Global Economy

The New Ag Economy: Why This Downturn is a Structural Shift, Not Just a Cycle

Mon, 13 Apr 2026 21:22:18 GMT

What You Need to Know:

Structural Evolution: This downturn is a permanent market shift, not just a temporary cycle.
Friend-Shoring: Trade is moving toward geopolitical allies to ensure supply chain resilience.
Aggressive Cost-Cutting: Farmers are doubling generic input use and delaying machinery purchases to protect margins.
Financial Resilience: Better management and working capital make today far more stable than the 1980s.
Premium Protein Demand: GLP-1 medications are driving consumers toward smaller, higher-quality meat portions

As the industry enters the third year of this downturn, farmers and agribusinesses are questioning if a recovery is on the two-year horizon. While cyclical behavior is normal, two economists suggest the structural evolution within crop protection, machinery, technology, livestock and other individual sectors is creating a different kind of staying power for those who survive the recovery.

The Evolution of the Cycle

When characterizing the current economic cycle in agriculture, historical patterns provide a necessary baseline, yet the present landscape is defined by unique pressures. Typical agricultural cycles consist of roughly six years of expansion followed by four years of decline. Currently, the market is navigating a “corrective period,” returning to long-run averages.

The drivers of growth are typically demand shocks — export surges, fuel demand or policy shifts such as the Renewable Fuel Standard. However, Wes Davis, ag economist at Meridian Ag Advisors, notes the current environment is an intersection of traditional contraction and sector-specific evolution.

“What I think we’re experiencing right now is that typical cycle behavior where we see growth in some business firms, and then some contraction and pullback to adjust to the cycle going back to more of the long-run average,” Davis explains. “I think we’re also seeing evolution of individual sectors within the market where there’s adjustments happening because of the industry itself.”

In other words, this isn’t just a cycle — it’s also a structural shift.

Change Fatigue and Modern Volatility

Farmers aren’t strangers to volatility, but global trade disruptions, policy shifts and rising competition, especially from Brazil, are layering uncertainty onto already volatile markets.
Farmers are grappling with “change fatigue,” a byproduct of the high velocity of information and extreme price swings that dwarf the relative stability of the early 2000s.

“When I go talk to any industry group right now, the phrase that I hear is ‘change fatigue’, and I feel that. Every couple minutes, something shifts,” says Trey Malone, Purdue University ag econ professor. “But to be clear, it’s not that the farm economy isn’t used to volatility, it’s just the uncertainty and the volatility now is, like, ‘hold my beer relative’ to the old volatility.”

Malone attributes this to layers of uncertainty created by global trade and policy. The rise of Brazilian production, coinciding with the disruption of U.S.-China trade relations, has created a permanent state of flux. This sentiment is reflected in the Purdue Ag Economy Barometer, which shares a higher correlation with the Small Business Index (.5) than with actual commodity prices. This suggests farmers view themselves primarily as small business owners facing broad economic pressures rather than just price-takers.

“We don’t see very strong correlations even with lagged soybean prices and corn prices,” Malone notes. “The world is more complicated than just looking at what happened in the market yesterday and gauging how farmers feel.”

Global Competitiveness and the Trade Reallocation

A primary concern for U.S. producers is their position as low-cost providers. While the U.S. maintains an infrastructure advantage that lowers the cost of getting products to export ports, Brazil continues to close the gap.

“It’s a fair question farmers ask a lot: Are we actually the ones who are the low-cost producers, and do we still have a place in the global market if Brazil continues to lower the cost of production and transport their grain to export terminals?” Davis asks.

However, Davis points out that global trade hasn’t shut off; it has reallocated. Only three global regions — North America, Latin America and parts of Southeastern Europe/Central Asia — are net exporters. The rest of the world remains net importers.

“While our trade has kind of shifted around ... that shift has really reallocated stuff in different places. Those calories and products end up going somewhere. It’s just a question of where,” he says.

The Shift to “Friend-Shoring” and Resilient Supply Chains

The industry is moving from “just-in-time” (hyper-lean) procurement to “just-in-case” (inventory-heavy) strategies, a lesson reinforced by the pandemic. This shift is accompanied by “friend-shoring,” where the U.S. prioritizes trade with geopolitical allies.

