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 2026-27 season.
That followed a report that sales of the oilseed in early January had the worst week ever.
And the Federal Reserve Bank of Kansas City warned that farm incomes were likely to have a weak start in 2019 and that credit was tightening at lenders.
“It’s not a pretty picture, but it’s not getting a lot worse quickly,” said Dan Kowalski, at farm lender CoBank in Greenwood Village, Colo. “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.
Farm income posted a 22 percent rebound in 2017.
Then came the trade war.
As tensions escalated between Beijing and Washington, D.C., China slapped tariffs on a host of U.S. agricultural goods.
Soybeans grabbed most of the headlines, though a myriad other products are facing duties. Apricots, alfalfa, cherries, pistachios, pork and sorghum are some of the items on the hit list.
Ethanol, made from corn, also has felt the blow.
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Todd Becker, CEO of biofuel maker Green Plains, said Monday 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.
At Iowa Renewable Fuels Summit last month in Altoona, Jeff Altena, a farmer and a director of operations at Siouxland Energy Cooperative, said the “long rope” the agriculture community gave the Donald Trump administration may be starting to fray.
When President Trump 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.
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.”