corn price. It's going to be 250," right? Sell, sell, sell. That was pretty great.
Turn the mic to you for a second. I'm going to get to work over here on this. I think it hopefully dropped.
All right, well, Betsy, let's go ahead and fire us up. We're at 11:00.
This meeting is being recorded.
Welcome, everyone, to a live feed. We're excited today at Farmer Mac to bring you a fresh and basically hot off the presses look at some USDA data. Today is the data release for USDA's farm and wealth income, farm income and wealth statistics. Data comes out today, and we wanted to do a live presentation, so we're going to take that information as it comes out and talk to you guys about it, do some hot takes. We've got Blaine Nelson on the line, so a senior economist at Farmer Mac, myself, Jackson Takach, the chief economist at Farmer Mac, and we're going to do an in-depth look at the most recent updates from the USDA Ag Outlook. We're also going to cover our most recent set of articles that just came out from The Feed.
So we're going to cover a lot of ground over the next 45 minutes. There's a lot happening in the world today. I mean, the volatility in the marketplace, the volatility in commodity prices, news policy, geopolitical changes. I mean, there is no shortage of topics that we could cover. And we're going to try to cover quite a bit of ground in the next 45. So excited to have everyone on the line today. Thanks for tuning in. And we're going to jump into our content in just a minute. I do want to do just a couple of quick announcements here just to make sure we've got everything lined up for you properly. We've got our legal disclaimers coming up. So, of course, give those a quick read. They basically say, "Hey, Farmer Mac, this is not investment advice, yada, yada, yada. These views expressed are our economists.
And we're going to cover a lot of ground." You'll notice that you have been muted upon entry. That's not because we don't want to hear from you. That's because we are recording today's session, and we want to maintain the highest quality audio possible. So we don't want to hear any background noises, combine equipment moving out there in the fields, or sirens if you're closer to the cities. So we like to have that muted. If you do have questions, however, please jump on the chat. We've got the chat room open. You can type your question. We will be monitoring it. We want to take your questions throughout. Blaine and I will go back and forth. We do quite well with our witty banter across our desks, but we love to take questions from you guys, the viewers. This is your time, not ours.
So please jump in. The recording of today's sessions will be available on our website, www.farmermac.com, which, of course, you know because you got here by going to that website. So please share this with others that you think might enjoy it, your colleagues, your friends, your peers who were not able to join today. They will all have access to it. And then we always do a survey at the end of our sessions. We're going to send you an email that says, "Hey, tell us how we did." We are economists. We love to hear how well we're doing. So please feel free to take that survey and tell us just how great the Farmer Mac economists are at delivering great content for you. And then tell us what you want to hear more about. We're happy to deliver that. So I think I've vamped one rough.
Blaine, do we have some data that we can share? I think first, oh, go ahead. What do we have?
No. Let me just say this. I don't know if they're trying to front-run us, but we're waiting. I can show the static page that has their static graph, but they have not released the Excel file yet to put into a format. So I don't know. Do you want to throw a guess out before I reveal anything at all about where you think net cash farm income is going to go, Jackson?
Let's do this. Why don't you bring up the February forecast? Let's talk about what numbers we had leading up to this release. And then I'll throw my prediction out there, which you now know is right or wrong, and I don't want you to tell me. But I'll say before we flip to the new numbers, I'll let the room have my guess, my best guess at the 2025 revision.
Yep. Yep. So let's just real quick go back through this just so we have a baseline understanding we're all on the same page. February comes out kind of a bit of a shocker. They forecast $194 billion net cash farm income. It's like one of the highest levels on record. And immediately, if you're just reading the headline, you're like, "What in the world?" Coming into the year, it was some pessimism about where prices were headed. You read the details, you see there's $40 billion in government payments, the second highest level on record, just a crazy number. In terms of the actual profitability across sectors, livestock up a little bit, crops down, which generally reflects what was going on. We can talk about that a little bit more as we go through today.
The overarching theme when thinking about the February forecast is normally it's conservative, which over 70% of the time they raise it in the August, September forecast. So if you're thinking that's your baseline, $194 billion, all of a sudden you're talking $200 billion is a likelihood when you think about the general increase that occurs through time. That's the 30-second kind of recap of where we were coming into today's thing. I'll just throw out there, Jackson talked about, gave some context of why we're doing this. We've done a couple of these internally, and generally folks like going through this with us. So we thought, "Let's open it up externally and get everyone's thoughts on it." You can see how we do these regardless of whether they're webinars or not.
Hopefully, you guys enjoy walking along with us because Jackson and I really enjoy these big data release days. So anyway, drum roll, Jackson. Or no, you need to give a forecast, and then I'll reveal where it came in.
So I'll say this is me judging based off of sort of my calculus, which is historically the USDA revises up. You put that to 70%+ of the time they revise it up, meaning what they put out in February is a bit muted, and then they come out with more information. They say, "Okay, things are better than we thought." So I'm working with that in mind. The average increase is about 14%, I think, if I remember correctly, remember the math correctly. I don't think we're going to see that level of bump this time. I'm thinking 5%, somewhere between 2% and 5% increase in net cash farm income, maybe something similar in the net farm income. But I still think it's a raise, and I'll tell you why. I think the animal products were the markets increased more than they expected.
So I think the revenues from animal products is higher. So you'll think beef, pork, poultry, all those revenues would be higher. And I think they probably overpredicted the costs and underpredicted the yields on the grain side. So maybe a little bit of a bump in there. So combo those two things, that's where my head is. Now you can tell me how wrong I really am.
Let me just say that, and you have the stamp from me. My guess was a slight downgrade, that it was going to be one of the few years where they were going to reduce it slightly just based on how much prices have declined for corn, soybeans, and a number of the key crops. I believe the number I threw out was 188. Drum roll, please. I'm going to bring this screen over. In an ideal world, they would have released the Excel file simultaneously. If you can find it on your side, Jackson, please send it to me. But right now, what I'm seeing is I'll show it. Here we go. This is the forecast for September, as of September for 2025 net cash farm income, 180.7.
That's a big downward revision.
5% or so, 5%-7% drop in terms of their overall forecast.
