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Productivity was a watchword for Alan Greenspan. Arguably the most powerful Federal Reserve chairman in history, Greenspan, who died Monday at the age of 100, marveled at the productivity strides that have characterized agriculture for decades.
In a speech focused on the farm economy in 1999, he observed that over the previous 30 years, “farm value-added per hour worked has grown at an average rate of more than 4-½%, roughly three times the rate of increase in output per hour in the nonfarm business sector of our economy. With the demand for farm output rising less than half as fast as productivity growth, the amount of labor input in agriculture has contracted dramatically. At the same time, the faster rate of farm productivity growth has led to a sustained decline in the prices of farm products relative to nonfarm business prices, at a compound average rate of roughly 3 percent per year over the past three decades. ”
Greenspan embraced the idea that the rapid adoption of personal computers, software and the internet was accelerating productivity growth in a way that allowed for faster real growth in the economy. That was a key component to how the Fed interpreted unusually strong economic growth and rapidly falling unemployment in the late 1990s without automatically assuming the economy was overheating.
Greenspan brought home what that revolution meant for agriculture. In that same speech, he foresaw that advances in computing power would lead to even further productivity enhancements in the farm sector, including advances in precision agriculture – a term that was just beginning to gain currency. Greenspan said:
- “In agriculture, as everywhere else in our economy, the computer is coming into wider use, as are other new electronic and communications devices. Moreover, some promising applications of new technologies are more farm specific. Combinations of electronic sensors, computers, and communications equipment are starting to give producers more control over farming operations that have always been vulnerable to pests or subject to the whims of nature. Applications of biotechnology have taken hold already in some parts of farming, and numerous new possibilities seem to be opening up. To be sure, many of the applications of these or other new technologies are still either in their infancy or in an early stage of adoption into standard farming practices, and some have yet to prove their commercial viability. But the general direction of change is clearly toward more precision and control of farm production processes. Over time, those changes surely will lead to a further lowering of real production costs as well.”
Crop conditions unchanged: USDA on Monday afternoon said 68% of the U.S. corn crop was rated “good” to “excellent” as of June 21, unchanged from the previous week and in line with the average estimate in a Bloomberg survey of analysts. USDA said 66% of soybeans were rated good to excellent, also unchanged from a week ago and in line with expectations. Corn was rated 70% good to excellent the same week last year, while soybeans were 66%.
- Spring wheat was rated 54% good to excellent, down from 55% a week ago and defying expectations for an uptick to 56%.
- Winter wheat, which has been slammed by drought and other challenges, slipped a percentage point to show 26% of the crop rated good to excellent. Analysts had expected an unchanged reading at 27%. Winter wheat harvest was pegged at 40% complete, outpacing the average forecast of 35% and well ahead of the five-year average of 24% at this point in the year.
The Pro Farmer Crop Condition Index (0-to-500 scale, with 500 being perfect), which compresses the USDA’s weekly crop progress report into a single, weighted, easy-to-track number that’s widely used to monitor the health and potential of crops during the growing season rose a minor 0.07 point for corn to 372.07, while the soybean CCI improved 0.86 point from last week. See the full Pro Farmer CCI ratings here.
Don’t miss: Will the European heat wave move the needle on global wheat stocks
U.S.-China tensions: A tit-for-tat rise in U.S.-China tensions over rare earths is testing the durability of a fragile trade truce, the South China Morning Post reported Monday. China on Monday placed the two rare earth companies, along with eight other American firms, on its export control list and barred 46 US firms from government procurement, in retaliation for the Pentagon’s recent move to label leading Chinese technology firms as military-linked entities, the report said.
California still waiting on E15: State lawmakers legalized E15 gasoline nearly a year ago, but not a single station in California is selling the ethanol fuel blend, the New York Post reported, despite estimates it could reduce pump prices by as much as 30 cents a gallon. The article put the blame for the holdup on the state fire marshal. Before E15 can be sold, manufacturers must update vapor-recovery certifications that show fueling equipment, including hoses and nozzles, can safely handle the fuel without releasing excessive gasoline vapors. The agency also requires testing reports from laboratories it has approved, while additional certifications are required from a number of state agencies.
Fertilizer ships head for India: Four cargo ships carrying urea, diammonium phosphate and sulfur crossed the Strait of Hormuz last week and were headed to ports in India, boosting the country’s fertilizer stocks, Reuters reported, citing a government statement. Last week, India said 16 India-bound ships carrying fertilizer were stranded in the Strait of Hormuz with about 700,000 tons on board. The report said to meet the local demand for the summer crop season, India has already imported 5 million tons of crop nutrients, including urea, apart from boosting local output, a government official said last week.
Don’t miss this week’s Pro Farmer Podcast, featuring a deep dive into the fund-led selloff that kicked off June and what to watch out for ahead of the end-of-the-month acreage update from USDA.