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It’s a Very Bad Day for U.S. Farmers


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2019 Feb 15, 7:34am   795 views  2 comments

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Effects of Trump trade war won’t ease until 2026, USDA says - And the clincher: Kansas City Fed says farm credit tightens

Things are not looking good for the U.S. farm economy.



On Thursday, the farm belt’s malaise deepened after the U.S. Department of Agriculture predicted soybean exports would stay below their pre-trade war levels until the 2026-2027 season. That followed a report that sales of the oilseed in early January had the worst week ever. And things didn’t end there: The Federal Reserve Bank of Kansas City warned that farm incomes would likely have a weak start in 2019 and that lenders were tightening credit.

“It’s not a pretty picture, but it’s not getting a lot worse quickly,” said Dan Kowalski, at farm lender CoBank Acb in Greenwood Village, Colorado. “It’s getting modestly worse over time.”



Some of the hurdles have been around for years. Consecutive seasons of bumper crops kept grain inventories flush. At the same time, U.S. meat production was soaring and dairies were overflowing. The supply boom meant prices stayed low for a long time, while robust demand kept things from falling off a cliff. In fact, farm income posted a 22 percent rebound in 2017.

Then came Donald Trump’s trade war.

As tensions escalated between Beijing and Washington, China slapped tariffs on a host of U.S. agricultural goods. Soybeans grabbed most of the headlines, though a myriad of other products are facing duties. Apricots, alfalfa, cherries, pistachios, pork and sorghum are some of the items on the hit list.

$1 Billion Burn

Ethanol, made from corn, has also felt the blow. Todd Becker, chief executive officer of biofuel maker Green Plains Inc., said Monday that the industry, collectively, may have burned through about $1 billion in cash to weather the tough 2018. China has 70 percent tariffs on the U.S. fuel additive.

On Friday, Deere & Co. Chief Executive Officer Samuel Allen cited worries by farmers struggling with the impact of tariffs as the company reported first-quarter results that missed analyst estimates for sales and profit.

Farmers are part of the base that helped drive Trump’s election victory. Amid the economic woes, support for the president has mostly stayed resilient. Still, there are some cracks starting to show. At an ethanol conference last month in Iowa, Jeff Altena, a farmer and a director of operations at Siouxland Energy Cooperative, said the “long rope” the agriculture community gave the administration may be starting to fray.

To calm his constituency, Trump has tweeted about his “love” for farmers. When he addressed the American Farm Bureau in January, his speech drew applause and cheers as he lobbied for a border wall, while telling the audience that he’ll make it “easier” for migrants to work on farms.

Aid Package

His administration delivered an aid package to help counter the blow from tariffs. Growers had until Thursday to sign up for the so-called Market Facilitation Program. More than 864,000 producers applied since the program’s debut in September, and payments have reached almost $8 billion, the USDA said this week.

“The bailouts did help out some,” Lynn Rohrscheib, chairwoman of the Illinois Soybean Association, said in an interview with Bloomberg Television this week. “But most farmers, they just didn’t want that. We want to be able to grow our crop and receive a fair price.”

Rohrscheib said she knows of some producers who aren’t farming this year because of the tariffs, and that her family “took a $600,000 hit to our annual income” as a result of the trade war.



While a truce in the trade war brought China back to the U.S. soybean market, purchases have been too small to make up for shrinking shipments. Inventories are still bulging across the Midwest, and prices are down 11 percent in the past 12 months.

The U.S. and China have made little progress during trade talks this week in Beijing, leaving much work to be done before Trump and his counterpart Xi Jinping look to seal a deal at a yet-to-be scheduled summit, people familiar with discussions said. USDA Deputy Secretary Steve Censky said on Wednesday that agriculture issues remain unresolved.

‘More Forthcoming’

“We’re still very much in the discussion and negotiating stage,” Censky said on the sidelines of an ethanol conference in Orlando, Florida. “The Chinese have to be, in our view, a lot more forthcoming than what they have been to date.”

Even if a deal is reached, it could be years before the farm economy completely bounces back. When importers shift to new suppliers, the U.S. loses out on the relationships it built, while rivals are able to strengthen their ties.

Meanwhile, other Trump policies have also taken a bite of out of the farm economy.

A labor shortage , which some in the industry say is at least partly sparked by Trump’s tough stand on immigration, means employers have been forced to boost wages in the face of sluggish markets. On Thursday, U.S. poultry producer Pilgrim’s Pride Corp. said it was increasing wages $50 million, year over year, to attract workers.

“A tight labor market in the U.S. and difficult market conditions last year are likely to weigh on at least some of the expansion plans” for the poultry industry, Pilgrim’s Chief Executive Officer Bill Lovette said Thursday on a conference call. The company is “trying to develop some proprietary automation to do some of the more difficult tasks in our plants to alleviate that pressure on labor,” he said.

“I think every company is facing virtually that same pressure.”

https://www.bloomberg.com/news/articles/2019-02-15/a-very-bad-day-for-u-s-farmers-exports-sales-incomes-all-hit?srnd=premium

#Farmers #Tarriffs #TradeWar #Dotard

zzyzzx - I'm just going to leave this here:

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1   anonymous   2019 Apr 5, 3:17am  

According to Bloomberg Business, U.S. farm incomes have hit a 12-year low (above article), and many farmers had planned to sell their grain in storage for money to live, pay their taxes or finance operations, including planting this spring. Farmers will have to destroy any grains that were contaminated by floodwater, which could also prevent some growers from planting over-saturated fields.



Farmers are already in a tight position. Chapter 12 bankruptcies in the Midwest increased by 19 percent from 2017 to 2018, according to data from the American Farm Bureau Federation. The odds of making up for their losses doesn’t look good for farmers counting on stored grain to make loan payments and stay afloat.

The storm flooded at least 1 million acres of U.S. farmland across nine major grain-producing states, according to satellite data analyzed by Gro Intelligence for Reuters. This includes around 210,000 corn acres and around 225,000 soybean acres (crops grown in 2018) in eastern Nebraska and western Iowa.

Because of rainfall, snowmelt and ice jams, the Red and Buffalo rivers are still rising in the Dakotas and Minnesota, where the National Weather Service (NWS) has posted Flood Warnings. Flood Warnings are also in place downstream in the middle and lower Mississippi River valleys, from St. Louis to New Orleans. The spring outlook from the National Oceanographic and Atmospheric Administration (NOAA) looks bleak, with meteorologists stating they expect above-normal rainfall and persistent flooding across the nation’s heartland at least through May.

Farmers may be able to recoup some losses, even if they’re not from stored grain, and some insurance plans may include flood damage. If not, some farmers could qualify for benefits from the Federal Emergency Management Agency (FEMA).

https://www.freightwaves.com/news/weather/flooded-farmers-to-eat-cost-of-damaged-grain-in-storage
2   everything   2019 Apr 5, 4:25am  

Bankruptcy will be good for much of this ag business, they can wipe the slate clean. In it's place, monopolies of agriculture can take hold as I can only guess venture capitalists will help sweep up deals on land and/or equipment. At least .. that has been the trend, can't imagine that would change anytime soon.

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