KANSAS CITY, Mo. – “Agriculture is the solution that can feed a growing planet,” US Deputy Secretary of Agriculture Stephen Censky told attendees at the Ag Outlook Forum, presented by the Agricultural Business Council of Kansas City and Agri-Pulse and held in Kansas City Sept. 23. According to Censky, agricultural innovation is the key.
“It’s important that we position agriculture as the solution. Right now, we have 7 ½ billion people on the planet. By the year 2050, we’re going to be approaching 10 billion people. To feed them all, we are going to have to radically and substantially increase our agriculture productivity and we need to do that through innovation,” Censky said.
“We know that we have the most productive farmers and ranchers in the world. We know that they are innovating, that they are creative and adapting how they produce. We know that we have a very innovative agriculture business and scientific sector that is innovating and bringing farmers and ranchers new products,” he said. “How can we create the right regulatory environment so that innovation and the adoption of those technologies can be accelerated and not impeded?”
Research, both in government and in the private sector, will help with agricultural innovation, Censky explained. Annually, USDA has more than $3 billion in its agriculture research budget. “We want to be sure that our research investments are going toward projects that are moving the needle and will make a difference for farmers and ranchers economically,” he said. “We want to partner with the private sector to make sure the breakthroughs that we produce out of our research are going to be picked up and marketed and further developed by those in the private sector.”
In addition to innovation, Censky said biofuels technologies are helping to advance the agriculture industry. “Biofuels is a win-win, win-win situation. It’s a win for farmers. It’s a win by creating demand for the products we’re growing. It’s a win for jobs because it’s creating jobs in rural communities – that are being supported by biofuels. It’s a win for the environment because of the more positive greenhouse gas profile and the other benefits that biofuels have. And it’s a win for energy security.”
Economic and trade development
US farmers are facing a tough economic outlook. USDA’s Economic Research Service (ERS) is forecasting for 2019 that farming income will be up $5 billion from 2018 but that it will be 49 percent below the peak of the market back in 2013. It will also be 23 percent below the historical average over the past 20 years.
Last year, bankruptcies among farmers in the Midwest states rose from 79 to 103, according to the Federal Reserve Bank of Minneapolis. However, that rate overall remains low at 2.35 bankruptcies per 10,000 farms nationwide, which is 10 times lower than the bankruptcy rates in the 80s.
Despite the wet spring, USDA is projecting the 6th largest corn and soybean crops – 13.8 billion bu of corn and 3.63 billion bu of soybeans.
Record red meat and chicken production is also predicted for 2020, which will likely have some downward pressure on prices. “Nonetheless we expect to see continued growth in exports despite a challenging trade environment. So, we expect to see livestock, dairy and poultry prices to increase in 2020,” Censky explained. “We at USDA know how important trade is to US agriculture.”
In 2017, $138 billion of US agriculture exports produced $179 billion in additional economic activity. Agriculture exports supported 1.1 million jobs including 800,000 in the non-farm sector. Each $1 of ag exports generated an additional $1.30 in business activity, Censky said. In 2018, US ag exports were $140 billion.
“We’re working at USDA to expand markets around the globe. One of the markets that we’re looking at is Japan. We think this is really good news for US agriculture,” Censky said. “We see that this framework agreement is a big win for US agriculture. The deal will help our farmers and ranchers export more to Japan and we’ve secured some market access for a lot of products.”
Censky also mentioned the possibility of future export opportunities in India, and of course the ongoing trade talks with China.
“In light of the positives that are happening on the agriculture trade front – in Japan and possibly India – one that has a lot of opportunity for us to move forward on is the USMCA agreement. We know how important that is for our products.”
Last week, all former secretaries of Agriculture endorsed the USMCA and talked about what a great agreement it was for US agriculture. “Support for the USMCA comes across all spectrums of the economy, all spectrums of the US farm economy and across all political parties,” Censky said. “It will help lock in and improve the flow of ag commodities that are going to our first and second largest export markets.” Last year, the US exported around $40 billion to Canada and Mexico.
“The USMCA really is a good agreement. We need a vote,” Censky said. “I can’t underscore enough how important it is that Congress act in the next month or so because it will get harder and harder to pass it closer to the election.”
While trade negotiations with China continue and the industry awaits the passing of the USMCA, USDA continues to support the agriculture industry with its trade mitigation programs. “We know that farmers would rather have a market for their products rather than have a check from the government. But, while we work to hopefully get China to the table, the president has made it clear that he wants to have farmers’ backs. He directed the USDA to provide a $16 billion program that has direct payments to farmers, through commodity purchases as well as trade development and promotion,” Censky said. “Our hope next year, if we can secure a trade agreement with China soon, is that we won’t need a trade mitigation program.”