By former USDA Secretary John R. Block.
I want to cover some trade issues today, but first let’s take a look at our farm economy. It’s better than it was last year – better than it was the year before. $92 billion net income is the forecast. Where is it coming from? The answer according to USDA’s Economic Research Service, 31% of the $92 billion comes from the Dept of Agriculture. USDA provides money to support farmers hurt by the tariff war, and crop insurance has stepped in to carry farmers through. Projections are that corn farmers will see a 20% increase in their net income this year. Wheat farmers can expect a 35% boost, soybean farmers 34%, and cotton farms can look for a 18% increase. Dairy, with a significant jump in milk prices, expects 47%. Pork producers will come home with 24% more money. Cattle up 10% and poultry down a little.
Farmers and ranchers have been suffering since 2014. Could this be the turn around? Well, it’s not a real turn around unless we start getting more money out of the market. Thanks to the Department of Agriculture farms will be able to stay in business for another year. Some good news for the ethanol industry – New York State, the 4th largest fuel market opened the door to sell 15% ethanol gasoline. There are still 5 states that do not allow 15% ethanol in their fuel. New York won’t be pumping 15% ethanol fuel overnight, but it is coming. Other states that approved E-15 earlier this year saw E-15 sales jump 46% compared with 2018.
Turn to Trade – Just when I was getting optimistic about the U.S. China Trade dispute and all the tariffs – out of nowhere President Trump tweets new tariffs on Argentina and Brazilian steel and aluminum. Trump is unhappy with the “massive devaluation of their currencies.” We don’t know when tariffs will be imposed. Perhaps we could see an agreement to back off.
My judgement is that we have too many balls in the air. Let’s get the China deal done. Put the pressure on Nancy Pelosi to vote on the trade agreement with Mexico and Canada.
Last subject is an H-2A bipartisan labor bill that could be very valuable to our ag industry. We need workers to milk the cows, butcher the hogs and pick the strawberries. It’s too soon to know if this bill has a chance.
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 online to www.johnblockreports.com.