Good morning. This is Bob Bragg with the February 5th edition of farm news and views.
Trade has been a hot topic in agricultural news over the past week. When it was reported last Friday that Chinese negotiators announced that China would purchase 5 million metric tons of soybeans, the futures markets reacted with a giddy uptick on soybeans. But by Saturday morning, the balloon had burst, because everyone realized that there was no time table associated with the sale. While 5 million tons of soybeans sounds like a lot of beans, the phantom sale amounted to less than 4% of 2018’s total crop of 4.6 billion bushels, and soybean exports to China are already running way behind the quantity of beans that U.S. farmers had sold to China by this time last year.
As if trade news isn’t somewhat depressing, the Congressional Budget office, who obviously were working while USDA agricultural economists weren’t, published a report last week that forecasts that low soybean, corn and wheat prices will continue for the next decade. Wheat is estimated to bring a dollar or so under the the $6.40 per bushel cost of production .
While the financial outlook for many U.S. farmers appears to be pretty tough for this year and maybe into the future. But Four Corners Region farmers and ranchers may be in a better financial position than their counterparts in the Midwest for a couple of reasons. First, agricultural census data tell us that 92% of all agricultural operations in the U.S. are classified officially as grain farms, specializing in…you guessed it, raising crops to sell in the U.S. and for export. This model has been in vogue for decades as a formula for success according to ag economists, agricultural university experts and industry suppliers of machinery and crop inputs. Second, Four Corners farmers and ranchers are usually more diversified, with about half of their income coming from livestock production and the other half from crops. For example, the number one crop in the Region is hay, which is commanding robust prices, and cattle, that are yielding profitability due to consumer demand for beef and beef exports, this puts area agricultural producers in a better position to weather the storm affecting much of rest of the U.S. ag economy.
Tariffs Hurt the Heartland, a free trade advocacy group, has organized a fly-in this week that will bring in more than 100 farmers and business reps from across the country to Capital Hill. They will call for congressional oversight hearings on the tariffs’ widespread effects on the economy, and deliver the message to lawmakers that they need to increase pressure on the Trump administration to end the trade war.
The U.S.-China trade truce ends in a little over three weeks, and a White House statement issued after the latest trade talks wrapped up in Washington last week, pointed to big differences between the two sides and reiterated that tariffs on $200 billion worth of Chinese goods will rise to 25 percent if no deal is reached. So the group will also emphasize how additional duties on top of those already in place will magnify the effects of tariffs on those farmers and manufactures who are already bearing the brunt of trade tensions.
They’ll also pressure lawmakers to oppose legislation spearheaded by Representative Sean Duffy, Republican, Wisconsin, that would expand executive authority over tariffs.
Today’s thought comes from Calvin Coolidge. He said, “It is much more important to kill bad bills than to pass new ones”
Until next week. This is Bob Bragg.