Update on the state of the agricultural economy

Agriculture has already faced a plethora of challenges this year and the state of the ag economy is under a microscope.

Early on in this pandemic, the ag sector garnished attention of the general public as a crisis took hold at meat packing plants and in livestock operations. American Farm Bureau Federation economist Michael Nepveux states, “That drop in cattle and hog slaughter... is just an astounding drop.”

As we have reported, things have begun to turn around. “Most analyst expected recovery to take a lot longer than it did,” Nepveux notes.

Those animals need to eat and analyst look to the world supply of corn for market insight. According to economist Arlan Suderman, “If you remove China from USDA’s numbers, and remove the United States, to see what’s the situation in the rest of the world, it’s at a 35 day supply. That is the tightest we’ve been since 2001.”

However, Suderman says that that is not enough to rattle the corn market: “That just says there’s not a lot of wiggle room in the rest of the world balance sheet.”

This implies the world, including China, will have to come to the United States to restock. Suderman states that China is producing hogs quickly now, as they had a crisis on their hands before COVID-19 hit. More hogs means China needs more feed stocks.

“They truly believe they handled coronavirus better than any other country in the world,” he adds. “Yet, their supply lines were shut down, their ports are shut down, so through the logic of their thinking, they are convinced it will happen to us and to Brazil and other suppliers, and their just trying to get supplies in before that happens.”

Trade and not aid is what farmers want, but billions of dollars still sit in coronavirus relief programs. “When we’re having policy discussions with the Hill, it makes it really difficult to talk about producers who were left out and the need for additional funding for them, if they haven’t even spent the money they were given,” Nepveux adds.

Nepveux also states that there is a lack of data covering some specialty crop growers: “This isn’t really a situation where these producers don’t need it... There were a lot of producers left out of this.” That is being corrected and the CFAP deadlines have been extended.