Farmers are ready for a rebound

by Rich HIllman ([email protected]) 356 views 

Farmers are optimistic. They have to be with weather, government policy, market fluctuations and pests and diseases all part of the daily lives of Arkansas’ farmers and ranchers.

That said, I can’t look at 2020 and say with certainty that we are going to have a good year. We have some things that have brightened the outlook — namely passage of the U.S.-Mexico-Canada Agreement (USMCA) and signing a trade deal with China. The general consensus is these agreements should bring some needed clarity to agricultural markets that have been depressed for several years. But, frankly, we are still missing some of the key details of the agreement with China.

Additionally, the coronavirus and the impacts it will ultimately have in China and other parts of the world have blunted any uptick in agricultural markets that surfaced momentarily after the hoopla surrounding the signing of Phase 1 agreement with China.

As we stand today — several weeks before planting begins — a lot of farmers are still holding onto crops from 2019, hopeful that prices will go up once we start fully trading with China again. While Phase 1 has been signed, I would say we have a “wait-and-see” attitude on China.

The trade challenges and possible improvements are taking place on the heels of five years of mostly negative markets. As the state’s largest industry, we’re kind of the star player who has suffered a pulled muscle. It is safe to say that those of us in agriculture have been limping along at less than full strength.

In addition to depressed commodity prices over the past several years, recall that mother nature has been very unkind to us. In some areas of Arkansas, we have suffered two or three 100-year floods, all in the past five years. We’ve seen the devastation in all types of agriculture, whether it’s row crop or livestock.

When faced with economic challenges, the nature of farmers and ranchers is to just try to get to next year, doing everything to keep the farm in operation. But when you have taken that approach several years in a row, that natural optimism gets tested.

The past several years have led to increased agricultural bankruptcies and risky balance sheets for the thousands of small businesses that operate as farms and ranches. We’re seeing a lot of the equity that farmers built over several generations that has been used during these challenging times.

We’ve also seen it take a toll on people, along with the balance sheet. The suicide rate among farmers and ranchers has spiked. We don’t want nor need that here in Arkansas or anywhere.

Let me say that the Arkansas Congressional delegation has a clear understanding of the impact agriculture has on our state. And our state legislators understand that a hindered agriculture sector has implications to state tax revenue.

Washington has tried to help out with market facilitation payments and other programs. But I can tell you that farmers and ranchers can’t survive long term on those programs. Those are only a Band-Aid to a bigger problem. We need to get the trade situation fixed so American farmers and ranchers have full access to foreign markets.

Some signs point toward an improvement in commodity markets (grains as well as poultry, pork and beef prices). African Swine Fever has really decimated the swine production in China. We had a sense that we could help them out with that. Some of that has taken place, but nothing like what we thought could occur.

U.S. farmers and ranchers not only feed our own people but also feed a large portion of the world. Farmers and ranchers have made the necessary capital investments in equipment, land, labor, technology, etc. We’re built to produce, and we’re very, very good at it. In fact, we are some of the most efficient producers in the world. We just have to have the people on the other end to buy our goods and our products.

I am looking forward to 2020 playing out, and I am certain of one thing: The Arkansas farmer and rancher is ready to feed the rest of the world. We are optimistic that we’ll be able to make a living doing what we love to do. Arkansas needs that for the overall vitality of our state’s economy.

Editor’s note: Rich Hillman is president of the Arkansas Farm Bureau. The opinions expressed are those of the author.

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