December 8, 2015 / 3:55 PM / 4 years ago

Falling incomes curb U.S. farmers' ability to hold back supplies

LONDON (Reuters) - Falling incomes in the U.S. will make it more challenging for farmers to hold stocks as they wait for prices to recover from current depressed levels, U.S. Department of Agriculture chief economist Robert Johansson said.

A farmer walks near a field bordering Highway 99 in Turlock, California April 22, 2015. REUTERS/Robert Galbraith

“Now (U.S.) producers are holding more stocks waiting for a better price but we’ve seen that farm incomes are coming down so the ability to hold that crop without selling it is somewhat limited,” he told Reuters on the sidelines of a food conference at London’s Chatham House.

U.S. farm incomes are expected to drop in 2015 to a 13-year low due to weaker crop and livestock prices, the U.S. Department of Agriculture said last month.

World food prices have been dragged down by a strong dollar and ample supplies. A monthly index of prices put out by the United Nations food agency earlier this month was 18 percent lower than a year earlier.

The strength of the dollar had added to the challenge faced by U.S. producers and exporters.

“If you look at the last year-and-a-half the dollar has appreciated remarkably against our competitor currencies. Our grains, oilseeds and livestock producers are really getting hammered by the high dollar value,” Johansson said.

In contrast, local currencies in rival exporters such as Brazil and the European Union have been weak.

“In Brazil, producers of maize and soybeans are seeing prices (in local currency terms) that are similar to historic prices we had three of four years ago,” he said.

“They have an incentive to continue increasing production. Our producers are facing a harder export environment.”

Johansson said USDA was always looking to improve the accuracy of its forecasts although he saw little immediate role for devices such as yields monitors which can be attached to tractors or combine harvesters.

“I have a couple of projects out there looking to see how that could affect our provision of information,” he said.

These could provide data on trends in crop planting, for example, particularly for the U.S. where tractors tended to be newer and are more likely to be fitted with such devices.

“As we move forward I would imagine that data would become better. We will continue to evaluate it but right now we are pretty happy with how NASS (National Agricultural Statistics Service) is doing their field surveys in the United States,” Johansson said.

He also saw no major role for drones.

“Drones right now are able to detect pest outbreaks in fields so you could argue they would be very good for USDA it is just that the coverage is too spotty,” he said.

Reporting by Nigel Hunt; editing by Susan Thomas

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