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Assessing the Capital Adequacy of U.S. Commercial Banks Participating in Agricultural Lending
Full text linkIn this article, we conclude our series on U.S. Commercial Bank participation in agricultural lending. In our previous article (farmdoc daily, June 20, 2024), we examined the differences in profitability between agricultural and non-agricultural commercial banks. As of the fourth quarter of 2023, on average, commercial banks specializing in agricultural lending reported higher Returns on Average Assets and were more cost-efficient than non-agricultural banks. However, non-agricultural banks reported higher average Net Interest Margins. Within both lending specializations, the average Net Interest Margin and Efficiency Ratio decreased as the bank asset size increased. We now extend this analysis by examining the differences in capital adequacy between agricultural and non-agricultural commercial banks. We limit our analysis to Federal Deposit Insurance Corporation (FDIC)-insured commercial banks that have outstanding farm real estate and farm operating loans on their balance sheets as of the fourth quarter of 2023. Two lending specializations are defined. Commercial banks whose sum of farm real estate and farm operating loans exceeds 25% of their net loans and leases are defined as agricultural banks, while all others are defined as non-agricultural banks. 1,022 commercial banks were categorized as agricultural banks, while 2,518 were categorized as non-agricultural banks
The Dilemma of Actuarial Soundness, A Legislative History
Full text linkOn Monday, April 8, 2024, a swath of the United States experienced a total eclipse of the Sun as the Moon passed between it and Earth (NASA, 2024 Total Solar Eclipse). Humans have been predicting eclipses since at least the time of the Greek philosopher Thales, but science has drastically improved our predictive abilities, imaging, and understanding of this phenomena (Couprie, 2004; HistoryDaily, June 10, 2019; Frost, August 8, 2017; Mosshammer, 1981). The center line in the path of totality cut through the middle of a familiar field in Darke County, Ohio. Lying in the cool grass of greening spring, a once-in-a-lifetime experience; nearly four minutes of surreal darkness in the middle of the afternoon; otherworldly spectacle as the dark disc of the moon blotted out the face of the midday sun; a 360-degree horizon burning orange on fields waiting to be planted, a simultaneous sunset and sunrise in all directions
Potential for Crop Expansion in Brazil Based on Pastureland and Double-Cropping
Full text linkThe role of land in increasing food production has accounted for over 50% of the increase in crop output in South America since the 2000s (see farmdoc daily, March 6, 2024), with Brazil standing out as a big player. Most of this growth has occurred as a result of the conversion of pastureland, particularly in the Brazilian savanna, the Cerrado. Consequently, Brazil has emerged as a global leader in producing commodity crops, with the potential for further expansion into new areas. But what is the real expansion potential, considering environmental restrictions, logistical challenges and climate
Impacts of Corn Acreage Increases on National Corn Yields
Full text linkIncreases in demand for corn, particularly for use in ethanol, have led to more acres in corn production in the US since 2006. Increased acres have typically come from lower yielding areas, which then impact national US corn yield. We estimate that increased acres after 2006 reduced US average corn yields by 2.2 bushels per acre, also resulting in minor reductions in trend estimates of US corn yields. The additional acres in lower yielding areas can lead to understated gains if a productivity analysis is conducted using US corn yields
Measuring Farm Policy, Part 3: Year One with Inflation Reduction Act Funding
Full text linkThe month of March opens with hope and reality for Farm Bill reauthorization seeming to collide much like the alternating weather patterns of the transition from winter to spring (see e.g., Stein, March 2, 2015; Farmers Almanac, January 25, 2024). Whether the winter of impasse—the product of unspecified demands combined with Congressional dysfunction—can give way to a productive spring season on Capitol Hill remains uncertain at best (Barnett, March 5, 2024; Clayton, March 5, 2024; Hanrahan, February 28, 2024; Downs, February 26, 2024). Unlike the weather, the legislative calendar does not become more favorable with the passage of days into spring and then summer; the future climate for the Farm Bill may become more unfavorable still. On the bright side, farmers have received a fiscal year’s worth of the additional investments in conservation from the Inflation Reduction Act of 2022 and this article measures that first year under the combined funding
Budget-Driven Crop Insurance Coverage Options for 2024
Full text linkRelative to 2022 and 2023, 2024 is projected to be a low to negative margin year for many grain farmers in Illinois. Because of lower commodity prices, per acre guarantees offered by crop insurance will be lower in 2024 than in 2023. Lower guarantees, along with stubbornly high costs, leads to a dilemma for farmers. Producers may seek crop insurance coverage with lower premium costs as part of broader cost reducing efforts. However, strategies which reduce farmer-paid premium may in turn reduce insurance guarantees or other risk reduction aspects of their insurance coverage, thereby increasing risk exposure. We evaluate options, with a particular emphasis on coverage resulting in farmer-paid premium costs for corn between 35 per acre in central Illinois. Historically, most farmers have chosen insurance options with premium costs that fall in this range
Liberalizacja rynku a bezpieczeństwo dostaw gazu