Wow. That is a big swap from what we would typically see in the August, September revision. Wow. So what is driving it? I mean, you were righter than me, right? If that's a word, you're right. You're more right than I was. What are the components here that are going into this? Now, I know we don't have the spreadsheet. It hasn't come out yet, so we can't do the detailed change piece. But is it animal side? Is it grain side? What's causing the discrepancy from what is normally an upward revision?
Let's go through this together. So it looks like right off the bat, you hit the nail on the head. Crop side is pulling it down. It looks like they've downgraded that even more than what they initially had. No, this looks again like they haven't even updated the summary findings, Jackson.
Wow.
So this isn't on us at this point. I mean, everyone is seeing this live. Let me hit refresh here, but we are actively waiting. They've given us a graph at this point to unpack. So.
Here, I've got, I think, has the net cash farm income already? Yeah. So that's been updated. If you go to.
Let's go back.
Go to the Farm Income and Wealth Statistics link there, the one that's grayed out.
Yep. Are you finding? Is there a spot where I can find this?
Yeah, so go to the net cash income one.
Let's go here.
Then you should see these are updated to the 2025. Yep.
We'll do it this way. Okay. So let's take a look. Crop receipts.
And I've got the old ones up too. So we can look at this side by side here.
We've got 535.
That's a pretty big increase. So they had 515 back in February.
Yeah. So we're seeing big increase driven mainly by animal products. Yeah. Animal products is we thought huge increase in terms of cash receipts. It went from about $275 billion, is what they initially were forecasting, to basically $300 million or $300 billion in revenue. So reflection of what's going on with both the beef industry is the leader there, right? But obviously, dairy's probably had a little bit better year, especially we're going to talk a little bit more later on about some of the calf sales from the dairy side that is boosting revenues there. Pork has seen a return to profitability. Prices have held in there and obviously feed costs lower and then poultry contributing as well. But animals leading the way, crop receipts, let's call it basically unchanged from the February forecast.
Yeah. You're exactly right. So we were kind of correct. I was kind of correct in the assessment of revenues. However, the big change, the big two changes, other farm income and direct government payments, both pretty sizable downward revisions.
Yep. Yep. Look at that. Direct government payments, yeah, $3 billion hit more or less. And then other farm income, big drop there. This is difficult without the actual underlying numbers, but we can pontificate for a second. Government payments dropping $3 billion. I wonder if that's a timing aspect. I mean, a lot of the money that was included in the February forecast was allocated in the bill last December in terms of dollars were expected to just automatically go out the door. Maybe some of those programs now they're backing off in terms of what's actually who's going to qualify. On the ECAP, that was the first program, the $11 billion or so, $10 billion- $11 billion , that had pretty good uptake rate. And I believe that all that's left there is just send the rest of those dollars out.
But on the emergency side, I know there were some challenges in kind of quantifying who qualified, getting those programs off the ground. And maybe now they just don't expect all those dollars out the door this year. I mean, what comes to mind for you just on the government payments first?
Yeah. I think that maybe part of it is they've looked at applications and said, "Hey, this is what we're not going to get all of that $30 billion out the door." Also could be a revision to ARC/ PLC payments if commodity prices came in slightly higher. Maybe some of those programs weren't going to be quite as utilized. Yeah, it's about $2 billion difference, which I think is within the margin of error for that particular line item. The other farm income is one, that's kind of a crapshoot, right, of other stuff. So that one, again, probably within the margin of error. I think the real story might be below the line at cash expenses, right? If I'm reading this right, this is about a $30 billion upsize in what the USDA expects farmers to spend this year in cash expenses.
That is the increase. And I'm looking at this as well, trying to do the manual back and forth. So bear with me. Did anything jump out to you? Have you done this now on your side, Jackson?
I have not. I'm just looking at like you at the side by sides. It seems like it is mostly the usual suspects. So you've got sort of an increase in interest expense, sizable increase in interest expense, sizable increase in feed costs. Well, yeah, pretty sizable increase in feed costs.
Interesting.
And I'm looking at labor. What's our labor? No, labor's about the same. So it's a death by a thousand cuts, it looks like. It's like in a bunch of different categories. They're just expecting stuff to cost more.
So, okay, let's talk about feed costs for a second. So they raised the just do you want to double-check that? Because that was one of the things you and I kind of were stuck on in February. Did they raise their expected feed costs?
Yeah. So in February, feed purchase was at $62 billion versus $68 billion and change now.
We didn't like the number in February. And when you just think about all that's going on on the annual crop side, the pressures there, corn, soybeans, that complex, the weight that's there. And yet you're saying that then producers on the backside are paying more in terms of their feed stock. It's a bit perplexing, Jackson. I couldn't square it in February. I thought they would adjust the feed costs in September. In February, they said, "Well, we put together this forecast in November, December, kind of those time frames." Well, now they've had a number of months where prices have been lower. So I don't know. Some skepticism is what you're hearing from me there on the expense.
I'm picking it up. Yeah. I'm picking it up.
The feed costs.
Well, the same with the interest expense going from $28.9 billion-$32.5 billion. I guess maybe they were building in some expectation of short-term rate cuts that didn't materialize. And maybe this dovetails with some of the balance sheet work that I will do in just a second. I'm trying to get the numbers of the balance sheet information, but maybe a little bit higher debt load than anticipated on the interest side, right? Because that's kind of some of the things you're hearing. Are farmers taking on more debt? Is that sort of the backdrop that you're reading about as well?
It is. It is. And it's for different things. And I know when we touch on The Feed articles, we're going to talk about some of the shift where maybe folks aren't buying as much machinery this year, but they are still drawing on their operating lines. And even I think in our latest 10-Q, we've talked about there's been an increase in the Farm & Ranch loan demand to term out some debt and tap into some of the equity. It feels a little bit early, and we probably haven't seen the wave that we saw 2015, 2016, 2017 when there was a fair amount of that activity, but it has started for a certain subset of producers out there.
