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Monthly Archives: August 2018

Want More Banking Business? Be a Resource

By Mary Ellen Biery

August 30 — Many banks boast about their relationship managers as key to their business banking, but Jack Hubbard thinks the most effective bankers today have learned to become resource managers.

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The Majority of U.S. Employees Are Satisfied with Their Jobs

August 29 — It’s a slim margin, but according to The Conference Board’s latest survey, 51 percent of U.S. employees feel overall satisfaction in their current jobs. In fact, employees attitudes about wages and job security have seen improvement over the last 7 years. However, employers should not get too comfortable — the survey also found that workers feel quite disappointed with opportunities for professional development at their places of employment, which The Conference Board sees as a warning signal for any organization looking to attract and retain talent in today’s tight labor market.

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USDA Announces Details of $12 Billion Trade Assistance Program

August 29 — Details of actions the U.S. Department of Agriculture will take to assist farmers in response to trade damage from retaliation by foreign nations were announced by Secretary Sonny Perdue. As announced in July, USDA will authorize up to $12 billion in programs, consistent with its World Trade Organization obligations.

“After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers,” said Perdue.

The following programs are designed to assist agricultural producers to meet the costs of disrupted markets:

  • USDA’s Farm Service Agency will administer the Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers starting Sept. 4. An announcement about further payments will be made in the coming months, if warranted.
  • USDA’s Agricultural Marketing Service will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities targeted by retaliation. The agency’s Food and Nutrition Service will distribute these commodities through nutrition assistance programs such as the Emergency Food Assistance Program and child nutrition programs.
  • Through the Foreign Agricultural Service’s Agricultural Trade Promotion Program, $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

MFP is established under the statutory authority of the Commodity Credit Corporation and administered by FSA. For each commodity covered, the payment rate will be dependent upon the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production.

Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Beginning Sept. 4, MFP applications will be available online at www.farmers.gov/mfp. Producers will also be able to submit their MFP applications in person, by email, fax or by mail.

Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income for tax years 2014, 2015 and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On Sept. 4, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.

Market Facilitation Program:

The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If CCC announces a second MFP payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate.

For more information, visit www.farmers.gov/mfp or contact a local FSA office.

Farm groups’ reactions to the USDA announcement varied, but generally suggested the details fell short of adequately compensating for anticipated losses stemming from trade war tariffs.

The National Pork Producers Council commended the administration for providing assistance to America’s farmers suffering from the ongoing trade disputes with China, Mexico and other nations but called for an early end to the disruption.

Pork producers would receive $8 per hog based on 50 percent of the number of animals they owned on Aug. 1.

U.S. pork exports to China are down significantly for the year, noted NPPC President Jim Heimerl, a hog farmer from Johnstown, Ohio, with the value falling by 9 percent through June. The drop has come mostly because of the 50 percent additional tariff that country imposed in response to U.S. duties on Chinese steel and aluminum imports and on other goods over China’s theft of intellectual property and its forced transfers of U.S. technology. Exports to Mexico are down slightly. In June, it put a 10 percent tariff on U.S. pork in response to U.S. tariffs on Mexican steel and aluminum imports; the duty increased to 20 percent on July 5.

“While we’re grateful and commend the administration for its action to help us,” Heimerl said, “what pork producers really want is to export more pork, and that means ending these trade disputes soon.”

Dairy farmers feel short changed by the MFP, according to National Milk Producers Federation President and CEO Jim Mulhern. “Today’s announcement by the U.S. Department of Agriculture on its tariff mitigation plan falls far short of addressing the losses dairy producers are experiencing due to trade retaliation resulting from the Trump administration’s imposition of steel and aluminum tariffs,” he said.

“The dairy-specific financial assistance package provided by USDA – centered on an estimated $127 million in direct payments – represents less than 10 percent of American dairy farmers’ losses caused by the retaliatory tariffs imposed by both Mexico and China.