“We’ve gone from offshoring to onshoring to nearshoring to friendshoring,” Malone explains. “We’ve got a paper that’ll be coming out ... where we document friend-shoring in ag and food supply chains. Over the last 10 years, there’s been a shift where we mostly in the U.S. trade with other people who vote like us in the WTO. That’s kind of one way to measure friends.”

This resilience is also visible in crop protection. In 2019, 80% of active ingredients were sourced from China. Today, that is closer to 60%, with manufacturing shifting to India and domestic sites. Davis calls these “geopolitically resilient” supply chains.

The Rise of Generics and Decision Paralysis

The economic downturn is fundamentally changing the business model for input providers. Farmers are aggressively cutting costs, leading to a massive surge in generic usage.

“The latest survey I saw shows about 60% of farmers use generics today. That was about 30% to 40% just 5 years ago,” Davis says. This forces companies to pivot from differentiation to operational volume.

In the machinery sector, high costs and economic uncertainty have led to “decision paralysis.” Farmers are extending the life of their equipment, treating machinery replacement as the most controllable variable in managing annual ROI. Davis notes the U.S. ag equipment cycle is currently 15 to 20 percentage points lower than typical low points, driven by this hesitation. Furthermore, there is significant skepticism toward subscription-based technology models.

“Farmers don’t terribly love this idea, and I think the other interesting thought here is I’m not sure that retailers like selling them either,” Malone adds.

AI: The “Undergraduate Intern”

While artificial intelligence (AI) is a major talking point, its current role in agriculture is more supportive than transformative. Malone views AI as a “highly capable undergraduate intern” — useful for processing information but incapable of replacing the trust and risk management provided by human advisors.

“I don’t think you need to be replacing your agronomist. I think your mediocre agronomist just got OK,” Malone says, noting while LLMs can pass CCA exams, they cannot manage the risk of a wrong decision. “The risk management value proposition of an in-person Claude, or whoever, is probably going to win out because there’s still a risk.”

Currently, the adoption gap is wide: While 75% of agribusiness managers see potential in AI, only 4% have implemented it, according to a Purdue University survey in 2025.

Livestock and the GLP-1 Impact

The livestock sector is facing a unique demand shift driven by weight-loss medications (GLP-1s). This is leading to “premiumization.” As consumers eat smaller portions, they are opting for higher-quality cuts.

“The explosion in demand for protein is just shocking,” Malone says. “What GLP-1s do to that calorie count is they are all shifting toward premium cuts. You don’t care how much it costs because you’re only going to have seven bites of it. But you’re going to have a steak. That premiumization is going to really, really take off in the next 10 years.”

Conversely, the hype surrounding “fake meat” has largely faded, proving to be more of an investor-led phenomenon than a market-driven one.

Financial Stability: Not the 1980s

Despite the downturn, the financial health of the American farmer remains more stable than during the crisis of the 1980s. Currently, 10% to 12% of farmers are in a “tight” financial position , compared to 20% to 30% in the 80s.

“We do have a completely different, more professional ag workforce than we did back then,” Malone says. “The farm policy we have right now does not necessarily match what we need for the future, but all of these things make me think we’re in a much more stable position.”

Farmers have built-in “shock absorbers,” Davis adds, including off-farm income and working capital built up during the expansion years. However, in his research Davis has seen how alternative financing is becoming a major tool for the 50% of farmers who use it — either to manage stress or, for larger operations, to leverage relationships with retailers.

Strategic Reassessment: Winning at the Bottom

The experts agree the “bottom of the cycle” is the time for professionalization and upskilling. Surviving — and thriving — will require sharper management. It is an opportunity to reassess farm transitions and management disciplines, such as financial management, accounting and planning, which become critical in tight margins.

“Farmers are going to have to get smarter and get more creative with how they manage,” Malone says. “This is a good opportunity to take a step back and think about what the strategy needs to be moving forward.”

