READ the NAFB’s National Ag News for Monday, December 30th
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Skepticism Remains Over China’s Ag Purchases
An Associated Press report says there are still people on both sides of the Pacific Ocean who remain skeptical about the actual amount of farm goods that China committed to buy in the “Phase One” trade agreement with the U.S. Trade Representative Robert Lighthizer said the amount will total $40 billion a year. However, President Trump says the total is actually “much more than $50 billion.” Is it realistic? Even in the best of times, exports to China has never been higher than $26 billion in any year. Beijing may be locked into contracts with other suppliers like Brazil and Argentina it lined up after the trade war broke out with the U.S. Chad Hart, an Ag Economist with Iowa State University, says, “History says we’ve never been close to that level. There’s no clear path to getting us there in one year.” However, the skepticism actually works both ways. A trade specialist at the University of International Business in Beijing says the figure is $40 billion and he wonders if the U.S. can ensure the full supply of products to equal that value. At this point, farmers that talked to the AP say they’re hopeful but guarded in their expectations. Iowa farmer Jeff Jorgeson says, “At this point, we have to see more details.”
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Don’t Forget about Wheat in the Phase One Trade Deal
When news broke about the Phase One trade deal between the U.S. and China, it made the soybean industry especially happy. A Bloomberg report says don’t forget about wheat, which could also be a big winner in the agreement. Speculation is rising that China will work to fill its wheat-buying quota as part of the agreement. That will likely create new demand for wheat because China has failed to live up to its wheat-purchasing promises in the past. Soybean purchases are likely to be somewhat more limited because of the African Swine Fever outbreak across the country, which will lower typical demand levels. If Chinese wheat purchases were to reach the quota mark of 9.6 million tons, that would represent a huge demand jump. In the six years prior to and up through 2017, buying has averaged less than 50 percent of that allotment. The timing could be good for U.S. farmers. Tighter corn supplies in Brazil and wheat supplies in Russia, the world’s top wheat exporter, have made American grain more competitively priced in the world market. That’s already causing Chinese importers to begin to boost their purchase levels from the U.S.
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China Changing Hog Production After AFS Outbreak
The Chinese Ag Ministry says large hog farms are lining up with the smaller family-owned farms as part of a state-initiated investment worth about $7.1 billion dollars. The goal of the new initiative is to boost hog operations across the country that were hit hard by the African Swine Fever outbreak. A Reuters report says fifteen of the country’s leading pig farms signed 19 agreements with local governments in 16 Chinese cities to raise pigs together. The Ministry of Agriculture and Rural Affairs says these projects should produce over 22 million hogs for slaughter every year and will involve 33,000 poor rural families. While announcing the plan, the ministry didn’t give a specific timeline on when this would take place. Bigger farms are being encouraged to purchase a stake in or lease medium and smaller farms. They’re also being asked to make these arrangements as quickly as possible by building a number of standardized household-based farms, slaughterhouses, and refrigerating centers. China’s hog herds, once the biggest in the world, has dropped almost 40 percent since the ASF outbreak began in mid-2018. China is the world’s biggest producer and consumer of pork.
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USDA; Climate Change May Increase the Cost of Federal Crop Insurance
The USDA’s Economic Research Service looked into the ways that climate change could affect the cost of the Federal Crop Insurance Program. Researchers worked with statistical models to predict crop yields from historical weather data. They used weather simulations from climate models to build scenarios showing how yields might respond to climate change. Economic models then simulated how farmers and markets might respond to changes in weather and yield. The study explored the potential impacts in the year 2080. It compared climate scenarios arising from different projections of greenhouse gas emissions levels to a hypothetical future with a climate similar to that of the past several decades. Under that scenario with moderate emissions reductions, in which farmers adapt to changes in climate with adjustments to what they plant, where they plant it, and how they manage it, the cost of today’s Federal Crop Insurance Program would average about 3.5 percent higher than under a future with a climate similar to that of the recent past. Under the scenario in which emissions trends continue, the cost of the FCIP would increase by an average of 22 percent.
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Brazil Soybeans Taking Much of U.S. Market Share in China
While China has been the world’s largest importer of soybeans for some time, Brazil and the U.S. have been competing for the top spot as the world’s largest exporter to China. Back in the 1990s, the U.S. was the top soybean exporter. During the end of that decade, both the U.S. and Brazil increased their exports to answer a growing demand for soybeans in China. Brazil’s exports grew more quickly than the U.S. During the ‘90s, the U.S. supplied as much as 50 percent of China’s soybean imports, but that number gradually declined further into the 2000s. Brazil’s share first matched the U.S. total in 2002 when each country supplied about 35 percent of China’s imports. Between 2002 and 2011, each country’s share of soybean exports to China totaled between 35 and 50 percent. Brazil’s share jumped to 50 percent of all exports to China between 2012 and 2016 as the U.S. share dropped to about 40 percent. That number would drop to 30 percent in 2017 as China’s tariff on U.S. soybeans took effect later in the marketing year. During the first nine months of China’s 2018/19 marketing year, Brazil’s share of the soybean import levels rose to 77 percent, while the U.S. share was just 10 percent.
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Ten Signs of Farm Financial Stress to Watch Out For
Things have been hard in agriculture and more specifically, it’s been hard to be a farmer. Wet weather, low crop prices, as well as trade disputes have put some farmers on the edge. Financial stress is taking a toll and Successful Farming has put together a list of signs that may indicate a farmer is suffering from significant financial stress. Signs include isolation or withdrawal, as well as talking in a monotone voice or lacking facial expressions, and outbursts of anger or abrasive behavior toward others, including children. After that, they list confusion, forgetfulness, and difficulty concentrating. Also on the list is blaming others such as banks or spouses, binge eating, gambling, or drinking. Sleeping too much or not enough is also on the list, as is a lack of pride in the appearance of the operation, including the buildings and grounds. Not caring for livestock is another sign to watch for, as are more farm accidents.
