U.S. Farm Report’s host told attendees Wednesday (Feb. 13) at the Arkansas State University Agribusiness Conference that commodity prices have been in the doldrums for about four years, and many experts think that one way to raise prices would be to sell more corn.
U.S. farmers planted 81.8 million corn acres according to the United States Agriculture Department (USDA) in 2018, and those acres were estimated to produce 14 billion bushels. Prices have hovered in the $4 per bushel range for several years after highs of more than $8 per bushel earlier in the decade, said Tyne Morgan, host of the U.S. Farm Report and keynote speaker at the conference.
The way to push corn prices upward is to create more demand, she told attendees. One option would be to entice China to buy more corn, but that is problematic right now because of the ongoing trade war. Soybean sales in China have dominated the media coverage of the trade war, but it has impacted other crops including the potential to sell corn, cotton, and even apples. During the Chinese New Year, it’s customary to exchange a “perfect apple,” Morgan said. Apple exports to China have dropped 33% since the start of the trade war according to USDA, and there’s no way to make up for the Chinese New Year lost, she added.
Another way to increase corn demand is the expanded sale of gasoline blends that contain 15% ethanol, commonly referred to as E-15. It’s banned during summer months, because there is a belief that it might contribute to smog during periods of higher temperatures. There has been a push to allow sales year round and President Donald Trump has signaled a willingness to support the move.
Year-round E-15 sales could have a dramatic impact on how much corn is consumed, Morgan said. It’s estimated another 2 billion bushels per year could be sold. But, again it could take awhile in part due to trade relations and due to consumer habits.
Farmers are facing significant headwinds in a lot of different sectors in 2019, she said. Farm bankruptcies are up, especially in states like Wisconsin. Since 1975, annual milk consumption per person has dropped 11 gallons. Bottled water is eating into milk’s market and dairy farmers are experiencing a significant drop in market share, Morgan said in citing national statistics.
Not all ag sectors look gloomy, however. It’s expected that when the final numbers are released, the U.S. will have record meat sales in 2018. Beef, chicken, and even bacon are leading the way, she said. Meat exports are on the rise and even vegan friendly college-age students eat more meat than they’d like to admit, she said. Up to 51% of Millennials that identified as vegan ate meat within the last week of the survey, she said to a chorus of laughter.
Tough economic times do have positive side-effects, she said. The national media has been continuously producing stories about agriculture and rural America as the trade wars have raged.
Successful farmers have to think outside of the box of traditional norms within the industry, she said. For instance, she encountered a potato farmer in Idaho, who had shifted a large portion of his farmland to hay production. Potato farmers produce such high yields now that’s its cratered the price and been hard to make a living just growing potatoes. At a meeting in Australia, the farmer met a Chinese businessman and the two came to a deal where the farmer would ship hay to China. The arrangement has been so good, it hasn’t been impacted by the trade war, Morgan added.
“We’re becoming better at business during these tough economic times,” she added.