Davis emphasizes relationships are solidified during these periods: “Farmers are going to remember the folks who were around when they were in the bottom of the cycle, and who were there to support them. The best farmers will continue to get better ... I get excited about what we can look like as we come out of this cycle.”

So Is This Ag Cycle Different?

These experts say yes as every cycle presents its own unique reshaping of future opportunities.

To download the full report on why this ag cycle is different and what it means for your operation, click here .

44 Million Acres: The New Frontier of Farm Consolidation and Growth

Tue, 10 Feb 2026 18:00:32 GMT

At the 2026 Top Producer Summit , Farm Journal Intelligence unveiled new farmland insights derived from predictive modeling and deep-data analysis. The research focused on the shifting landscape of land acquisition, identifying which operations are at risk of consolidation, who is positioned for growth and where the most significant opportunities lie.

Here are the six primary findings for farm businesses:

1. Scale Does Not Immune Operations from Consolidation.

(Farm Journal)

While smaller operations face the highest risk — with 58% of small farms “at risk” for sale or acquisition before 2030 — size is not a complete safeguard. Research shows the risk of consolidation or ownership transfer never drops below 27%, even for the largest operations. Furthermore, crop diversity made minimal impact on these odds; the likelihood of transition remains constant whether a farm produces one crop or more than 11.

2. Geography Trumps Diversification.

(Farm Journal)

Regional location is increasingly becoming a primary driver of financial success, often outweighing the benefits of operational diversification. As regional market divides grow, farmers and ranchers are finding that local market conditions and individual circumstances dictate their trajectory more. State-level or even county-level effects are more indicative of their situation than national trends.

3. The 44-Million-Acre Transition.

(Farm Journal)

Nearly 15% of American cropland is projected to change hands within the next three years, driven by generational transfers, continued consolidation and economic pressures. Farm Journal data identifies the Midwest as the epicenter of this shift, with roughly 12 million acres likely to transition. Nationwide, that total reaches a staggering 44 million acres.

4. Mapping the “Sweet Spot” for Expansion.

(Farm Journal)

By plotting cost per cropland acre against the volume of land likely to transition, clear opportunities for expansion emerge. For producers looking to grow their footprint, the most viable opportunities are currently concentrated in Kansas, Texas, North Dakota, Missouri, and Oklahoma, according to this research.

5. Integrity Is the Top Currency in Rental Markets.

(Farm Journal)

When more than 400 landowners were surveyed about tenant selection, integrity ranked as the most critical factor. Interestingly, age was reported as the least important factor. For producers looking to secure rented ground, a reputation for character and experience outweighs both seniority and youth.

6. The “Willingness” Factor in Technology.

(Farm Journal)

Producers most inclined to expand share a common trait: a higher comfort level and rate of adoption with technology. Crucially, this is not necessarily tied to technical skill or existing expertise, but rather to mindset and action. The most growth-oriented producers are defined by their willingness to try new technologies rather than their current mastery of them.

Download the Full Report

Atlanta Fed Chair Bostic Recognizes Sectors of Agriculture Are in Crisis

Tue, 10 Feb 2026 00:19:58 GMT

Is an economic crisis brewing in farm country? That’s the question Raphael Bostic, outgoing president and CEO of the Federal Reserve Bank of Atlanta, is watching as balance sheets carry over operating expenses into the 2026 season.

“There’s a lot of distress in agricultural marketplaces and in a lot of our agricultural enterprises,” Bostic says. “I do think there’s a significant crisis here.”

During a fireside chat at the 2026 Top Producer Summit , he recognized the challenges facing farmers in today’s financial environment.

“I get to talk to a lot of smaller family farms and I worry about them, especially because the big operations, they are so large scale, it gives you a diversity of possible strategies,” Bostic explains. “You can tap into different types of credit that can allow you to weather volatility a bit more readily, and we don’t see that for a lot of the smaller folks.”

To help, USDA is set to release $12 billion in “ Farmers Bridge Assistance ” payments toward the end of the month.

“This is a short-run patch on something that could be a long-run problem,” Bostic says.