So I guess when you bake that in, that interest expense rates are significantly higher, I guess, than where they were three, four, five years ago, and that's maybe weighing on it. I don't know. That's a big increase. This expense side of the income statement, I need to do some harder thinking on some digging into some of these numbers. What about on the balance sheet side? Have you had any luck pulling that up?
Yeah, I sure have. Let me just bring up the summary here. All right. I'll share my screen.
Absolutely. I'll stop sharing. See if that expedites it. Let me see if I can pull.
All right. So you should be looking at a spreadsheet kind of comparing the 2024 forecast and five forecasts. So these are the differences between each one of the categories of the balance sheet. So total assets, they revise down $2 billion from 2024, but revised up assets $20 billion in 2025. So a pretty sizable increase in 2025. Real estate, they actually revised down by $45 billion. So that's a pretty sizable increase when you think about the value of assets. They're saying, "Hey, look, on average, the farmland value went up 5%, 4%, 5% this year. Yet we took down the total value of all real estate assets by about $46 billion." That's a pretty sizable change. Debt up $30 billion in 2025. That is a huge number when you think about how much I'll flip over to the core spreadsheet here.
So when you think about the total real estate debt was predicted to be $375, and now we're up to $386 billion. That's a huge, huge increase in the total real estate debt predicted for the September data. So these are pretty sizable numbers. The total debt up $30 billion, that's the 30 is the total debt. Real estate up $12 billion and non-real estate up $12 billion. So that's where your interest expense increase is coming from. Farmers are taking on a little bit more debt than USDA anticipated at the beginning of the year.
That's absolutely where that comes from. Just talking about the first number you touched on, the real estate number, that is interesting. A bit of a conflicting number in the context of we all saw that USDA land values report. That was a bit surprising, I think, to some folks, the fact that land values increased across the country in every single state, and their pockets of weakness that we could certainly talk about out there. But very positive August land values report, only to then downgrade the overall value of real estate in the sector a month later. I know that these are different reports, and there can be some difference in data collection methodology. The USDA economists can obviously speak to that. But interesting, you see the discrepancy across teams for sure.
Yeah. And a couple of things at play there, right? So the total acres could be going down as they're seeing some land come out of production. So that could drive your total down, whereas you could still have a higher per acre dollar amount even though you've got less acres, right? And so very possible that's what's at play here. I think it's also interesting to look at the value of these inventories. Some of them are pretty sizable revisions up. So for example, crops up $15 billion, right? The expectation is farmers are going to hold on to those crops a little bit longer. So they're not going to market them in the 2025 calendar year, maybe hold them over into the 2026 calendar year.
So I think as lenders, that's something to build into the expectation is USDA's expecting maybe more carryover into 2026 through the marketing year of 2026. And so that will potentially impact lending demand, some of the repayment, carryover debts, like all those kinds of things will be impacted if these inventories carry over. I also think it's reflective on the animal side of just how much more those cows are worth, right, Blaine?
Yeah. Yeah, absolutely. In terms of the livestock space, if there's one shining star, we knew it was going to be the positive aspect about this. Frankly, it had to be given where beef cattle prices continue to set new records. That trend doesn't look to be stopping anytime in the near-near term. There are some black swan events we could talk about, New World screwworm, that could potentially derail that. But absent any of those outlier events, livestock is going to continue to be the hot sector led by beef cattle. There's some spillover. On the dairy side, those cows are worth more. I think the USDA is picking up on that. They're worth more because dairy profitability has been okay. I'll say mixed. I grew up on a dairy farm. I know it's never great, but it's been okay, and obviously, those animals are worth more.
And then even the pork and poultry, we talked about that. It's maybe not their year to shine, but they've done okay this year as well. Interesting. Interesting on the inventory adjustment side.
Yeah. Interesting is exactly the right word I would use. It's interesting in how you take it and how you think about how to change your strategies as lenders. Definitely a lot to unpack. I think it's interesting. The farm sector equity took a dip in 2020. So they revised backwards 2024 saying like, "Hey, look, we think there was probably more debt taken out and a little bit lower real estate side." So the equity is upside down on their 2024, but almost no change. I'm trying to check that to make sure that's right. But farm sector equity between 2024 and 2025 looks to be pretty stable. So let me check on that number and make sure I didn't have an errant copy-paste or maybe the data hasn't been quite refreshed yet. Any luck on the specifics of farm incomes or the government payments yet?
I'm waiting. I'm waiting for that spreadsheet to come out here. Thinking about if you're a lender, and one of the questions we always get, Jackson, from interested folks in the sector in terms of, okay, your debt-to-asset ratio maybe starts to turn the other way. We had a number of years where that was declining. Obviously, on the lending side, you like to see balance sheets that look better year after year after year. It doesn't always happen that way. And we may be going back to a period where folks are tapping some of the equity. I, at this point in the cycle, probably like you, am not that concerned if we did start to see the debt-to-asset ratio start to inch up a little bit. For historical context, we're still well below where we were in the 1980s cycle.
The sector overall still extremely low leverage relative to where we were. Even if you focus in, one of the big critiques would be, "Yeah, we got a lot of landlords that I'll never put debt on." And then you have a lot of operators that are highly leveraged. Highly leveraged today looks very different than it even did then. And when you're talking about operators that are maybe going from 40%-50% debt-to-asset ratio, it's not really the end of the world so long as on the income side, you can still continue to support and service that debt. It seems like the USDA is saying that income and revenues are holding in there, which is positive. But I want to dig in a little bit more once they put out some of the more detailed stuff. Are you seeing?
The correction to equity is about $9 billion. So that's the 2025 number. Almost no as a percentage of the total equity, right? So there's whatever, $3.5 trillion, $9 billion. Who cares about a billion here, a billion there? That's not that big of a deal. But it is a 1% revision to the 2024 number, which is fairly substantial. So I think summary what I'm hearing you say, what I think I'm saying is revision down. So what we all somewhat expected was like, "Hey, things are a little bit tougher out there than maybe some of these headlines were saying." I think the USDA has revised their income picture to reflect some of those difficulties, higher costs, a little bit lower revenues, and the balance sheet is also reflective of some of those challenges.
