Frozen Economy

By former USDA Secretary John R. Block.

After months of uncertainty, the biofuels industry got some good news. The EPA had been granting exemptions to small refineries so they were not required to blend ethanol with petroleum fuel. A January ruling by the 10th U.S. Circuit Court put a stop to EPA’s small refinery exemption. Then we heard information from the Administration that the Justice Department might challenge that Court decision. President Trump said this week the Administration would not challenge the Circuit Court’s ruling. Thank you President Trump for standing up for the ethanol industry. Thanks to Iowa Senators, Chuck Grassley and Joni Ernst for their efforts. We are already suffering enough with the collapse of oil prices. The Coronavirus has frozen the global economy and our farmers depend on global markets. A month or two ago we had limited optimism about farm prices and income in this new year. USDA projected net farm income to be up 3% to $96.7 billion. The President’s deal with China has started to pay off. They are buying corn, wheat, pork and chicken big time. Still it’s hard to be optimistic.

Zippy Duvall, American Farm Bureau President, reminded us, “the stress out there in farm country is really high-level.” Corn and dairy prices have fallen. The milk market can’t get any lift. The collapse of the oil market has hammered the price of ethanol and that has pulled corn down. Remember – about half of our corn crop is used to produce ethanol. I know that China will need some soybeans, but how much is the question since African Swine Fever has killed half of their pigs. With the economy around the world shutdown to stop the spread of the Coronavirus, how long can we afford to sit around like this? Europe is asking the same question. French President Macron said, “It is impossible to live – even in self isolation – and to cure people if we do not continue economic activity.” President Trump wants the U.S. to go back to work by Easter. Let’s hope that we can. Last Tuesday was Ag Day – but under current circumstances it wasn’t much of a celebration.

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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