Currently viewing the category: "Agriculture"

There are fewer Canadians coming across the border. This is in all probability because their dollar has becoming cheaper in relation to the U.S. dollar. That is, simply, the same thing costs them more than it used to, and that makes sense.

On the other hand, based on the Grand Forks motel tax, it appears that the Canadians still enjoy their holidays and like coming to North Dakota, particularly Grand Forks for entertainment. The biggest draw is probably the UND hockey games, but good nightclubs and places to eat, as well as motels with amenities are also important.

Truck traffic, and that means both agricultural products and manufactured goods are up. We are one another’s best trading partners. That is continuing and long as it works both ways it is good for both countries.


There have been articles in some of the printed press recently about the increase in food costs. It is certainly true that prices at the grocery store are higher than a year ago. However, except for some of the meat products which have increased substantially due to the weather I don’t know if an increase of 3 to 4 percent which is the amount I have read is that much.

Especially, when the articles I have seen fail to mention that this is the first increase in prices in the past couple of years. In the meantime, most of those who have not had a layoff have had increases in their earnings over that period. That means the cost of food for many has decreased over that time period and even with this years increase they are spending a smaller percent of their income on food than they did two years ago.

The other thing I have not seen in these articles is what each economic sector’s share of the prices received is.

I recently ran across this table which was calculated by the National Farmers Union. It only shows the farmers share. It doesn’t show how much goes to the transportation sector which is now paying higher fuel costs, nor the processing sector for turning corn into corn flakes. Nor the supermarket for their costs and profits.

The other thing that is important to all of American, and especially to this sector of the country is just how much agricultural prices have declined in the past year and more. While that was also not included in the series, readers can see that by reviewing some of my earlier postings.

I know that most people not involved in the food sector understand how little of the total price the farmer gets. Here is a relatively current example. Thanks to the Farmers Union for providing this data.


Should we call it “The Perfect Storm”? I, along with most economists who write about agriculture because it is so important to those areas we are writing about have been saying crop prices are going to go down and that means the incomes we look at are going to decline.

We apparently were right. If you read Moody’s Analytics chart of wheat and soybeans, two important ND crops, that is what has been happening. Their prices are declining. As always I am surprised about Moody’s analysis. Where is the corn. It isn’t on the chart and it certainly has become important to ND. So too have been dry beans and they are also not charted.

So, take the figures with a grain of salt, no, at least a half teaspoon of salt. With what they show though wheat and soybean prices are more than 20 percent about the 2010 base. Of course in 2011 and 2012 they both were as much as 60 percent higher than in 2010 and that is significant. If they were shown, so too would corn and dry beans. Moody’s show all food commodities at about 25 percent above the 2010 average, down from a peak in late 2012 of about 35 percent above the 2010 base of 100.

If you don’t believe that has made a difference just drive by the implement dealers lots and look at all the machinery in their lots. If that doesn’t convince you go inside and ask a salesman. Watch their eyes.

As for Moody’s projections, they are only short about a percent a one-half in sales taxes. That is certainly within the realm of acceptability. However, individual income tax collections are nearly 40 percent above their predictions and so too the corporate income taxes, collections more than 40 percent above their predictions. Auto sales excise taxes are 10 percent short of what they predicted.

They are so far off on so many accounts that when it comes to the bottom line the net figure collected is only a little more than 6 percent greater than their predictions.

This begins to get complicated, but please note: The general fund cap for oil and gas taxes contains two tiers. The first tier of $200.0 million was reached in October 2013. Additional oil taxes will flow to the property tax relief fund until that fund receives $341.8 million, after which time the general fund will receive an additional $100.0 million. Total production and extraction tax collections were $250.3 million in February 2014. Monthly allocations to the property tax relief fund were $73.4 million; allocations to the legacy fund were $69.6 million.

Standby. A significant negative in collections could lead to an interesting situation before the biennium is completed. I don’t know the people in OMB, and I have tried to keep my comments from being partisan in anyway, but I am glad that Jack Dalrymple is the Governor. They may have a tiger to ride before the biennium is over.


In Grand Forks and in several other cities in North Dakota the March city sales tax payments are down considerably from January and February. And then while the town is much smaller Devils Lake is even up a little and after being down for several months in a row, Minot is up, and by a lot. Across the state it is a mixed bag, and after this hard winter, difficult to assess.

I am not sure if we are seeing the beginning of the slow down in North Dakota that many of us have been expecting, or if the January and February payments were made quicker and now the adjustment for all the Christmas spending is over and it will take another two months or so for us to see the real trend for 2014. Both year to date and the 12 month rolling data are still positive.

There were some good signs in Grand Forks. Some are worried about the Canadian dollars relation to the U.S. dollar not attracting Canadian traffic, but the motel rooms and the restaurant and lounge quarter cent sales tax don’t support that theory, at least up to this point. Again this month I don’t have all the motel tax I want, but what we do have suggests traffic is at least as good as last year.

Grand Forks need to remember also that they should just not rely on Canadian Traffic. Now with all those new good class motels that the Convention and Visitors Bureau needs to work with places like the golf courses, the curling clubs, baseball clubs, etc to attract people to this city all year round. They can’t just wait for the Canadians. The Chamber and the CVB, which has always done a good job, need to be even more aggressive. The taxpayers of this city with the facilities like Aurora, and the University have all done a lot to attract people. Now they just need to be even more aggressive.

So, for now lets see if the city goes after those things. Lets also see if the oil patch business that has come from here stays here. There is no reason that done properly that won’t be case. There is no reason to let it go to others. It is time for some to earn their pay.


Well the first half is done and it appears I was right about that. There was not much movement from a month ago. Some up a little. Some down a little. Not enough of any magnitude to tell us what to expect. Now, hold onto your seats.

Of course like any good economist I have to give myself a little cover. It is certainly possible we won’t see much in another month, especially if this cold weather sticks around and no one wants to get excited about the coming year, especially if we are only going to not have any shocking news in the around the world.

Anyway, I have expanded the report some this month. Not only am I showing what has happened in the past month, but also the changes from a year ago. That is interesting, to put it kindly. What it shows is just how much crop prices have declined in the past year. Again, thank you Harold Hamm. If we don’t realize how much this means, the new oil extraction technology I mean, well we are really stupid. It will take some time to get all the reports, but by Christmas we should be able to come up with some pretty accurate data of just how deep a hole we would have in our state if it wasn’t for what this man and others have handed us.

I will do my best to keep working on this and show you just what this means compared to these changes in the past. Keep reading.

One final comment, note how on a couple of crop categories that in order to not show individual income we can not report the prices because of the crop concentration. I am a capitalist, but this concentration is not capitalism, and it is not good for society.

I have tried to keep politics out of these reports, but we need to examine this change and its effects on the culture we are part of.

More on that later.