In this file:
· NFU says “trade successes” likely have long-lasting negative impacts
… the U.S. will become a smaller world market player in the future…
· For Trump, trade wins power U.S. economic engine
· Trump cites USMCA as best gain for ag
· Expectations After Phase One Send Ag Economy Barometer to Highest Level Recorded
NFU says “trade successes” likely have long-lasting negative impacts
By Nicole Heslip, Brownfield
February 5, 2020
The head of the National Farmers Union says while the President’s State of the Union touted recent trade agreement successes, he believes the U.S. will become a smaller world market player in the future.
“Our reputation is going to be damaged for a long time to come.”
President Roger Johnson points to major Chinese ag investments into infrastructure in South America and Eastern Europe and China’s lack of keeping promises.
“We got a Phase One Deal that I think the market is saying they’re not sure it’s going to be real.”
He says the Market Facilitation Program has helped mitigate damage done by the Trump Administration’s trade policy, but it could have long-lasting negative impacts on future farm policy...
more, including audio [11:26 min.]
For Trump, trade wins power U.S. economic engine
By Steve Kopperud, Brownfield
February 5, 2020
When this week ends, we will have, for the most part, put behind us the ordeal of impeachment rhetoric, accepting the split decision expected from the onset. We will also get to ignore the chaos of the Iowa caucuses leaving that headache to the Iowa pols. That leaves us with the theatrics and pettiness of this week’s State of the Union address. For agriculture, the gist of the president’s speech is Trump’s bragging rights over his generally successful efforts to render extinct any all trade deficits no matter the overseas trading partner.
With a U.S.-Japan “mini” trade deal in force, with fingers cross the “phase one” China tariff détente will deliver amped U.S. ag sales once coronavirus is in hand, with the U.S.-Mexico-Canada Agreement (USMCA) finally signed last week, with India likely to agree to “modest” market access increases for U.S. agriculture, with Trump eyeing new bilaterals with Brazil and a handful of southeast Asian nations, and the president of Kenya in town this week hoping to get U.S. trade blessing, it’s obvious White House agriculture policy is all about targeting trade.
In that context, all eyes now turn to the 27-nation European Union (EU), and whether the U.S. can pull off, as the president asserts, a major bilateral trade agreement that includes agriculture. President Obama failed to cross the treaty finish line in his race to get a U.S.-EU free trade agreement, and it’s fair to say this White House is currently at loggerheads with Europe over policy and politics. The biggest headache is the World Trade Organization (WTO) tug of war over alleged government sweetheart loans to Airbus and Boeing. So far, the U.S. is in the driver’s seat, with the WTO blessing prospective U.S. tariffs on some of the EU’s most lucrative exports, including wines and cheeses.
Recall that in mid-2018, Trump and then-European Commission (EC) Jean-Claude Juncker stood on the White House lawn, proudly proclaiming the two superpowers would forge a trade deal. That euphoria quickly evaporated, replaced by a very public dispute over whether agriculture is on the agenda. The EU says “nope,” the talks are limited, and ag issues are too complicated to shoehorn into a quick treaty; the U.S. says there won’t be any deal without ag concessions.
Last week Trump met with new EC President Ursula von der Leyen on the sidelines of the annual World Economic Forum in Davos, Switzerland...
Trump cites USMCA as best gain for ag
By Nicole Heslip, Brownfield
February 5, 2020
President Trump’s State of the Union address spent more than an hour addressing accomplishments and goals of the administration over the past three years including the benefits of the U.S. Mexico Canada agreement for farmers.
“The USMCA will create nearly 100,000 new high-paying American auto jobs, and massively boost exports for our farmers, ranchers, and factory workers.”
Trump also cited the benefits a trade deal with China will bring, “that will defend our workers, protect our intellectual property, bring billions of dollars into our treasury, and open vast new markets for products made and grown right here in the USA.”
His new vision for high schools could provide a boost to ag education...
Expectations After Phase One Send Ag Economy Barometer to Highest Level Recorded
By Purdue University News Service
via Hoosier Ag Today - Feb 4, 2020
The Ag Economy Barometer rose to a reading of 167 in January, a 17-point jump from December when the index stood at 150. Virtually all of the rise in this month’s barometer was attributable to a sharp rise in optimism about future conditions in agriculture. The Index of Future Expectations climbed 24 points to 179, while the Index of Current Conditions at 142 was essentially unchanged from the December reading of 141. This month’s Ag Economy Barometer survey, which is based on responses from a nationwide survey of 400 agricultural producers, was conducted from January 13-17, 2020. The sharp improvement in future expectations coincided with President Trump’s signing of the Phase One Trade Agreement between the U.S. and China on January 15th. In the agreement, China agreed to increase purchases of U.S. manufacturing, energy, and agricultural goods and services by at least $200 billion over two years, but it did not include specific information regarding which U.S. goods and services would benefit from the purchases.