Rising Expenses and the Growing Debt Burden

USDA is expecting net farm income to be $153.4 billion, which is down $4.1 billion from 2025. Economists say this year’s latest outlook continues to reflect declining receipts and an ongoing reliance on help from the government, which is expected to increase by 45% in 2026 alone.

“Total production expenses are forecast to increase almost $5 billion or 1%,” says USDA economist Carrie Litkowski. “On the farm sector balance sheet, assets, debt and equity are all forecast to increase.”

The latest Purdue University - CME Group Ag Economy Barometer in January found 21% of farmers surveyed expect their operating loan to increase over a year ago. Of those, a third say it’s because they’re carrying over unpaid operating debt from the prior year. In 2023 that number was only 5%.

“We know that input prices for a host of products are up,” Bostic says. “We know that competition at a global level is up. We know that the tariffs have put tremendous pressure on the competitiveness of American products overseas because of those dynamics, and we also know many commodity prices haven’t changed to offset these things. These are all incredibly challenging dynamics to wrestle with, and how we move forward is really an open question.”

Fed Policy: Why Patience is Required for Rate Cuts

The Fed’s primary mandate of stable prices and maximum employment provides an environment with predictable growth, giving people the opportunity to invest for the long haul without having to worry about where the economy will be in five to 10 years.

“First we have to diagnose the problem,” Bostic says. “Is this an issue with labor availability, an issue in new technology or shifting climate patterns, etc., and then we need to think about what strategies will work for all of these new things.”

That mandate requires patience in seeing how current monetary policy impacts the market. Bostic notes inflation remains above the Federal Reserve’s target of 2%, but economic growth has been and will continue to be robust. One thing he’s not advocating for is a continuation of interest rate cuts.

“The government shutdown actually prevented a lot of data from being produced, so it is actually going to make the numbers a bit choppier in the next several months,” Bostic explains. “The usual signals we would get from those [reports] are actually going to be weaker than they would be otherwise. For me, that’s another reason why I think we want to be cautious. We want to be patient, and I think that’ll be prudent.”

Patience ahead of additional rate cuts would allow the Federal Reserve to see how tax cuts and deregulation stimulate growth into 2026 before cutting rates, which could spur inflation even further above the Fed’s target.

At the 2026 Top Producer Summit, Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta, joins Bill Watts, Pro Farmer editor, to share insights into the economic forces shaping monetary policy and what that could mean for agriculture.

(Farm Journal )

The ag economy is seeing similar challenges to the economy as a whole. Bostic remarks while the top end of the economy is doing remarkably well, there is a growing number of U.S. consumers who are living paycheck to paycheck, evidenced by the increased rhetoric around a K-shaped economy. That has made itself evident in the ag economy by higher consolidation, with big farms getting bigger and smaller farms going out of business.

“This economy has continued to perform well at an aggregate level; consumers have continued to be resilient, and that’s a good thing,” Bostic says. “My outlook is that the resilience we’ve seen for much of 2025 will continue into 2026 and might even get a bit stronger, so we might actually see some of the tax benefits, some of the deregulation, those things could actually spur the economy to do even more than what it did last year.”

Consolidation and the Transformative Potential of AI

The latest red flag, a sluggish labor market has Bostic waiting on data and wondering if technology or AI are having an outsized role in the current new-hire economy.

“When you think about AI, for example, and those technologies, businesses are experimenting with ways to have AI introduced into their production processes to allow productivity that doesn’t require people,” Bostic admits. “You may have heard reports about a lot of entry-level hiring has happened at a much lower pace than it has in previous years. A lot of that is because the promise of AI has folks thinking, well, maybe I don’t need to do those hires, and I can get that same amount of productivity. That’s a structural change.”

From a farming perspective, those opportunities are also presenting themselves. Given the current challenges in agriculture, Bostic says it might be time to look at new ways to build toward the future.

“To the extent that work can be done, that is, generative, without necessarily needing a person to be there all the time, that’s potentially transformative,” Bostic says. “I know the day is long, seasons are hard, and if you can use technology to take two hours out of it that gives you space to do other things. The opportunity there is what do you do with that extra space?”

