This holiday season, farmers are asking for a few gifts that won’t fit in a stocking or under the tree. Rural America is simply hoping for a little better weather for 2020 to go with some free and fair trade breakthroughs that will lead to a more robust farm economy.
This month, Groundwork spoke to Dr. John Newton, Chief Economist at the American Farm Bureau Federation, and one of the foremost experts on farm economics to discuss rural America’s hopes for a prosperous new year. Listen to this month’s episode by clicking here.
Farming is a unique occupation – one that comes with its own particular set of risks and rewards. In this great Agriculture Economics 101-type segment, Newton said that one of the top things that set farming apart from other industries is that farmers and ranchers are essentially in business with Mother Nature.
“Farmers take out considerable amounts of debt each year to put a crop in the ground,” Newton explained. “And they ultimately don’t know what that crop’s going to be at harvest because they depend so critically on Mother Nature.”
And Mother Nature certainly hasn’t made the nice list recently. Farmers have had to grapple with record rainfall, early snowfall, hurricanes, wildfires, 2,000-year floods and even volcanoes.
These weather woes have exacerbated an already difficult financial situation in rural America. Farmers are burning through their equity and relying on off-farm income to try and stay afloat.
“When you look at on-farm income, on average, half the farms in the country lose money every year,” Newton said.
Newton noted that farm debt in 2019 is projected to be a record-high $415 billion. When adjusted for inflation, that’s only slightly below the amount of debt held by farmers prior to the 1980s farm crisis.
The impact of financial difficulties in rural America reverberates far beyond the farm.
“The rural economy is so important to America, and farmers and ranchers are a big component of that,” Newton said.
Trade disputes have also affected the rural economy by tightening critical export markets for U.S. agricultural products. While our farmers appreciate trade aid, what they truly want is a resolution to trade negotiations.
“There’s not a farmer that I’ve talked to around the country that would rather have aid instead of trade,” Newton said.
Newton rightly pointed out that the prospects for a more prosperous 2020 rely on creating a strong demand for the high-quality agricultural products grown and raised by our farmers.
Congress has an immediate opportunity to secure new opportunities for farmers by passing the United States-Mexico-Canada Agreement (USMCA) as quickly as possible.
“The potential to get USMCA through the House before Christmas, and then maybe through the Senate in 2020, that shows the world that if this Administration negotiates a trade deal, that Congress can get it done and that we’re open for business,” Newton said.
Finalizing USMCA is just step one to fully addressing issues affecting the demand for agricultural projects, including restoring full access to the Chinese market and addressing the small refinery exemption on ethanol.
With so much riding on the line every year, it is important that America’s farmers and ranchers have access to a strong farm safety net and risk management tools they can rely on.
Because rebuilding the farm economy is about more than short-term benefits, it’s about creating a lasting prosperity so that the next generation can take up the plow.