Agricultural producers have become noticeably more optimistic about the future of agricultural trade over the last several months. As recently as October, just 55 percent of the farmers in our survey said they expect to see U.S. ag exports increase over the next 5 years. That changed in November and continued through the January survey as 70 to 71 percent of survey respondents said they expect to see ag exports rise in the upcoming years. At the same time, the percentage of producers with a pessimistic ag export outlook declined, as just 4 percent of respondents in January said they expect to see an export decline. That represents a shift from late summer when 10 to 12 percent of producers in our survey said they expect exports to decline over the next five years.
Part of the improvement in farmers’ trade outlook can be traced to a shift in their expectations regarding the trade dispute with China. Although the Phase One Trade Agreement with China did not explicitly address the soybean trade dispute, the percentage of farmers who expect the soybean trade dispute to be settled soon rose to 69 percent in January from 54 percent in December. That percentage has been rising steadily since July when just 22 percent of producers said they expected a quick resolution to the soybean trade dispute. At the same time, 80 percent of farmers in January said they expect a favorable outcome to the trade dispute with China compared to 72 percent who felt that way in December.
Despite the big improvement in future expectations among farmers in our survey, the Farm Capital Investment Index in January actually fell 4 points below December’s to a reading of 68. The index is based upon a question that asks farmers whether now is a good or bad time to make large investments in things like farm machinery and buildings. The index has ranged from the high 60s to the low 70s since November and, despite the small decline in the January reading, remains much stronger than it was in late summer and early fall when it ranged from the high 40s to the high 50s.
Each winter, we ask producers about future plans for their farming operation. Specifically, we ask what is a reasonable growth rate for their farming operation over the upcoming five years? Over the five years that we’ve included this question on the barometer survey, there has consistently been a small percentage of farms that plan to grow rapidly and a relatively large group who either has no plans to grow or actually plans to exit or retire from farming. That was true again this year. But what was noticeable this year was a trend in the responses with the percentage of farms that either have no plans to grow or actually plan to exit/retire from farming rising over time. For example, two years ago 28 percent of respondents said they had no plans to grow, while a year ago 38 percent of respondents said they had no plans to grow their operation. In January 2020, that percentage rose again to 44 percent of respondents. Combined, farms that either have no plans to grow or plan to exit/retire totaled 56 percent of the farms in the January 2020 survey, compared to 50 percent last year, and just 39 percent two years ago. Correspondingly, fewer farms in this year’s survey indicated that they expect to grow rapidly compared to prior years. The rise in the number of farms that don’t plan to grow could be a response to a perceived rise in risk on the part of farm operators.
Farmers are faced with a March 15 deadline to sign-up for the USDA’s Agriculture Risk Coverage (ARC) or the Price Loss Coverage (PLC) program under the 2018 Farm Bill. This year’s sign-up is for the 2019 and 2020 crop years and farmers can choose different programs for corn or soybeans. USDA’s Farm Service Agency indicates that the vast majority of farmers have not enrolled their farms yet. To learn more about farmers’ perspective on which program might be more attractive, we asked farmer’s which program they planned to enroll in for corn for the 2019 and 2020 crop years? The majority (57 percent) of farms in our survey are still uncertain about which program they will choose. However, among the farmers who have decided, there appeared to be a shift away from the program choice made by many farmers for the 2014 Farm Bill. Under the 2014 Farm Bill, the most popular program choice among corn farmers was the ARC-County program. This month’s survey responses indicate that might not be the case for the 2018 Farm Bill sign-up. In our January survey, the PLC program was chosen by 23 percent of respondents, while 14 percent of respondents chose the ACR-County program. However, unlike in the 2014 Bill sign-up period, the ARC-Individual Coverage program appears to be a viable option for a significant number of producers as 6 percent of respondents indicated that was their preferred program choice.
Producer sentiment improved markedly in January, as the Ag Economy Barometer rose 17 points above its December reading. The improvement in farmer sentiment was attributable to a rise in optimism regarding future conditions in agriculture as the Index of Future Expectations rose 24 points from December to January, while the Index of Current Conditions was virtually unchanged compared to a month earlier. This month’s survey was conducted the week that President Trump signed the Phase One agreement with China and the rise in optimism about future conditions appeared to be motivated by expectations for improved trade with China. In January, nearly 70 percent of farmers said they expect the soybean trade dispute with China to be settled soon, up from 54 percent who felt that way in December, and 80 percent of farmers think the trade dispute will ultimately be resolved in a way that benefits U.S. agriculture. Producers increase in optimism about the future was not enough to push the Farm Capital Investment Index up. Although the investment index fell 4 points below December’s reading in January, it remained strong compared to late summer and early fall. Finally, the percentage of farm operations who have no expectations for growth in the next five years has been trending up the last couple of years and fewer farms expect to grow rapidly over the same time frame.
document, plus charts , video [4:21 min.]