'The System Is Failing Us:' Why Real Change is Needed in U.S. Agriculture

Wed, 29 Oct 2025 13:57:30 GMT

Joe Maxwell doesn’t pull punches — especially on the topic of the future of American agriculture.

“The system is failing us,” says Maxwell, co-founder of Farm Action , during a recent episode of “Unscripted.” “It’s failing the people. It’s failing family farmers and ranchers. And it’s failing consumers. We can’t keep pretending everything’s fine.”

The Missouri farmer and former lieutenant governor shares an uncomfortable truth: The economic model that has shaped U.S. agriculture no longer works for those producing America’s food.

Commodity prices remain under pressure, input costs stay stubbornly high and government payments — while keeping some farms afloat — often mask deeper structural problems.

“We’re on this hamster wheel,” Maxwell says. “Government sends out a bailout, input companies raise prices and the money flows right back up to them. We think we’re being helped, but really, we’re just passing the money through.”

From Missouri Roots to National Reform

Maxwell grew up on a family farm in Missouri and lived through the 1980s farm crisis. That experience shapes his conviction that policy, not luck, determines who survives in agriculture.

That belief lead him and Ohio farmer Angela Huffman to co-found Farm Action, a nonprofit working to “connect the dots” between policy decisions, corporate consolidation and on-farm economics.

“We see a need for a farm organization that looks up and down the entire food chain,” Maxwell explains. “Everyone’s focused on one part of the system — fertilizer here, seed prices there, meatpacking somewhere else — but no one connects them. Farm Action connects those dots and pushes for policy that works for independent producers again.”

“We Don’t Feed the World Anymore”

Maxwell challenges one of agriculture’s most familiar slogans.

“Let’s be honest — we don’t feed the world anymore,” he says. “We import 60% of our fruit, over a third of our vegetables and record amounts of beef. We have a $47 billion agricultural trade deficit. The world is starting to feed us.”

He argues that U.S. farm policy has become overly dependent on exports of feed and fuel crops, while overlooking food crops and livestock production that directly feed Americans. Maxwell calls for farm programs that reward food production rather than commodity production.

“Every year we lose up to 1.8 million acres of pasture to row crops,” he notes. “That’s a failure of policy. We make it easier and more profitable to grow corn for fuel than to raise beef or vegetables for food. That’s not national security — that’s national vulnerability.”

“Let’s quit lying to ourselves. We don’t feed the world anymore — the world is beginning to feed us.”— Joe Maxwell, Farm Action

The Growing Grip of Consolidation

Maxwell points to consolidation as the most dangerous — and least understood — threat facing independent producers. From fertilizer and seed to meatpacking and grocery shelves, he says control has concentrated into the hands of just a few corporations.

“The power dynamic in agriculture has flipped,” Maxwell explains. “Farmers used to have leverage. Now, a handful of companies control nearly every input we need to farm — and they set the prices we pay. Then they control the markets we sell into, and they set those prices, too. That’s not a free market — that’s corporate feudalism.”

He points to Farm Action’s Concentration Tracker, a public data hub that compiles market share information across the food system. It shows that:

Four companies control over 80% of beef processing.
Two companies dominate more than 75% of corn seed genetics.
Three firms hold the majority of fertilizer production capacity.
The top five grocery chains now capture nearly 65% of all food retail sales.

“When just a few players hold that kind of power, they don’t compete — they coordinate,” Maxwell says. “They can raise input costs and suppress farmgate prices, and farmers have no real alternative. That’s why our concentration tracker matters — it exposes what’s really happening behind the curtain.”

The problem, he says, isn’t just economic — it’s political.

“These corporations have so much money and influence they shape farm policy to fit their own balance sheets,” Maxwell adds. “When we go to Washington asking for help, they’re already there, writing the rules. Until we restore fair competition and transparency, every bailout, every policy tweak is just feeding the beast.”

Farm Action’s data shows concentration doesn’t just hurt farmers — it hurts consumers, too. From fertilizer to feed to food, fewer companies mean higher costs for everyone.