So tighter equity, more debt needed on farm, a little bit tighter asset levels. And so you're seeing that ag cycle turn. That's how I'm interpreting it. Blaine, what do you think?
One of the things, and they don't break it out here, but in doing the kind of the speaking circuit this summer, and you and I have compared notes on this, it seems like a lot of lenders are having proactive conversations with folks, talking them through, "Hey, let's focus on bringing expenses down as we've seen our revenues come down." One of the stickiest items that they don't break out here is the family living expense, and I wish they did. I'm looking to see if they've released it. It doesn't look like they have yet. Family living expense probably is contributing to this, Jackson. We've looked at some university data. We've looked at our own internal data. That expense is quick to rise in the good times, and there's some tax reasons for that. Lenders out there on this call are going to easily understand that.
does not drop at the same rate that it increases. It tends to be a little bit stickier. Folks get accustomed to that higher cost of living, and then it takes a while to come back down. My hunch is that's probably bleeding into a certain extent on the expense side, and we're just not, we don't have the full details on it, but that could be a part of the aspect of going from $194 billion in net cash farm income down to $180 billion in terms of the USDA's new forecast. $180 billion still is a great number, and we should have probably said that upfront, Jackson.
Let's at least put that into perspective. 180 adjusted for inflation is a solid number. A lot of producers are going to do very well in 2025. Am I right?
Absolutely. Absolutely. Even on the, doing some quick math, talking to some folks from southern part of Minnesota down into Iowa and even Illinois, we think about the price collapse that we've seen. If collapse is too strong a word, I apologize, but on the corn and soybean side, we're talking huge yields out there. The USDA coming in with, was it their August WASDE, basically put together forecast that highest corn yield on record? Soybean might have been record as well. You combine that from a revenue perspective with where prices are, you're still going to do okay. That's where then government payments and the number of these other things come into play. I think even on the crop side where you say maybe it's a bit tougher, overall, okay.
One thing we haven't talked about, and maybe we should here, Jackson, on the West Coast, we probably have some lenders calling in from out there. We don't have great detail in bifurcating out, okay, what crops are doing what this year just yet. But that's probably part of the recovery as well. Almond price is higher this year. We've seen a little bit of a dip since the July report, but still a lot of sales early this year, very favorable levels compared to where they were last year. That has to be a contributing factor. Do you agree, disagree?
Oh, yeah. No, I think when you get into the crop receipts, which you're probably going to see is a shifting of some of those things. So when they release some details of their 2025 outlook, I think we're going to see animal or fruits and nuts, maybe any offsetting decrease in grains, they're going to see pickup in some of those fruits and vegetables and tree nuts. Just because I think the perception was at the beginning, and this is all data coming from last November, right? They do their February forecast from data that's even a little bit dated from February is that things weren't quite turned around yet. There was still momentum. It was looking better, but they couldn't, you can't price things that are looking better. You got to price what's in the data. So I think you're right.
I think we're going to see a little bit of a shift in maybe an improvement in receipts for specialty crops and a little bit of a degradation in those core grain commodities, even though I think maybe yields come in a little bit higher and offset some of those prices. We're also forgetting that prices just surged, right? I mean, so we were looking at a curve that kind of looked like this, right, in terms of corn, soybeans, wheat. And then a few days ago, we see a bounce off the bottom. So even this data, as recent as it is, is a little outdated because you have to at some point say, "Stop. I'm going to take what I have now. I'm going to make my estimates looking forward." And stuff continues to change and migrate.
Where do you think one of the things we talked about interest expense, and there's been a lot of focus on the bond market right now, what the Fed might do in a couple of weeks in terms of interest rate cuts? Do you think when we fast forward to the December one, I hope we do one of these again, are we going to see a lower interest expense if we start getting rate cuts in the next couple of months?
Yeah, I don't think so. And I'll tell you why I think it's a timing issue. I don't think that will kick in until next year's op note. So it's going to take a minute for, let's say there's a cut in September, there's a cut in December, or maybe two cuts at one of those meetings, we get 50 basis points wrung out this year. That really won't take effect until renewal season in March, April. And so it should impact 2026 numbers. I'm not sure it will impact too much 2025 numbers, especially if debt loads are up the way the USDA is expecting them to be.
So on that note, if you're a lender out there right now, Jackson, you're seeing the USDA is saying we're going to see a larger increase in the amount of farm debt that exists out there by the end of this year than we were even expecting in February. If you're at a bank and you're saying, "Well, I haven't seen that increase, should I be preparing right now?" Just the USDA is expecting it. Should lenders expect that as well?
Yeah, I think so. Well, I think it's all about that communication point with the borrowers and making sure that you understand their needs, their demands, and that you kind of see that from the ground up. Certainly, the USDA makes estimates based on a lot of survey data, a lot of touchpoints. They have great intelligence coming to them. It tends to be when they see an increase coming that lenders also see an increase coming. It may not be exactly in lockstep. Maybe it's a little before the latter. But my hunch is if the USDA expects it, it's coming from solid groundwork, and it's either happening at the lender level or it's going to happen at the lender level come end of year once that crop is in the bin.
Nope. Very good.
We did get a question from Gus. I don't want to ignore your question there, so safe to assume the rise in real estate debt is due to consolidation of troubled operating, so restructuring, I think, is the basic question, which I don't blame you. You want to take a first crack at it, and then I'll maybe spackle in any other thoughts.
Sure. And I can maybe just speak anecdotally to some of the volume that we've seen. We've seen refinances increase this year. And talking with lenders out there, it doesn't seem like we're an outlier per se. That's going to be a fair amount of it. Now, refinances could be some troubled operators. It could also be, in a lot of cases, just folks that were operating on a cash basis didn't need to tap any of the equity that they've built up the past few years and are now just taking advantage of the fact that it's sitting there and it's a tool in their toolkit that they can use. So that's my initial reaction. The delinquency data doesn't say that there's that much troubled operators out there, but it is increasing up. So I don't know, Jackson. Is that an aspect?
