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Economists Lay Out Critical Issues Facing Farmers
For many of us, the new year is a time to reflect on the year (or decade) behind us and consider what may lie ahead of us. What will 2020 have in store?
Well, that is a daunting – if not impossible – question to answer in January. However, that doesn’t mean we are completely helpless in thinking about the significant issues ahead.
Here is a list of the 11 biggest issues facing agriculture in 2020.
1. Farm Income
From the trade war to MFP and commodity markets, farm income will have several moving pieces in 2020. It is no secret that ad hoc MFP payments in 2018 and 2019 have propped up farm incomes, but no such program is currently in play for 2020.
2. Farm Finances
As we noted in 2019, the challenges in the farm economy go deeper than farm income. Specifically, the trends toward higher debt and lower working capital reveal an unfavorable trend on producers’ balance sheets. Will farm balance sheets stabilize in 2020?
3. African Swine Fever
Was 2019 the worst of African Swine Fever (ASF) or the tip of the iceberg? Conversations in 2020 will likely swing from opportunities (“Will U.S. exports surge to fill a void in the market?”) to risks (“What will happen to demand for grain if Europe and/or the U.S. face an outbreak?”).
4. Trade War
There is, again, hope for a quick resolution to the trade war. Mark January 15 on your calendars as this is when China and the U.S. are set to sign the Phase One agreement. At stake for agriculture appears to be a surge in China’s purchase of U.S. agricultural goods. It is hard to read what has been written/tweeted about the situation and not feel both optimistic and skeptical at times. Stay tuned.
5. Drama in D.C.
USMCA. Impeachment. Tensions in the Middle East. Farm workforce modernization legislation. The EPA and RFS. Oh, and an election. There is a lot for lawmakers to get themselves distracted by in 2020. The biggest questions for agriculture – at least at this point – surround USMCA and the Phase One trade deal getting across the finish line. We also would not be surprised if farm policy and MFP get attention during the plethora of upcoming political debates.
6. U.S. Economy
Will the U.S. economy continue its lackluster yet long-lived economic expansion in 2020?
7. Global Unrest
The new year has seemingly been met with amplified global tension. A lack of progress in negotiations between the U.S. and North Korea has turned into new threats. Even more complicating, a U.S. airstrike in Iraq killed a high-ranking Iranian military official, which led to even more threats.
8. Acreage Debate
There is always speculation surrounding U.S. corn and soybean acreage, but this year’s debate will likely get even more attention. The debate got a kickstart last summer when the possibility of 100 million corn acres was thrown out. In reality, the conversations – regardless of the actual numerical outcome – will likely be focused on too many acres.
9. 2020 Weather
A perennial question for agriculture is what the weather might have in store for 2020. It is hard to believe, but some producers – especially in western Kansas and Texas – are facing dry conditions. Early indications imply El Niño and La Niña aren’t likely to make an appearance during the 2020 growing season as forecasts anticipate neutral conditions through summer.
10. Ending Stocks
Mother Nature took a dent out of the massive soybean stocks in 2019. How will U.S. (and global) grain production and ending stocks fare in 2020?
11. Good Times Ahead for U.S. Livestock Producers?
Livestock producers will be carefully watching for the details of the Phase One trade deal with China, especially given China’s challenges in responding to ASF.
11.5. But Really, What Are Those Drones Doing?
On a lighter note, we will be curious to see if 2020 brings resolution to what those night-flying drones in Colorado and Nebraska are up to.
As you make plans for 2020, it is important to keep these uncertainties – and any others you might be facing – in mind. The challenge for decision-making is how to evaluate and think critically about the uncertainties. This is a topic that we have thought a lot about over the last several months. In 2020, we will be talking, writing, and thinking a lot about how decision-makers can navigate uncertainties in a thoughtful, strategic process. In future posts, we’ll be sharing more details and provide opportunities for you to be apart of this project.
Agricultural Eonomic Insights hopes you will continue the conversation with us on Twitter and Facebook.