“You see it every time you go to the grocery store,” Maxwell says. “Beef prices are high, but cattlemen aren’t seeing that profit. Fertilizer prices spike, but farmers don’t control the market. Consumers pay more, farmers earn less, and the middle consolidates the wealth. That’s not sustainable for anybody.”

It’s a concept gaining national traction. Just this week, the Senate Judiciary Committee held a hearing on the soaring costs of inputs.

Sen. Charles Grassley (R-Iowa) also introduced legislation to address the rising costs of inputs, called the Fertilizer Research Act . But the hearing brought together the larger issue of rising costs across the board for farmers.

“This hearing is focused on competition issues. However, there is something that the Trump administration can do right now to help ease the burden for farmers: lowering the countervailing duties on phosphate from Morocco. In 2024, the Biden administration increased duties on Moroccan phosphate to 18%,” said Grassley in his opening statement. “The Biden phosphate duties have only hurt farmers by boxing out access to this important market on an essential input with no substitute. I’m calling on the Trump administration to help American farmers and get rid of the Biden phosphate duties.”

The Beef Debate: “We’re Blindsided”

For ranchers, the issue of consolidation has long been a point of contention. But recent comments by President Trump sparked a renewed push for change and a probe into who and what really controls the prices consumers are paying.

When the White House signaled it will allow more beef imports from Argentina , Maxwell says many ranchers feel blindsided.

“Our cattle herd is at a 70-year low,” he says. “Ranchers finally see light at the end of the tunnel — and then Washington steps in to import more beef. That’s not just a policy mistake, it’s a psychological one.”

He argues that the frustration isn’t only about imports; it’s about the perception that the administration doesn’t understand the complexity of the cattle market.

“Cattle producers don’t set the price they’re paid — packers do,” Maxwell explains. “So when the president talks about lowering prices for consumers without addressing packer control, he’s aiming at the wrong target.”

“We’re finally seeing the light of day. Then government puts its hand back on our backs.”— Joe Maxwell on the U.S. cattle market

“It’s Time for DOJ to Step In”: Why the Beef Industry Needs an Investigation

He says instead of the Trump administration focusing on cattle prices, Farm Action thinks what happened in the egg industry during past price spikes is exactly what needs to happen now in beef: a full federal investigation.

“Two companies control 90% of hatcheries in the U.S. egg industry,” Maxwell explains. “When egg prices exploded, Farm Action presented evidence to the Department of Justice showing that those companies were profiting at historic levels while blaming avian flu. And you know what happened? DOJ opened an investigation. That’s what accountability looks like.”

Now, he says, the same pattern is playing out in beef.

“We’ve already seen price-fixing cases in the cattle sector,” he says. “Two of the major packers admitted it back in 2019. We shouldn’t have to spend years in court to prove what every rancher already knows — that a handful of companies are manipulating the market.”

The so-called “Big Four” — Tyson Foods, JBS, Cargill, and National Beef (controlled by Brazil-based Marfrig) — control roughly 85% of U.S. beef processing capacity. That concentration, Maxwell argues, allows them to influence both the price paid to producers and the price charged to consumers.

“It’s an abusive system,” Maxwell says. “They squeeze ranchers on one end and shoppers on the other, and everyone in between gets caught in the middle. The packers are the only ones guaranteed to make money, no matter what happens to the market.”

He calls for the Department of Justice to launch a new, comprehensive investigation into price manipulation and anti-competitive behavior within the beef industry — similar to what Farm Action pushed for with eggs.

“We need DOJ to do in beef what it finally did in eggs,” he says. “Follow the money, follow the profits, and hold these corporations accountable. Because right now, the people who produce our beef — the ranchers who’ve weathered drought, inflation, and decades of consolidation — are getting crushed while multinational packers report record margins.”

Maxwell says the Biden administration has taken small steps, but much more needs to be done.

“It’s not enough to tinker at the edges,” he warns. “We need enforcement — real enforcement — of the Packers and Stockyards Act, the Sherman Act, the Clayton Act. The laws are already on the books. What’s missing is the will to use them.”

