Uncertainty

By former USDA Secretary John R. Block

The agriculture industry in the U.S. is dealing with a lot of uncertainty. Falling prices and trade wars top the list. We expect our exports to grow faster than our imports. However, for 3 years in a row, that has not been happening. We are losing ground.

Looking to 2019, pork exports are expected to decline by $300 million and beef by $100 million.

A little bit of good news – poultry will be up slightly, and also wheat. Net farm income is forecast to drop $9.8 billion. Pulling everything down more than anything else – you guessed – soybean exports, which are expected to drop $800 million.

Yes – the trade war has been very disruptive for our industry. But part of the price decline problem is self-inflicted. We are expecting a record crop of corn and soybeans. Our feed lot supplies of beef have jumped up almost 8%. Hog numbers are up 3.4%. Who is going to consume all of this food if we can’t expand exports?

The U.S. and Canada are meeting this week to see if we can get a breakthrough in NAFTA trade negotiations. We did get an agreement with Mexico. Canada is another story. U.S. farm organizations are desperate to keep Canada in the NAFTA agreement. The Canadian dairy supply management program is a big obstacle.

Turn to Europe and we are seeing some positive signs. They are starting to buy a record amount of soybeans. Just this week, they say they want more beef. And now they want to have a free market between the U.S. and the EU on automobiles. I don’t think we expected that.

Turn back to China – they have been our number one foreign market for farm products. However, our farm exports to China this year will be down by as much as 20%. The tit-for-tat, back-and-forth tariffs have messed up trading relationships around the world.

Just to make it clear – we had to take a tough stand on trade. Secretary of Agriculture Sonny Perdue said: “Farmers understand why President Trump has thrown the flag on China. They’ve been cheating for a number of years since they joined the WTO.”

O.K. I agree, but I hope the pain will force an early resolution.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.  If you would like to review his radio shows going back more than 20 years, just go on-line to www.johnblockreports.com.

Categories: USDA

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