4 posts from November 2014

Strong crop production in Ninth District helps offset lower prices

Farmers have been preparing for a bumper crop this year: Nationally, a record number of soybean acres were planted this spring, and while corn acreage was down from last year, weather in much of the country was favorable enough to produce good yields. And, sure enough, the USDA’s latest crop production estimates for 2014 confirm record production of both commodities for the United States.

The picture was only slightly different in the Ninth District. Due to a late spring and an early frost, corn yields in Minnesota and North Dakota were revised down from earlier forecasts, and production came in below 2013 (see Chart 1), though only narrowly for Minnesota. Corn production for South Dakota and Wisconsin did hit new records, however.

Soybean production hit new records in every district state, the result of both higher acreage and improved yields. North Dakota saw the biggest increase, with a 41 percent jump in bushels grown over 2013 (see Chart 2).

The big harvest should offer some comfort to farmers, who are also coping with much lower prices for these outputs, thanks in part to the expected boost in supply. Prices received by farmers for soybeans were down 23 percent in October compared with a year earlier, while corn prices fell 36 percent over the same period, according to the USDA.

  Crop production -- 11-17-14

October Mid-America survey shows softness in Dakotas; Minnesota on top

Update from last week’s blog.

Results from the October Mid-America Business Conditions Index, released this week, show weakening conditions in the Dakotas and Minnesota. The index surveys supply managers monthly in a nine-state region, and an index greater than 50 indicates expected expansion over the next three to six months.

For the first time in recent memory, sentiment in North Dakota is hovering near contraction, with the state’s overall index declining to 54.8 and employment dropping to 51.2; both of South Dakota’s scores have continued a general descent of late, declining to 51.8. While Minnesota’s scores also dropped, it remains a bright spot, with its overall index at a healthy 63.7, with employment at 56.7.

Mid-America UPDATE -- 11-4-14

Sure it’s cold, but we’re upwardly mobile

If you live in a Ninth District state, which do you prefer, moving out or moving up? Probably the former if you don’t like the cold, but likely the latter in most other cases. And while Ninth District states have cold winters, so too do they offer better upward income mobility than the nation overall, according to data from a team of researchers from Harvard and UC-Berkeley.

The research project, dubbed Equality of Opportunity, collected income data on millions of parents in the last half of the 1990s. It then tracked how kids from low-income families in this sample fared in 2011 and 2012, when they were in their early 30s. (For more information on the study’s methodology, go here.)

The study split the country into more than 700 commuting zones, which are rough approximations of local economies (urban and rural). It then ranked commuting zones for absolute upward mobility—roughly, the average national income rank of a child from low-income parents in the commuting zone.

The data show that Ninth District states stand out for high absolute upward mobility. The distribution of scores for commuting zones in every district state (including the combined region of northwestern Wisconsin and the Upper Peninsula of Michigan) skewed higher than scores for all other commuting zones not in the Ninth District (see charts below).

For more data and discussion on this topic, see the October fedgazette for in-depth articles on both high income mobility and low income mobility in the Ninth District.

  Absolute income distribution 9th states -- 11-13-14

U.P. electricity prices tops in district

Households and firms in the Upper Peninsula of Michigan have long complained about expensive power. Civic and business leaders say high electricity rates squeeze family budgets and hamper efforts to foster industrial development in a region plagued by high unemployment.

Angst over the price of U.P. electricity has come to a head this fall. A regional power grid authority has ordered Wisconsin-based We Energies to continue operating an aging coal-fired power plant near Marquette, with costs passed along to U.P. ratepayers. If federal energy regulators approve, U.P. utility customers could see average rate increases of $100 annually to fund operating subsidies for the Presque Isles plant and two other coal-fired power plants in the U.P.

The Michigan Public Service Commission and big U.P. power consumers such as Cliffs Natural Resources—owners of the Empire and Tilden iron mines—have objected to the proposed rate hikes, saying they would further burden utility customers already paying dearly for electricity.

Federal price data show that U.P. residents pay higher electricity rates than those in other parts of the Ninth District and the nation as a whole (see Chart 1). Electricity costs about 20 percent more in the U.P. than it does in Minnesota and about 35 percent more than in North Dakota. But Yoopers pay less than Michiganders overall, and U.P. power is a bargain compared with utility rates in some parts of the country, such as New England.

However, the U.P. average rate obscures wide disparities across the peninsula; residents of some U.P. communities pay significantly more than others to keep the lights on, the result of differing customer densities and, in some cases, reliance on imported power rather than local generation sources. State PSC figures for 2013 show that power producers such as Upper Peninsular Power Co. and the Alger Delta Cooperative Electric Association, which primarily serve customers in the western and central U.P., charge much higher rates than other utilities (see Chart 2).

UP power -- 11-3-14