Country-of-Origin Labeling: A “No-Brainer”

Maxwell says Farm Action is pushing hard for mandatory Country of Origin Labeling (M-COOL) as part of the upcoming USMCA review in 2026.

“Consumers deserve to know where their beef comes from,” he insists. “The president could fix this tomorrow by negotiating M-COOL into the trade deal. That one move would give American ranchers a fair shot.”

He dismisses claims that M-COOL violates WTO rules.

“WTO is dead in the water,” Maxwell argues. “There’s no functioning tribunal to even hear a case. The only people fighting this are the packers — JBS, Tyson, Cargill, Marfrig — because they profit when foreign beef gets a U.S. label.”

Structural Change, Not Another Bailout
When asked whether Farm Action supports another round of USDA bailouts for struggling producers, Maxwell doesn’t hesitate.

“We recognize farmers are in crisis,” he says. “We don’t want to see our neighbors driven off the farm. But we can’t just keep sending out checks without fixing the system. One day those bailouts won’t come, and then it’ll look just like the 1980s. We have to demand structural change.”

Those changes, he says, should include:

Capping farm subsidies to slow consolidation.
Rebalancing insurance and incentive programs toward food production.
Rebuilding local and regional processing capacity to compete with the “Big Four” packers who control 80–85% of the cattle market.
Stronger enforcement of antitrust laws like the Packers and Stockyards Act and the Sherman Act.

Rebuilding from the Ground Up

Despite his criticism, Maxwell frames his message as one of hope — if farmers and ranchers take the lead.

“We can’t sit back and wait for Washington to fix this,” he says. “We have to step up, be part of the conversation, and demand policies that keep family farms in business.”

He supports Rep. Thomas Massie’s Prime Act, which would expand small-scale meat processing and let states regulate local slaughterhouses directly.

“We’ve got the infrastructure,” Maxwell adds. “We just need to give it life again. Let’s rebuild local processing so farmers can sell directly to consumers and keep value in their communities.”

Why It Matters Now

Fresh data from the Farm Journal Ag Economists’ Monthly Monitor shows that 76% of agricultural economists expect conditions to persist or worsen over the next year. Many see echoes of the 1980s — though they warn today’s crisis is more complex.

“It’s not the 1980s all over again,” says Unscripted host Tyne Morgan. “But the pain is real. Economists say the situation could worsen in 2026 if structural issues aren’t addressed. That’s what makes conversations like this so important.”

A Call to Action

As the conversation wraps up, Maxwell’s tone shifts from urgency to determination. His message to rural America is both a warning and an invitation.

“We have to lead,” he says, pausing before adding, “because no one else is going to do it for us.”

He says the future of U.S. agriculture depends on whether farmers choose to engage in these hard conversations — the ones about fairness, policy, and the future of independent family farms.

“Look, we can’t afford to sit on the sidelines and hope someone in Washington suddenly understands our way of life,” Maxwell says. “Every farmer, every rancher, every person who believes in feeding people instead of feeding systems has a role to play. It starts at the local level — showing up, speaking up, refusing to accept that the current model is the only way forward.”He continues:

“This isn’t about right or left, or about politics at all. It’s about survival — for the people who feed this country. We can’t keep patching the same broken system and expecting it to serve us. If we want a food system that’s fair, resilient, and rooted in our rural communities, we’ve got to build it ourselves, together. That’s the hard truth — and the hopeful one.”

Maxwell’s words linger long after the conversation ends — a challenge, but also a call for courage. Change, he insists, isn’t something that happens to farmers. It’s something that must happen through them.

Listen to the Full Conversation

Listen to the full interview: “Unscripted” with Tyne Morgan and Clinton Griffiths featuring Joe Maxwell, a vailable on Farm Journal’s YouTube channel and anywhere you stream podcasts.

Global Beef Trade: Key Economic Insights and Trends

Wed, 21 May 2025 10:58:04 GMT

Beef trade in countries around the world is driven by a variety of factors including cattle inventories/beef production; population; general and product specific beef preferences; and transportation/logistics. Table 1 provides broad indicators of some of these economic forces.