Full text linkThe article discusses the relationship between the liberalization of the gas market and the security of gas supply. The issue is considered in the context of two interlinked factors, the geographical factor and the geopolitical factor, which determine the structure and functioning of the gas sector in EU member states. The geographical factor, i.e. the fact that gas resources are predominantly located in non-European countries, implies the dependence of European countries on gas supplies. The geopolitical factor, on the other hand, is used a means of political leverage by gas exporting countries, including Russia. Taking these two factors into account, the author sets out to determine whether Europe’s dependence on gas imports puts gas supplies at risk and whether or not it could become an obstacle to the full liberalization of the gas market. This question is related to the hypothesis that the relatively slow liberalization of the EU gas market, compared with the electricity market, for example, is due to fears that unbridled liberalization could have an adverse impact on the security of supplies. The analysis is especially topical in the context of reports about a revolution on the U.S. gas market triggered by a technological breakthrough in the extraction of shale gas. If these reports are confirmed, the author says, shale gas may redefine the relationship between the security of gas supplies and the degree of liberalization of gas markets in EU countries
Znaczenie zasady wzajemnego uznawania dla integracji rynków usług w Unii Europejskiej
Full text linkThe article focuses on the so-called principle of mutual recognition and its impact on the integration of service markets in the European Union. Mutual recognition is the principle of EU law under which member states must allow services that are legally provided in another member state also to be sold in their own territory. For the exporter, this means that a service legally provided in one EU country should not have to meet a second set of requirements in the country to which they are exporting. In her theoretical and empirical analysis, the author sets out to determine just how much room is still available for a further opening of service markets in EU member states. Szypulewska-Porczyńska concludes that this chiefly depends on the solutions adopted in the construction of the internal market. The article lists the main tools used for building the internal service market and classifies the existing solutions in the so-called Services Directive transposed by EU member states. In the first part of the article, the author discusses the principle of mutual recognition in comparison to other tools of the internal market and the relationships between them. Part two looks at the service market in terms of how these tools are used. The third part of the article classifies the solutions adopted in the Services Directive in terms of the tools used in building the internal market. Against this background, part four traces the integration of service markets in EU countries in the period from 2007, when the Services Directive was adopted, to 2010, the first year after the statutory deadline for transposing the directive. According to the author, there is still room for a further opening of service markets in EU member states. The internal service market is only partly based on the principle of mutual recognition, which offers substantial opportunities for a further integration of service markets. Progress made in the integration of service markets in EU countries after the adoption of the Services Directive shows that this regulatory change has not reversed a negative trend on the internal services market when it comes to the role of intra-EU trade in the overall trade of services, the author says
Finanse a długookresowy wzrost gospodarczy – rola instytucji formalnych i nieformalnych
Full text linkThe paper aims to empirically analyze the effect of the quality of the formal institutional environment and social capital on financial development and long-run economic growth for a sample of developed and developing countries using the Generalized Method of Moments (GMM) for the period spanning from 1980 to 2009. The author sets out to find out if there is a synergetic effect between financial sector development and: first, formal institutional aspects measured by the institutional environment quality index, second, informal institutional aspects measured by the level of social capital in society. The article examines if the qualities of formal institutions as well as the level of confidence and cooperation between individuals are important to promoting financial sector and consequently long-run economic growth. The main results of the model are that (i) the development of formal institutions with a higher level of general institutional quality has a positive impact on long-run economic performance through the development of financial markets; (ii) the effect of financial sector development on long-run economic growth also depends on the state of informal institutions with a higher level of trust between individuals
Znaczenie państwowych funduszy majątkowych na globalnym rynku kapitałowym
Full text linkThe article examines the role of sovereign wealth funds (SWFs) on the global capital market. Sovereign wealth funds are state-owned investment funds that invest globally in financial assets such as stocks, bonds, property, precious metals and other financial instruments. The author defines sovereign wealth funds and describes their market position. She also refers to some controversial issues related to the operations of sovereign wealth funds and discusses the policy of the European Union vis-à-vis SWFs. The research method used by the author is based on analyzing data on the operations of sovereign wealth funds published by the Sovereign Wealth Fund Institute and the International Monetary Fund (IMF). The article also reviews a body of research conducted in EU countries and source documents. The study shows that sovereign wealth funds are becoming an increasingly important participant in the global financial system, the author says. In recent years, SWFs have grown in number and their investments have increased significantly. In particular, this applies to SWFs based in emerging-market countries. Although these funds provide the desired capital and contribute to the stabilization of the financial market, their growing significance raises some concerns, the author says. These concerns stem from the low transparency of many SWFs in terms of their organizational structures and objectives and from the potential implications of their international operations. A further concern is the rapid development of such forms of investing public funds in the wake of changes in the structure of global production, accompanied by a widening imbalance in international trade, and changing relations between developed and emerging economies. Sovereign wealth funds have been investing governments’ foreign assets for decades, but it is only recently that such funds have emerged as managers of large excess reserves, the author notes. SWFs are likely to continue growing and increase their importance on global financial markets, the author says