You know, I think I agree with your assessment. Yes, certainly. There's going to be some of that. You look at the bankruptcy counts, Chapter 12s are up slightly, but they're coming off the floor, right? So you hate to use that number too exclusively. You say, "Oh, well, in the first quarter, there were 82. Last year, there was like 80 in the whole year." But that's historically low and covered up by a lot of sort of voodoo economics and cash on hand and all sorts of crazy economic activity. So I don't judge this year yet based off of last year. It's more of a, we're kind of near historical averages in the bankruptcy space. And you're exactly right on delinquencies through Q2. They're kind of coming back to normal. They're coming back to average. You know what I mean?
So we're not seeing them go yet above, but we're certainly not at the historic lows that we were in 2022, 2023, and 2024. So yeah, is it getting worse? Probably, right? We're starting to see some early signs of that, but those are all lagging indicators of stress. I think you're right. It's more working capital recap on the balance sheet. Take a little bit of equity out, put some cash back on the balance sheet. And that's probably the bulk of that extra debt coming on. It's a working capital recapitalization.
It's going to be an interesting renewal season, and I know everyone is. Every renewal season has their own narratives and stories. When we think about, especially on the annual crop side where you get into it in the fall and start talking about next spring, the prices where they are today and the current yields that we have in 2025, you can make a lot of stuff work, but in terms of, okay, what do you pencil in for next year in terms of yields? If you're using kind of today's prices, it's going to take some proactive and probably a little bit more work than some of the previous years have. Obviously, appreciate all the work that goes into that, and yeah, the conversations, probably not as easy or fun as previous years.
But again, from an overall sector and for many operators, they are sitting fine from a balance sheet standpoint. It's just that income side is going to take a little bit more work, probably. And the USDA is sort of picking up on that. They are forecasting an increase. But again, when you take government payments out of it, we're back at a flat to maybe declining income story. And government payments are a tricky thing to underwrite too, Jackson. I mean, I don't envy, as a lender, how do you bake that in? Even when there's a lot of support on Capitol Hill, we talked about that leading into this call, some talk about, do we divert some of the tariff incoming revenue and help out in the farm sector where maybe they're struggling a bit? It's great talk.
And I love to hear the support for farmers, but how do you underwrite that? What do you include for a per acre boost for a central Iowa farmer looking to do a real estate deal? It's complicated. It's complicated.
It absolutely is, and maybe one more number to throw out there is $39 billion. That's the increase in USDA's expectation for working capital, the farm level working capital. That's two things, right? So part of that's the cash coming off of additional debt issuance, so maybe that recap of the balance sheet, but also those inventories, right? So that you're carrying over the inventories in your working capital and the value of those inventories is also showing up. And so that big increase, I mean, that's a huge increase. It was last year, they were, or in February, they were anticipating $128 billion in total farm working capital. Now the expectation is $168 billion. Huge number. Even in 2022, it was $133 billion, right? So one of the best years ever in farm profitability. We're seeing more working capital on the farm because of those inventory carryovers. Not the best.
You want it to be in cash, right? Like if you're thinking about the quality of that working capital, like the closer it is to cash, the more valuable, the more liquid it is. But I think right now it's going to be more in animals, just through the high prices and the crops that you're going to carry over into the new year, which isn't quite as strong. It's a great number, 168, super, super duper number, but I wish it was a little bit more cash and a little less inventory.
Yeah, for sure, for sure, and there's probably farmers playing Tetris out there right now. Let's be honest, Jackson, with more of their last year's crop than they probably would have liked to have carried to this point, and now you're at this weird spot of, you know, if it sits in the bin, you don't have to sell it. You don't have to recognize where prices are today, and a lot of folks just hoping for a boost. Let's see. We've got a question. I can't see all of it.
The recent court rulings. Is that the one you're looking at there?
Oh, is that what it was about? Is that?
Legality of tariffs and potential to repay businesses. I am not going to touch that one. Blaine, you feel well-informed enough to go after that one?
I thought about being a lawyer growing up, and I somehow ended up as an economist. I don't know what that says about me. So I'll refrain as well. We did throw the disclaimers up, so I don't know if that technically absolves us of our ability to pontificate, but.
I'll say this. Any policy-related decision, there's going to be court challenges. This is not uncommon to see court challenges come up against geopolitical activity. So no matter who's in the White House, right, you could see different factions saying, "Hey, I don't think that's legal. You got to go take a look at that." So this is fairly common. Again, not specific to tariffs, but just challenges to executive positions and policies, not uncommon. I don't expeqct it to change the math a tremendous amount, with the caveat being that we said up at the beginning, like anything we say could be completely wrong. So I think today my economic view of it is not a big change in outlays, or I wouldn't expect a huge payday from farm businesses who maybe can demonstrate some harm from the tariffs.
However, I've been wrong before, and I'll be wrong again.
Can I just say on that note, Jackson, that even if the challenge of legality of redirecting some of the tariff income, they might just spin something on paper and say, "Okay, we'll use the tariff income for what we can, and then we'll just use funds from somewhere else." And it's kind of a, what's that? You're just moving kind of.
Shell game.
Yeah, it's a shell game to a certain extent. And again, on the political front, what I'll say is it's nice that there's support from all wings of Congress and the executive branch as well. They're not going to forget about farmers. I know there's lots of other bigger issues out there in the world. I get that. Right now we're talking about the farm economy, and I love that there's support for it. So yeah, put a pin in that thought.
We've taken up a lot of airtime with just the USDA farm income. Why don't we spin over into some of the articles that you and I wrote over the last couple of weeks and just have a quick overview, quick highlights of some of The Feed articles. Then folks, feel free to jump in with some additional questions here as you've had time to think through some of the things we're talking about, maybe reading some other things on the side, and we'll jump back into the presentation.
Absolutely. Let me jump here, throw this back up, and then we'll go to the backside of this.
I mean, it's kind of perfect too because so many of the things that we're talking about in The Feed articles reflect what we just saw USDA bring into their farm income forecast, right?
Absolutely. There's a great dovetail. Let's come back to this. We could talk about how to subscribe and whatnot. But let's come back. We just talked about the livestock space and the fact that that's the shining star, right? And it's no secret when we focus on this, this is one of the articles we wrote. And I'm going to come back to the graph on the left. Let's focus on the one on the right. Beef is expensive right now when you look at retail beef prices because there's a lot of demand for it. And beef demand is somewhat insatiable. That's led to higher prices. And fortunately for your cow- calf guy, for a number of years, we saw the packers capturing large margins.
