Even the best plan is subject to change

Written by Ernie Verslues on .

Eleanor Roosevelt said, “It takes as much energy to wish as it does to plan.” It’s easy to sit back and look at the challenges our industry faces right now and wish for the “silver bullet.” It’s not there.

In agriculture, we work in an environment of constant risk and uncertainty. We develop our plans from the best information available, control what we can and adjust to the challenges thrown our way.

Going into 2019, a couple of the biggest uncertainties in agriculture were trade and the farm bill. New agreements and policy change in these two areas will impact the industry for many years. It’s important that our leaders get this right.

In an effort to improve the U.S. trade balance, the current administration has challenged agreements with our largest trading partners.Trade policy and international market access are being turned upside down. The negotiations have been particularly tough on agriculture.

Negotiations with Canada, China and Mexico represent over 40 percent of the total U.S. agricultural exports, which were $138 billion in 2017. Closer to home, exports represent over 16 percent of cash receipts value (farm value). At stake is a significant impact on farm income.

On a positive note, an agreement has been reached in the NAFTA renegotiations with the USMCA (United States, Mexico, Canada Agreement). Agricultural exports had grown exponentially under NAFTA, and the industry’s request during negotiations was “do no harm.” Canada and Mexico are both in our top three export markets.

Wheat, dairy, poultry and eggs gained new opportunities from the USMCA that lock in market access to these countries. All of agriculture was a winner. The agreement should stabilize and strengthen these markets over time. It’s expected to be signed Nov. 30, but it may be early 2020 before it is effective.

Negotiations with China have focused on reducing the overall trade imbalance. Discussions have escalated into a trade war with tariffs imposed by both sides, and farmers are bearing the brunt of the retaliatory tariffs. Soybean producers are especially affected. Approximately one-third of China’s imported soybeans come from the U.S., representing over half of U.S. soybean exports. At the farm-gate, it represents almost 30 percent of receipts for beans.

In response, the USDA has offered three programs designed to mitigate the trade damages felt by farmers and ranchers.

The Market Facilitation Program will provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers based on 2018 production. Approximately $10 billion has been authorized under this program. The program will be administered by the Farm Service Agency. Applications and program information are available online at www.farmers.gov/MFP.

The Agricultural Marketing Service will administer a Food Purchase and Distribution program to purchase up to $1.2 billion in commodities targeted by retaliation. The USDA will distribute these through nutrition assistance programs.

Through the Foreign Agricultural Service’s Agricultural Trade Promotion Program, $200 million is going toward developing foreign markets for U.S. agricultural products. It’s a move designed to help exporters identify and access new markets.

While farmers and ranchers welcome the economic relief from these programs, it is not a long-term solution. Farm country is struggling. Costs continue to rise, and commodity prices have declined. What we need is improved market access.

Discussions on the 2018 Farm Bill were started many months ago with the belief that it could be completed before the expiration of the 2014 bill on Sept. 30. Failure to meet a deadline on a farm bill is nothing new. Many farm bill programs won’t be affected immediately with the exception of conservation.

The three most prominent differences in the House and Senate bills surround SNAP work requirements; cuts in funding for conservation, energy and organic food programs; and farm payment limitations. Despite ongoing dialogue in committee, little progress has been made.

It is likely that passage of a farm bill could stretch into 2019. Given the stance of both parties, further action will be on hold until after the November election.

Let’s hope the people who can make it happen step up for agriculture and give us progress on both trade and the 2018 Farm Bill.