JULY 24, 2019
WASHINGTON, D.C. – President Trump began his Tuesday with a congratulatory tweet to new British Prime Minister Boris Johnson, a shout-out to the military and a rosy assessment of U.S. agriculture: “Farmers are starting to do great again, after 15 years of a downward spiral. The 16 Billion Dollar China ‘replacement’ money didn’t exactly hurt!”
Each sector of the farming and ranching industry has its own assets and challenges, but it appears “great” may be an overstatement.
Before the trade war even began, farmers and ranchers struggled with falling farm income and commodity prices, rising debt, historic floods through the Midwest and rain that delayed, and in many cases prevented, spring planting.
In May, the president announced a $16 billion aid package, the second bailout for farmers since 2018. The bulk of the money was allocated for row crops such as soy, wheat and oats. Niche crops, including tree nuts, sweet cherries, cranberries and grapes, were also eligible for relief, and so were dairy and pork. But farmers say the payments won’t even start to make up for their losses.
“While America’s farmers and ranchers are grateful for the administration’s agriculture assistance package, it only begins to relieve the great difficulty the agriculture industry is currently facing, ranging from extreme weather conditions to depressed markets,” says Dale Moore, executive vice president of the American Farm Bureau Federation.
The U.S. Soybean Export Council reports that shipments of U.S. beans to China were down 19.2 million metric tons, or 705.2 million bushels, in the first 10 months of the current marketing year compared with the 2017-2018 marketing year. Falling sales and lower prices for soybeans have led to a historic carry-over stock of unsold U.S. beans, up 47 percent over the past year, according to the USDA’s National Agricultural Statistics Service.
Davie Stephens, a grower from Clinton, Ky., and president of the American Soybean Association, says: “Before the trade war, U.S. soybean farmers saw prices well over $10 per bushel, but now that number has been in the $8 range way too often. Dealing with weather, weeds, pests and normal markets is tough enough for farmers, but being caught in the middle of a trade war for an entire year is a whole different level. Prices are lower, and anxiety is definitely higher for those of us trying to keep our farms going.”
Soybean farmers such as Ronnie Russell from Missouri say older farmers are considering retiring early to protect the equity they’ve built up in their farms, while younger producers are looking at other employment.
For the pork industry, the trade war has meant lost market share. China’s tariff on U.S. pork is 62 percent, which has dramatically curtailed sales there.
U.S. pork is a $6.4 billion export market, but tariffs have squeezed this significantly. “We export 25 percent of what we produce,” says National Pork Producers Council president David Herring. Because of tariffs, American pork has lost market share in Japan and China, with Canada, Brazil and European Union countries seeking to expand their presence in the market.
“Today, most American pork producers are making a slight profit or losing money,” Herring says.
African swine fever has decimated China’s hog herd, and China is the world’s largest consumer of pork. “We should be making a large profit right now because of China’s African swine fever problem,” he says.
“I’ve been in the pork industry for 40 years and this is the most unprecedented opportunity. If we could get rid of those tariffs it would be a cornucopia for U.S pork.”
Herring estimates 70 percent of pork producers will not qualify for assistance because they exceed earnings cap limits. (The cap limit for this new package is not yet known, but for the $12 billion last year, $125,000 in sales was the cap.)
Beef has been less affected by tariffs and is not in line to receive much farm aid. According to Kent Bacus, director of international trade and market access for the National Cattlemen’s Beef Association, the industry has been hampered by non-tariff barriers to trade in China.
Commercial beef production has increased by 11 percent since a low in 2014, but numbers appear to have leveled off. Beef prices have declined slightly, and inventory is high. The big question, in terms of the health of the industry, is China. In 2017, the country ended a nearly 14-year ban on U.S. beef.
“We still face very strong trade barriers that are just not justified by science,” Bacus says. “If we can remove those barriers, then it’s estimated that China could be a $4 billion market for us.”
Courtesy/Source: Washington Post