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READ the NAFB’s National Ag News for Wednesday, September 4th
Trump: China Talks Going “Very Well”
President Donald Trump offers an optimistic view of trade talks with China. Trump on Twitter Monday proclaimed, “We are doing very well in our negotiations with China.” Over the weekend, new tariffs were enacted by the United States and China, yet negotiators from China could still visit the U.S. this month. A spokesperson for China’s Foreign Affairs Ministry says, “What matters the most at this moment is creating necessary conditions for ongoing consultations.” With the implementation of new tariffs, the American Farm Bureau Federation is urging both sides to focus on trade negotiations. AFBF President Zippy Duvall says the Chinese tariffs are “no surprise,” but are “no more welcome than before.” AFBF says farmers welcome the trade mitigation payments that are keeping some farms in business as the trade war continues, but says many “cannot withstand continued uncertainty in trade.” The latest round of tariffs is expected to hit U.S. consumers the most, as practically every product shipped to the U.S. will face additional taxes.
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August Ag Economy Barometer Falls
Farmer concern regarding low prices and the farm economy led to a sharp drop in the August Ag Economy Barometer. The Perdue/CME Group economic measure fell 29 points last month to a reading of 124. The barometer’s decline was attributed to declines in both the Index of Current Conditions, which dropped 19 points, and the Index of Future Expectations, which fell 34 points below its July reading. A reading greater than 100 still indicates positive sentiment, while a reading below indicated negative sentiment. Weaker views were fueled in part by both crop and livestock price declines that took place during late July and early August. Meanwhile, producers’ concerns about the future of the farm economy led to a more negative outlook on the advisability of making capital investments and on the short-term farmland value outlook. Meanwhile, farmers in August were slightly more optimistic the trade dispute with China will be resolved soon, although many still think resolution of the dispute will not come quickly.
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Farm Income to Increase in 2019
The Department of Agriculture predicts farm income will rise in 2019, despite challenges impacting the farm economy. Last week, USDA reported inflation-adjusted U.S. net cash farm income is set to increase $5.8 billion, up 5.4 percent, to $112.6 billion. U.S. net farm income, a broader measure of farm sector profitability that incorporates noncash items including changes in inventories, economic depreciation, and gross rental income, is forecast to increase $2.5 billion, or 2.9 percent, from 2018 to $88.0 billion in 2019. USDA says the forecast increases are due to a combination of lower production expenses, which are subtracted out in the calculation of net income, as well as increases in government payments and farm-related income. The trade aid payments are expected to more than offset the forecast decline in cash receipts. If the forecast holds true, USDA says net farm income would be 2.3 percent below the 2000–2018 average, but net cash farm income would be four percent above its 2000–2018 average.
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2020 Planting Intentions Include More Corn, Soybeans
A survey by Farm Futures magazine reports farmers are planning to plant more corn and soybeans next year. The 2020 planting intentions survey found farmers intend to plant 94.1 million acres of corn next year, up 4.5 percent from the 90 million planted this year, as reported by the Department of Agriculture last month. Farmers also reported to Farm Futures their intention to plant 83.6 million acres of soybeans next year, nine percent more than 2019, but 5.6 million below the 89.2 million acres planted in 2018. Hard red winter wheat seedings are expected to increase 1.3 percent to 23 million acres, and soft red winter wheat seedings could also increase. Meanwhile, farmers in cotton-growing states are planning to reduce cotton seedings by 8.7 percent to 12.7 million acres next spring, and sorghum could gain 9.3 percent to reach 5.8 million acres planted. However, given the wet spring in 2019, and the number of acres not planted, some of the survey results should come as no surprise.
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NCC: RFS Threatens Animal Feed Prices
The National Chicken Council wants the Environmental Protection Agency to reduce volumes proposed in the Renewable Fuel Standard. Comments submitted to the EPA last week by NCC claim that given the current crop year, the volume proposal is “overly aggressive, overly reliant on corn-based ethanol, and will likely cause disruptions to the nation’s feed supply.” NCC President Mike Brown says the volumes should be reduced “to more accurately reflect the availability of feedstock and the usage rate of biofuels.” The organization claims that since the RFS began in 2007, broiler producers have faced $68.5 billion in higher feed costs for the production of broiler meat. NCC believes that the potential for supply disruption and a resulting similarly destructive pattern as 2008, 2012 and 2013, poses a threat to the broiler industry during the 2020 RFS compliance year and 2019/2020 crop year. Brown says in 2008 and 2012, chicken producers were denied protection from the impact of the RFS mandate during times of market volatility.
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Alternative Meat Makers Form Coalition
Five companies creating meat imitating products have formed a coalition for educating consumers and advocating for market access. the Alliance for Meat, Poultry & Seafood Innovation was founded to allow the sector to “speak with a unified voice,” according to a news release. Founding member companies include BlueNalu and Finless Foods, makers of cell-based/cultured seafood, and Fork & Goode and JUST, makers of cell-based/cultured meat and poultry, and Memphis Meats, which is making cell-based/cultured meat, poultry and seafood. The coalition seeks to educate consumers about their products, and create a clear path to market for their products. Coined as fake meat by the animal agriculture sector, groups such as the National Cattlemen’s Beef Association have called for science to drive the regulatory framework, current being crafted by federal agencies. The new coalition will soon begin lobbying lawmakers and the Department of Agriculture regarding the framework. The coalition aims to “create an environment for the industry that will support continued innovation for years to come.