“The price drop resulting from these tariffs has not been gradual – it’s hurting U.S. dairy producers right now and will continue to do so. Since the retaliatory tariffs were announced in late May, milk futures prices have lost over $1.2 billion through December 2018. Milk prices for the balance of the year are now expected to be $1.10-per-hundredweight lower than were estimated just prior to the imposition of the tariffs on U.S. dairy exports.

“Dairy farmers are particularly vulnerable to downward price swings” said Mulhern, “because, unlike crop farmers who harvest once a season, dairy producers harvest and market their product daily. If farmer incomes continue to suffer as projected, we will lose more farms.

Mulhern noted that the NMPF appreciates USDA seeking ways to help producers weather volatile economic times, while adding, “Although there may be a second direct aid package at the end of the year, dairy producers are greatly disappointed that the farmer aid portion of today’s trade relief package does not adequately address the harm done to dairy.”

Likewise, the National Corn Growers Association said plans unveiled by the USDA to provide aid to farmers negatively impacted by trade tariffs and ongoing trade uncertainty would be insufficient to even begin to address the serious damage done to the corn market as a result of the administration’s actions.

The organization reiterated its call for the administration to rescind tariffs, secure trade agreements and allow for year-round sales of higher blends of ethanol; no-cost actions that would allow for the marketplace to drive demand.

“While most members prefer trade over aid,” said NCGA President and North Dakota farmer Kevin Skunes,they support relief if it helps some farmers provide assurances to their local bankers and get through another planting season. Unfortunately, this plan provides virtually no relief to corn farmers.”

According to an NCGA-commissioned analysis, which NCGA provided to USDA and the Office of Management and Budget, trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018. This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018. USDA’s plan sets the payment rate for corn at just one cent per bushel.

“NCGA has understood from the beginning that this aid package would neither make farmers whole nor offset long-term erosion of export markets. But, even with lowered expectations, it is disappointing that this plan does not consider the extent of the damage done to corn farmers,” Skunes said.

Meantime, soybean farmers, who stand to collect $4 billion of the $5 billion in initial MFP payments, reacted positively to the details released by USDA.

“We welcome USDA’s announcement that soybean farmers will receive a payment on their 2018 production to partially offset the impact of China’s tariff on U.S. soybean imports,” said ASA President John Heisdorffer, a soybean producer from Keota, Iowa. “This will provide a real shot in the arm for our growers, who have seen soybean prices fall by about $2 per bushel, or 20 percent, since events leading to the current tariff war with China began impacting markets in June.” Heisdorffer explained, “This assistance will be particularly helpful to farmers who didn’t forward-contract their crop earlier this year and who need to arrange financing for planting next year’s crop.”

The expected value of the 2018 soybean crop has been under increasing pressure ever since tariffs were imposed The National Pork Producers Council commended the administration for providing assistance to America’s farmers suffering from the ongoing trade disputes with China, Mexico and other nations, but called for an early end to the disruption.

In the last two months, USDA has raised its estimate for soybean production in 2018 to a record 4.6 billion bushels, reduced its estimate for soybean exports in the 2018-19 marketing year by 230 million bushels, and projected an 82 percent increase in soybean carryover stocks to 785 million from 430 million bushels by September 2019.

China was the number one export market for U.S. soybean growers in 2017, importing 31 percent, or nearly one in every three rows of total production, equal to 60 percent of total U.S soybean exports, according to ASA.

The Challenges of Reaching the Next Generation of Banking Customers

By David Sosna

When it comes to the relationships between millennials and their banks, disengagement and disappointment are unfortunate facts of life.

Amid rapid digitization, branchless banks, and mobile apps, customers from the digital generation don’t just expect convenient online options and robust apps to manage their finances – they also expect individually tailored assistance in navigating their financial lives. To date, most young consumers don’t believe these expectations have been satisfied.

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Consumer Confidence Hits Highest Level in Almost 18 Years

August 28 — The Conference Board Consumer Confidence Index increased in August, following a modest increase in July. The index now stands at 133.4 (1985 = 100), up from 127.9 in July. The Present Situation Index also improved, moving from 1661. to 172.2, as did the Expectations Index, climbing from 102.4 last month to a current 107.6.

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