That pendulum has swung back, and your cow- calf guy is now capturing a big part of this strong retail demand, and they're having very profitable years. So that's great news for your cattle ranchers f eedlots to a lesser extent. And packers have done okay in the past. They'll probably do okay again in the future. Let's talk. One of the articles that we dive into on the beef sector, though, is there's been some headlines about, "Wow, we see strong, insatiable beef demand here in the U.S., and yet it's being fed by imports." And there's some, I don't know if it's pessimism about that, some negativity surrounding that. Let's talk about the facts just in terms of the actual numbers and what it shows. And absolutely, imports have surged of beef into the U.S.
The graph on the left shows the trailing 12 months, and we've now surpassed four billion pounds according to the most recent data. I mean, hockey stick growth is a crazy thing, and you look for it in economics. You don't always find it. This is an example where you see some exponential growth over the past 12 months, Jackson. Were you aware of this? Is this a thought that crossed your mind?
Yeah. I definitely have been, this has been on my back burner, right? It's like how much competition, as we've seen our herds dwindle, it almost has to have, it's the same way when you don't have labor for an industry, what are they going to do to find labor? Well, they're going to import it, right? Same thing here. When you don't have beef or beef becomes too expensive, all of a sudden shipping it up from South America, Australia, wherever they do have cheaper beef, that's kind of the way it goes.
Yep. Yep. For sure. And so not to, you know, everyone can go out and read the article, and I encourage you to read all the articles. There's great intel on lots of different subjects. But the punchline with this one, so we can go to the next one is we've seen imports increase. A lot of it's been the lower value meat that gets blended into hamburger and things of that nature. It has not put a meaningful downward impact on beef prices overall at the grocery store. And we see that in the graph on the right. Has it had a marginal impact? Absolutely. You can't have this level of imports and say, "If this supply was gone, would it impact prices?" Of course, it would.
I think it's a delicate balance of you don't want beef prices to spiral so far out of control that you start turning off a large subset of consumers that can no longer afford it. We're probably approaching that. I think imports are helping limit that impact while also maintaining strong profitability. So it's a delicate balance. I acknowledge the concern, but it's also helping keep prices in this stratosphere and not off in outer space.
Hard to think of that they could be higher, but they could, right? Without some degree of supply injection, retail beef would be even higher, which is wild.
You have kids. Anyone on the call who has kids knows what it's like feeding a family. And it's crazy when you're talking about $5, $6, $7 hamburgers. So anyway, let's zoom forward to another article. And this one, the spillover impact of high beef prices. I grew up on a dairy farm. And for dairy folks out there, folks who are familiar with the industry, you used to be able to give bull calves away for 5, 10, 20 bucks. At times, you were basically paying people just to come take bull calves. It was not a moneymaker in terms of how the economics of a dairy operation, dairy producers work. Your bull calves serve no purpose other than to go off into the beef sector. That's changed. That has completely changed in recent years. And there's a number of reasons why.
For the sake of this call, we won't get into all of them. I encourage you to, again, read the article. But we have seen the value of bull calves from dairy operations increase again in hockey stick upwards growth to the point where they're surpassing in many regions this summer over $1,000 per head for a newborn baby calf, completely altering the economics, Jackson. You're talking about a section of the income statement for a dairy producer where it was less than 1% of their annual revenue was bull calf sales. Our numbers show that it was upwards of 10%-15%, even close to 20% for certain operations of revenue of a dairy operation, not even milk-based, but sales of bull calves. So I'll stop for a second. Just wild.
It's wild. You know there's really no outlet. Typically, you would just import live cattle or calves from other countries, but this whole screwworm thing is screwing with the supply and demand equilibrium for live cattle and creating opportunities like this one where you just see a wild, wild change in valuation because we're so near zero on the supply chain.
Yep. Absolutely. It's filling that beef void that, again, imports are trying to help fill, but you're limited. You're limited to only process from certain countries, and that's a whole process to get in. And so dairy producers, good on them. They've recognized there's this void they can help fill. Again, the article dives into how and the different mechanisms of how this logistically actually has taken place. But I thought this graph does a really nice job of highlighting one of the developing trends that exists out there.
No, it's fascinating. I was shocked when you showed this to me. Shocked how much that run had happened and kind of quietly too. It wasn't like I haven't read a lot of articles about this phenomenon. And now I'm looking at the data going like, "It's all right there.
Absolutely. I think the dairy producers out there have been very aware of it, and you see for a number of years they've seen this increasing, but there's a dearth of information about it from an actual published article standpoint, so anyway, great article. I encourage everyone to read it. We've touched on two positive articles. Why don't we touch on the other side of the profitability spectrum, Jackson?
The bad news, the bad cop, right? I'll be the bad cop and talk a little bit about the grain markets. Hey, these are just two graphs looking at corn, soybeans, global ending stocks. I'll say there is a little positivity. A little positivity. On the left, you've got your corn ending stocks. We're actually seeing that drop a little bit. This is like the best measure of global supplies that we have at our fingertips. When you think about ending stocks, that's after you've processed stuff, you've turned it into ethanol, you've turned it into feed, you've turned it into high fructose corn syrup, whatever you're going to do with it, how much you got left over, right? That's the way to think about ending stocks. And it's a good way to think about oversupply, undersupply, are prices going to move up or down, right?
So if you have too much, if your ending stocks are going up, that tends to put downward pressure on prices. If your ending stocks are going down, you tend to have price support or maybe price increases. So I'll say, "Hey, look at corn. We're finding great uses for corn. That could be in ethanol SAF in Europe and America. It could be in imports for feed livestock in Japan and Mexico and in China." So we're finding good uses for corn. As U.S. producers have switched over to more corn acres this year, that's good news story. And I think that's one of the reasons why corn prices have bounced in the last couple of weeks as people start to realize like, "Hey, actually corn exports are going quite well," right? Blaine, you looked at that recently. Corn exports are actually holding up to near historic highs.
