WASHINGTON – In opening remarks at the 2019 Agricultural Outlook Forum, Robert Johansson, the US Dept. of Agriculture’s chief economist, addressed the role of US agriculture in a global economy that is projected to see slower economic growth in 2019-20.
The chief economist’s remarks covered a range of forecasts related to the US farm economy, crops and livestock, global trade and the recently enacted farm bill. A resilient US economy during the past year stood in contrast to volatility in much of the rest of the world, he said. Still, the value of the US dollar has weakened over the past year while other currencies, such as the Brazilian real, have strengthened, Johansson said.
The USDA projects a $66 billion net farm income for 2019, Johansson said. The chief economist didn’t skirt the bad news for the nation’s agricultural producers. He said total debt was approaching record levels and real estate debt hit that milestone in 2018. The national rate of producer bankruptcies is seen at 2.25 per 10,000 farms.
While rising bankruptcies aren’t a positive development, they are low historically, and should be viewed in context, he said. Using a scatter graph showing the bankruptcies per 10,000 farms in each of the 50 US states, Johansson explained that while some states are higher compared with recent years, such as Wisconsin, while some are lower, such as California. The overall figure is 10 times lower than in the 1980s, he said.
One indicator, level of optimism, showed mixed results in recent surveys, the chief economist noted. While farmer optimism is up 6.5 percent from this time last year, consumer sentiment and optimism among “Main Street” and builders is down.
On the US crop forecast, Johansson said declines in real prices were projected over the next 10 years, accounting for inflation. Production is simply growing faster than demand, he said, noting for example that since 1960, soybean production has risen 1,000 percent while prices for the oilseed declined 50 percent.
In remarks about global trade, Johansson briefly touched on the importance of the US-Mexico-Canada Agreement, noting plenty more was to come on that subject in a keynote address by US Secretary of Agriculture Sonny Perdue and his “fireside chat” with Canadian Minister of Agriculture Lawrence MacAulay and Mexican Secretary of Agriculture Victor Villalobos.
The most important issue this year will be China’s retaliatory tariffs that essentially blocked US soybean exports to China, forcing sale of the oilseed at steep discounts relative to main competitor Brazil. Alternate markets are increasing, Johansson said, but not nearly enough to offset the loss of exports to China. A projected carryout of 910 million bushels will “take 10 years to unwind,” he said, and prices won’t fully recover until the 2020 crop year.
The chief economist offered a preview of coming attractions at this week’s annual outlook forum, including a discussion of advances in biotechnology during a plenary panel, discussions about a rising global population income driving demand and talks about the farm bill signed Dec. 20, 2018, by President Donald Trump.