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Agriculture

"USDA Secretary Prospects: Trump's Potential Picks for Agriculture"

2024-11-24

President-elect Trump has been making significant strides in announcing his cabinet picks. One crucial position that has drawn attention is that of the Secretary of Agriculture. On Saturday, he announced his intent to name Brooke Rollins of Texas to this important role. Let's take a closer look at some of the names on his unofficial short list.

Unveiling Trump's Agricultural Leadership Choices

Abel Maldonado: A California Agricultural Figure

Abel Maldonado hails from Santa Maria, California. Currently, he is the owner of Runway Vineyards. His background is rich in political experience. He was the 48th Lieutenant Governor during Arnold Schwarzenegger's administration. In 2012, he ran for Congress but was defeated by the Democratic incumbent. Maldonado's early political career saw him serve as the Mayor of Santa Maria and a California State Senator. Growing up in the Santa Maria Valley as the son of an immigrant Mexican family, he attended Cal Poly San Luis Obispo to study crop science. Later, he left the school to join his family's strawberry farm, which grew into a large operation with refrigerated facilities.Another aspect of Maldonado's life is his connection to agriculture. His expertise in this field and his political background make him a notable candidate for the USDA Secretary position.

Ted Soqui/Corbis via Getty Images: Zippy Duvall - A Georgia Farm Bureau Leader

Zippy Duvall is from Greene County, Georgia and also has a presence in Washington, D.C. He was elected the 12th president of the American Farm Bureau Federation (AFBF) in 2016. Duvall is a third-generation farmer and, along with his son, raises beef cattle, broiler chickens, and hay. The family farm used to have a dairy. Before his role at AFBF, he served as the president of Georgia Farm Bureau for nearly a decade.Recent events have seen Duvall make headlines. He expelled Illinois Farm Bureau from the national organization due to a membership dispute. Although he has not publicly acknowledged the possibility of serving in the Trump administration, his agricultural background and leadership experience make him a potential candidate.

Kip Tom: An Indiana Agri-Businessman

Kip Tom is based in Leesburg, Indiana and is the Chairman of Tom Farms. During the first Trump administration, he served as the U.S. Ambassador to the United Nations Agencies for Food and Agriculture. Before this appointment, he was the Chairman of Tom Farms, one of the largest farms in the state. According to the Tom Farms website, it is a multi-generation family-owned business that is one of the leading suppliers to the DEKALB seed production supply chain and has more than 17,000 acres in production.In addition to his agri-business affairs in Indiana, Tom has served as a crop production consultant to various companies in South America. In 2016, he ran in the Republican primary for Congress but was defeated by Jim Banks. After the election, he spoke to the media and acknowledged his name is on the short list for USDA Secretary. He said, "I would be honored, if asked, to serve. I would serve at the pleasure of the President in any role that he would offer to me at that time."

Mike Conaway: A Texas Political and Business Figure

Mike Conaway is from Midland, Texas and is currently a private consultant. He served as a U.S. representative for Texas' 11th congressional district from 2005 to 2021. In July 2019, he indicated that he would not seek reelection. From 2019 to 2021, he was the Ranking Member of the House Agriculture Committee. Prior to that, from 2015 to 2019, he was the Chair of the House Agriculture Committee.Before his political career, Conaway served in the U.S. Army from 1970 to 1972. He became a Certified Public Accountant in 1974 and worked as the CFO at a bank and Arbusto Energy Inc in the 1980s. His diverse background in politics and business makes him a strong contender for the USDA Secretary role.

Sid Miller: A Texas Agriculture Commissioner with a Ranching Heritage

Sid Miller is from Stephenville, Texas and is the Texas Agriculture Commissioner. He has been elected to three terms in this position. According to the Texas Department of Agriculture's website, Miller is an eighth-generation farmer and rancher who breeds and trains American Quarter Horses. In his spare time, he is a rodeo cowboy.Recently, Miller told the Texas Tribute that before Trump's 2020 loss, he was in early talks with the administration to lead the USDA. His ranching background and experience in the agricultural field give him valuable insights for the role.

Ray Starling: A USDA Executive with Policy Experience

Ray Starling is from North Carolina and is currently an Executive Advisor at Aimpoint Research and the General Counsel at the NC Chamber. From 2018 to 2019, he served as USDA Chief of Staff, coordinating the execution of the Secretary's policy agenda.His experience in the USDA and his legal background make him a valuable asset in the potential USDA Secretary selection process.