Corn is clearing. Maybe the bad, bad cop is in the soybean markets where we're just seeing those supplies increase and increase and increase. Brazil making more soybeans, having great yields down there. America's had a couple great years of soybeans. The world is just kind of flush, right? You're seeing the economics turn around on soybeans purely as a result of oversupply. Farmers probably going to grow less soybeans even next year. I anticipate more rotation into corn, maybe double corn years, whether that's possible. Right now, I think the story is in corn. How much demand is there? Is that going to hold up? Can we see exports continue? On the soybean side, how big is the crop going to be from Brazil next year? Then can we turn around some of these relationships with China?
That will be the big story in the soybean markets.
It cannot be overstated the impact of China, right? It's something like the total global imports of soybeans, they're around 50% and plus minus, give or take. But right now for new crop soybeans, I believe the most recent data I looked at was zero purchase contracts of new crop soybeans. If it has changed a little bit, I apologize. I believe that still holds though. And that's a concern, right? And that's part of the downward pressure. Folks who monitor this, this is not like a news story, a new news story, but it's going to continue to be the main news story when you think about what do we do with all the soybeans we produce.
It's especially relevant up here in the Upper Midwest, kind of the western Great Plains where over the past two decades, there's been an entire logistic chain built out to help bring those soybeans to the West Coast and get out to the markets in Southeast Asia and China. To a certain extent, you're going to see some increased soybean crush. In the WASDE reports, they've started picking up on that as prices have come down. It's not all negative. I'll also remind people that we have seen increases like this before. Back in 2017, 2018, 2019, we were going through a trade war with China. On the backside of that were some of the largest purchases of U.S. soybeans in the Phase One trade agreement. It's been done before. I don't think that we need to be completely pessimistic. We need to be realistic about where the market is.
But there can be some upside on the backside if we do get some sort of trade agreements worked out. I know there's a huge complex things. There's a lot that is going on right now in terms of the U.S. and global trade and shifting patterns. But let's just remain open to the idea for time being that there could be some resolution with positive impacts for soybeans. So I know it's negative, Jackson, but I can't be completely negative.
No, I love it. And what I'll point out to everybody. If you look at that graph on the right, look, the blue represents the ending stocks just in America. We're actually pretty low historically. You look at 2019, look at that big bulge in 2019. That was the trade war. That was when China basically turned away from us. We're not anywhere close to that level of ending stocks here in the U.S. We're much tighter to that level. So whenever you get those supplies kind of low, like that, prices can swing quickly if new buyers come online or if old buyers come back to market for any number of reasons. It could be a trade deal. It could be South America has a bad crop year or there's some disruption to global marketplaces and China needs to access soybeans quickly.
We're not like super oversupplied historically. In 2019, we were super oversupplied, like super, super oversupplied. This year, I think we're a lot tighter than we were even in 2018, so there you're exactly right. There's room to run. And I'll also say the domestic demand for crushing for renewable diesel, there's still good support for the renewable diesel markets, West Coast, but also in the H.R. 1, there's still some supports for renewable diesel. So there's some demand drivers that could kick in in 2026. And if supplies stay tighter, they're not tight, but if they stay tighter, we could still see some price appreciation in soybeans. So we talked out of both sides of our mouth. It's bad.
Yeah. Yeah. I've got two hands that qualified me as an economist, right? On one hand, on the other.
It's like I've shown both.
Yeah, exactly. For the sake of time, could we just touch on farmland values? It's near and dear to my heart, to your heart, to Farmer Mac's heart. Could we just touch on this quick and then we can go to questions? Does that sound good?
Perfect. And guys, start putting those questions in the chat because otherwise it's just me and Blaine making them up. And we question ourselves every day.
All right. Real quick, I just want to spotlight, highlight the fact that Farmer Mac, we did roll out our national farmland index earlier this year. On a quarterly basis, we work with AcreValue to track what's going on in terms of actual farmland transactions out there. We weigh it nationally, just like the USDA weights theirs. There are some differences, and so if you look at this, you're going to notice right off the bat that maybe the numbers don't line up one-to-one with the USDA's national farm real estate value. It can all be traced back to the actual weighting, but the other key difference relative to the USDA, and I think what's worth highlighting here is we've seen a bit of plateauing nationally in terms of actual farmland sales prices.
USDA's is based on survey data that they ask people, "What do you think your land is worth?" We base ours on what is the land actually trading at, and there's been a little bit of weakness. It's through Q2. Q2 is not a great benchmark quarter. Most farmland in Q2 is busy being farmland and not generally sold mid-season for obvious reasons to lenders, but it's an interesting data point that we're picking up on and is absolutely worth reporting, so Jackson, just any brief thoughts on the farmland index and what we're showing nationally?
No, you hit the nail on the head. It's also seasonally. If you look at this, there is some seasonality in it to Blaine's point on when do you see a surge? It's going to be in Q4 when the crops are already out and people are selling and there's more activity. When are you going to see a dip? It's when less land comes to market, and so that's what we saw, but I think there's also a lot of the West Coast dynamics popping up in here, so there's a lot of land that traded in Q1 and Q2 that started to trickle its way into the data set. If anyone's following California markets, some of the subsidence, some of the lawsuits, some of the bankruptcies in West Coast agriculture are absolutely showing up in this number.
So if we were to do a regional index, it would look a little bit different in the Midwest, probably a little bit different in the Southeast. But when you nationalize that number and look at the weights across the country, it makes a lot of sense to a lot of people when you think about all the trades, all the sales that happened in Q2.
Absolutely. West Coast, maybe some pockets of stress, cropland, nationally speaking, transactions flat to modestly higher or lower depending on region. And then livestock, pasture ground continues to go up. So there is a bifurcation there, just like we've talked about with farm income numbers. And unfortunately, the national number here, the weighting showing a little bit of weakness, but nothing to be overly concerned about. We'll continue to report on this going forward. Let's talk about that. Can I flip back to this slide? If folks want to subscribe, Jackson, do you just want to highlight this and then we'll get to questions?
