Look Back and Ahead

By former USDA Secretary John R. Block.

It’s a New Year. 2020 got here so fast. I want to look back at 2019. For the American ag industry, I think the weather made our production challenges more difficult than I can remember, and we have farmed through some tough years. Last spring was so wet it was impossible to get the seed in the ground on time. Millions of acres were left unplanted. When harvest time came, it started raining again. Rivers flooded crop fields. There is still corn unpicked in some Northern Midwest states.

Not everything last year was bad. President Trump will sign a huge first phase trade deal. China has agreed to buy $40 billion of ag products this year. During the years 2013-2017 they purchased an average of $22 billion. The trade agreement is almost double and will help to lift our industry out of our slump. Lighthizer projects “China’s total purchases of food, energy, manufactured goods and services will increase by $200 billion.” That’s not chump change. Of course, it is not done until it is done, but I am optimistic.

Another big trade victory was the passage of USMCA. It should be a big boost to our dairy industry, and they sure do need some good news. We also have a new agreement with Japan which opens a big new market for our pork. Although the yearlong trade conflicts did hurt our farm prices, we will now get our reward. President Trump is “bringing home the bacon.”

It was amazing that everything came together at the end of the year. Surprise – we got a new budget and no government shut down. The one cloud still hanging over us is the impeachment circus. Republicans should be able to get that behind us soon. Progress on trade issues can give us a lift this year, but we still have some serious head winds and the strongest head wind is over production. With normal weather we can plant and harvest more acres and the yield will be up. USDA projects a 5% increase in corn acres and 10% increase for soybeans. We already have too much milk. Remember market prices are driven by supply and demand. We will need a hungry world to feed this year.

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.

Categories: USDA

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