Report 1-5-21

As we move into the new year, the outlook for the agricultural economy looks pretty good. As I mentioned last week, government payments healed a lot of farmers and ranchers financial problems in 2020, and this year, higher commodity prices and low interest rates, should give astute producers a chance to catch up from the downturn caused by trade wars. However, it’s unlikely that the USDA will come up with any extraordinary payments for farmers in 2021. Corn, soybean and wheat prices are rebounding based on robust Chinese purchases and dry growing conditions in South America and the Black Sea Region, while the value of farmland is expected to remain stable this year.

At this time a year ago, agricultural trade with China was of great concern to many farmers. The Phase one trade agreement, signed in mid January last year, called for China to purchase $36.5 billion of U.S. agricultural products. But analysts predict that China will fall short of that goal by about $10 billion. However, fallout from the trade war may have a greater impact in the long term, because China and 14 other countries have recently agreed to a multi-lateral free trade agreement that doesn’t involve the United States. The agreement encompasses one third of the world’s total economic activity.

Last week, the updated official Dietary Guidelines for Americans, that influence federal nutrition programs and nutritional messaging for millions of Americans were revealed. Over the summer, an advisory group of dietary experts recommended several notable changes to the existing guidelines: They defined moderate drinking to be just one alcoholic beverage per day for men, down from the previous limit of two. That prompted sharp blow back from the alcohol industry, and the USDA and Health and Human Service agencies declined to change the previous guideline, and they also declined to change recommendations for lowering the number of calories from added sugar from 10% to Six percent. But recommendations that diets should include nutrient rich foods such as fruits, vegetables, grains, dairy and protein were left alone.

Another trend that farmers may see this year is a move by the Environmental Protection Agency and the USDA to offer more incentives to producers to encourage them to capture carbon in their farmlands and forests. Bayer AG , Nutrien Ltd., Cargill Inc. and other startup companies are working to encourage crop producers to adopt climate-friendly practices and develop farming-driven carbon markets. Those efforts would let retailers, food makers and other companies offset their greenhouse gas emissions by paying farmers for their fields’ capacity to withdraw carbon dioxide from the atmosphere.

The Mexican government’s recent announcement that the country will ban genetically modified corn seed has some GMO growers upset, while organic growers are pleased. The decree also mandates that GMO corn imports for feed will end in 2024, which will have some impact on U.S. producers, because Mexico was the top importer corn produced in the United States in 2019.

Thomas Jefferson wrote, “I like the dreams of the future better than the history of the past.”

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