Oh, yeah. I mean, I can't stress enough how easy it is to get on our subscription list. You go to The Feed, farmermac.com/thefeed, sign up. There's a little box there. You put in your credentials, and then we're going to package these articles up. When we get them done, we're going to send them over to you guys. It's a great way to get all the latest and greatest that are coming from our team here at Farmer Mac, and we love feedback, so please feel free to give us some feedback and maybe article ideas. We love to collaborate and work with others, so if there's something you're dying to know about, don't have a research team at your bank or at your lending institution, give us a shout. We love to take feedback from our readers.
And that's, again, for the sake of time. We don't have time to maybe go through all of these, but here's some more just from the last few weeks. We just put these out. And a couple of these articles, I'll talk about the machinery debt one. This was an idea that came from a bank. They said, "Hey, we're seeing a lot less demand for farm real estate loans. Can you look into this?" We looked into it and absolutely, it's been a huge drop-off to the lowest kind of four-quarter rolling value in basically the history of the time series that the Fed puts together. Great idea that came in. We were able to write on it, report on it, and provide some insight back in the form of an actual The Feed article.
There's a couple of other of these as well, but any you want to touch on briefly before we just go to the final slides?
No, I'll double-click on the history of tax credits because it was something that was a little unfamiliar to me. Farmer Mac, we have an infrastructure group and we do loans against solar and wind farms. But the history, the length of time that those tax credits have been in service and have sunset and come back, it's just a really fascinating story. I encourage everyone just to, if you're unfamiliar with energy tax credits and how they've been used historically to spur innovation and investment in all sorts, all fashions of power creation, we're going to need more electricity. We're going to need more power into the future. You can read a little bit about that history and then the H.R. 1 sunsets those tax credits.
So thinking and putting that into context in ways that might impact your communities, your banks, I think it's a great read.
It is an excellent read. That's extremely informative and another great idea. We've got the roadshows coming up. I forgot this slide was in here. I'm glad that we can plug this though because it is one of my favorite events of the entire year, and we have lots of them this year. Holy smokes!
Yeah. To say we're coming to a town near you is an understatement. We've got a great team of relationship managers who are traveling the country, talking to lenders, helping them understand what Farmer Mac does, how we do it. And I couldn't stress more how great these events are. Blaine, you're turning up at a couple of them, I believe. I'm going to try myself to make my way out to a roadshow near some of our listeners here.
You know, I'm not going to commit to all six weeks. Not to all of them. I do plan to pop up at a few of them. And again, one of the best events of the year just in terms of us getting to interact with the lenders that we work with out there, current and prospective ones that we work with, and kind of hear what's on their mind. And we don't get to do a lot of farmer-facing events. So this is our interface where we get to hear, "Hey, what are the lenders hearing from farmers?" We present some of the stuff, some of the new updates that we have, but mainly it's about hearing, "What are you guys hearing out there?" So very excited about these. And you can find more at the.
This is a great event to grab your coworkers and bring to, right? So it's a, "Hey, let's all together come and learn more about." Maybe you're, as a listener, well aware of everything going on at Farmer Mac. We'll find a peer, someone who sits across from you, grab them and bring them with you and have them hear the message and learn more about secondary market and liquidity and the products and services that we can help add more value to your institution and that you can pass that value on to your growers. Great. We've got a couple of, somebody's already posted some of the articles in the chat there. So that's awesome.
Excellent.
Asked and answered by the listeners. Also, thank you to Cody for noting that some of the stuff has been refreshed while we were talking. So go out to USDA's website, the Farm Income and Wealth Statistics website. You can read more about their interpretations of those updated numbers in addition to our take on it. They put out their own information. So please go and read what the USDA wants to put out on those things as well because they offer a lot of insights into, "Hey, here's what we're thinking," right? Here's the thought behind that number or the statistic behind the statistic. And they give a lot of great color in those commentaries.
The purpose of this is two folks that weren't involved in putting the forecast together, trying to interpret the results, right? That's you and I, Jackson. We're very plugged into all different facets, but we don't know how all of those pieces come together in terms of the USDA forecast. They can provide that additional color. I like doing this with you just because we get the real live reaction, right, of two economists. This is near and dear to my heart and it's hard to predict. I mean, you saw it this year. Jackson, you followed this for 20 + years, and history says that it should have went up in this September forecast and they downgraded it, so it's a bit perplexing, but it's one of those years.
That's exactly right. Hey, we're used to it. We're used to cycles in agriculture. And Farmer Mac, we see through them. I'll say, even though it's a downward revision, there's still a lot of positivity out there, a lot of things to be positive about in that farm income release, the farm income and wealth data release. Tune in for more. We're going to be putting out articles about that probably in the next issue of The Feed. Come out and see our teams on the roadshow and look out for more great communications from our marketing communications team. Thank you to them for helping us put this on. And I hope everybody has a great rest of your day. Thanks for tuning in and we'll talk to you soon.
Thank you, Jackson. Thanks, everyone.
Thanks, Blaine. That was fantastic.
The recording has stopped.
We knew that USDA wasn't going to be exactly like on the spot, right? So I think you handled that well, and thank you to you all for tuning in.
I'm a bit conspiracy theorist that they found out about our webinar and then decided not to release the results to make us look kind of foolish. But hey, that's all right. We improvise, adapt, and overcome. And that's exactly what we had to do there on the fly, so.
I didn't look to see. Was there anybody from USDA registered? Maybe they tuned in. Somebody was Carrie or something like that. Thank you all for tuning in and for your thanks on the chats, guys. That's awesome.
We need to comb through the list and see if there's any plans from the USDA, and maybe we're going to get subpoenaed for questioning some of their numbers, but hey, there's Clay Sundberg right there.
Hey, there he is. The man, the myth, the legend, Clay. Nice to see you. Thanks for tuning in.
Yeah. Great.
I think that was great. Let's maybe you and I can catch up. I've got another call here in 30 minutes. But before that, maybe let's find 15 minutes just to debrief.
Sounds good. Thank you. Good to see everyone. Thanks.
All right, everyone, we're signing off. Thanks for tuning in. And we'll see you on the next one.