Today in the grain markets, March corn closed down 3¾¢, while January soybeans closed down 12¾¢. After a four-day consecutive rise, March wheat contracts broke the streak, with CBOT wheat closing down 2¾¢, KC wheat down 5½¢, and Minneapolis wheat down 5¢. According to the Grain Market Insider team from Stewart-Peterson Inc., corn was pressured by losses in soybeans and wheat along with a higher U.S. dollar. "Soybeans fell for a third straight day, with March and deferred contracts hitting new lows…," said Grain Market Insider. "Declines were driven by weaker soybean oil and continued favorable South American weather, as soybean oil also closed lower." Grain Market Insider also noted that wheat prices were under pressure from the dollar and easing drought conditions in major U.S. winter wheat growing areas.

Live Cattle and Hogs

February live cattle ended the day in the red, while January feeder cattle and February lean hogs closed higher. January crude oil is currently up $1.33. December S&P 500 futures and Dow futures are currently up 29 points and 465 points, respectively.

USDA Export Sales

This morning, USDA announced new export sales. China is buying 198,000 metric tons of soybeans for the 2024/2025 marketing year. Unknown destinations are buying 135,000 metric tons of soybeans for the same marketing year. The Philippines are buying 133,000 metric tons of soybean cake and meal for the 2024/2025 marketing year. USDA also released the weekly U.S. Export Sales report. Regarding net sales for the 2024/2025 marketing year, The Brock Report stated: "Net U.S. corn export sales for the week ended Nov. 14 came in at 58.8 million bushels compared with trade expectations that ran 51-86.5 million bushels and the previous week’s 51.8 million. The sales total, which is toward the lower end of the range of expectation looks a bit disappointing." "Net weekly U.S. soybean export sales came in at 68.4 million bushels compared with trade estimates that ran 36.5-70 million bushels and the previous week’s 57.2 million. The soybean sales total looks supportive for soybean prices, but may not be enough to support them against continued pressure from South American production prospects and fears of a new U.S.-China tariff war…." "Net weekly U.S. wheat export sales came in at 20.2 million bushels compared with trade estimates that ran 10-22 million bushels and the previous week’s sales of 14 million bushels. The sales total looks supportive for wheat prices."

Morning Market Updates

In the morning, March corn is down 1¼¢. January soybeans are down 4½¢. March wheat contracts are also lower. CBOT wheat is down 1½¢. KC wheat is down 3¢. Minneapolis wheat is down a penny. The U.S. Dollar Index December contract is down to 106.48. December S&P 500 futures are unchanged. December Dow futures are up 149 points.

The two-year decline in commodity prices has had a significant impact on farm income in the northern Plains this summer. According to an overwhelming survey by the Minneapolis Federal Reserve Bank, ag bankers have witnessed a decrease in farm income. This decline is expected to continue into the winter months. Farmers have responded by cutting back on major purchases, and there has been an increase in loan demand.

Unraveling the Effects of Commodity Price Decline on Farm Income

Impact on Purchasing and Loan Demand

Farmers have significantly reduced their capital spending. As stated by a South Dakota banker, "Most farmers are not purchasing or trading machinery at this time." This indicates a cautious approach by farmers in light of the economic conditions. Additionally, the increase in loan demand reflects the financial challenges faced by farmers in maintaining their operations.

Regional Fed banks in Chicago and Kansas City have also reported lower farm income in their districts. Nationwide, ag bankers have observed a 40% increase in the volume of new operating loans compared to the third quarter of 2023. This highlights the need for financial support to help farmers navigate through these difficult times.

Survey Results and Expectations

Nine out of every 10 bankers participating in the Minneapolis Fed survey reported lower farm income during July, August, and September compared to the same period in 2023. A significant 83% of bankers expect lower farm income in the final three months of this year. The Minneapolis Fed's district, which covers Minnesota, Montana, North Dakota, South Dakota, the northern third of Wisconsin, and the Upper Peninsula of Michigan, is particularly affected.

A Montana banker looking ahead noted that with high input costs and land rental rates, "2025 cash flows will be very tight and most likely net losses." This emphasizes the long-term challenges faced by farmers in the region.

Farmland Value Trends

Despite the decline in farm income, farmland values in the northern Plains have shown an upward trend, continuing a four-year pattern. Non-irrigated cropland values are 2% higher than a year earlier, irrigated cropland is up 3%, and ranchland and pastureland are up 1%.

In the central Plains, bankers reported a 5% increase in non-irrigated cropland values from the third quarter of 2023. However, in the Chicago Fed district, which includes Iowa and most of Illinois, Indiana, Wisconsin, and Michigan, farmland values remained unchanged. This is the first period since the fourth quarter of 2019 without a year-over-year increase in district farmland values.