Table 1. Global Beef Trade Indicators, Selected Countries. Data compiled from United Nations, USDA-FAS, USDA ERS. Columns E and F in carcass weight equivalents.

(Oklahoma State)

The total size (population) of a country is a factor affecting beef trade in the country. Population and per capita consumption drive total beef consumption. For example, China has relatively low per capita consumption (Column F) but is a large beef consumer and importer by virtue of a large total population (Columns B and E). In contrast, the U.S. is the second largest beef consumer with a population one-quarter of China but per capita consumption roughly 4.5 times higher.

Not surprisingly, countries with large beef industries (cattle inventory) tend to be large beef consumers, for example, China, Brazil and the U.S. India is an exception simply because much of the population does not consume beef and many of the cattle are not part of the commercial herd. India is, however, the third largest beef exporter, much of which is carabeef — meat from water buffalo.

One general indication of beef trade is the population relative to cattle inventory of various countries. Countries that have large populations relative to the size of their cattle industry are frequently beef importers. Of course, it depends on their general preferences and tendency to consume beef.

Table 1 shows that the highest people to cattle ratios are in Japan, China and South Korea (Column D). These countries rank first, third and fourth for total beef imports. Total beef imports in Japan and South Korea are 143% and 166% of domestic production, with China imports equal to 52% of total beef production (Column I). The U.K is the number five beef importer and has a relatively high people/cattle ratio, with imports representing 56% of production.

On the other hand, countries with low ratios of people to cattle are more likely to be beef exporters. Three countries with the lowest people to cattle ratios are New Zealand (0.55), Argentina (0.86), Australia (1.0) and Brazil (1.14) (Column D). These countries rank 6, 5, 2 and 1 as beef exporters, respectively (Column H).

New Zealand exports 90% of production but is not a bigger exporter simply because it is a small country and a small beef producer in total. Australia exports 73% of production while Argentina has high per capita beef consumption but also exports 37% of production.

The U.S., along with the E.U. and Canada, ranks as both top 10 beef importers and exporters. In the U.S., bilateral trade in beef reflects the diversity of beef products, with exports and imports of specific products helping to balance consumer preferences to domestic production. This adds value to U.S. producers and consumers by seeking the highest value across a wide range of beef products.

The U.S. exports a mix of high-value cuts, end meats and offals, and imports mostly processing beef to support the enormous ground beef market in the U.S., along with some specialty cuts. Beef trade between the U.S. and Canada also reflects the transportation efficiency of moving similar products north and south rather than east and west across the wide countries. Population centers in eastern Canada are closer to U.S. Midwest beef production, while beef production in western Canada is closer to U.S. west coast markets. Column K in Table 1 shows the shares of the major U.S. beef imports sources and Column L shows the shares of the major export markets for U.S. beef.

Global beef trade reflects the comparative advantage of beef producing countries, the demand of beef deficit countries, the balancing of preferences for specific beef products and the logistics between trading partners. It is a complex set of economic forces but the gains from trade benefit beef producers and consumers worldwide when beef markets are allowed to function without impediments and seek out the highest value for beef products.

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Economists Fear the U.S. Will See a Recession in 2025, And That Could Eat Into Consumers' Demand for Meat

Fri, 28 Mar 2025 17:56:24 GMT

Consumer meat sales hit record-breaking levels last year. The craze for protein-filled diets has been a storyline that’s helped drive meat demand, which is good news for meat producers. Ag economists warn, however, the major limiting factor for meat demand, and meat prices, in 2025 just may be what happens in the overall economy.

The March Ag Economists’ Monthly Monitor asked economists if they think the U.S. general economy will see a recession in 2025, and 62% said yes.

Recent reports agree with that sentiment, as the Federal Reserve’s key inflation index rose more than expected in February and consumer spending posted a smaller-than-projected increase, according to the Commerce Department. Both could be warning signs of what’s ahead.

As a follow up question, The Ag Economists’ Monthly Monitor survey asked, “In what ways does the U.S. economy impact meat demand in 2025?” Respondents had no shortage of opinions on that.

Here’s a rundown of some of their reactions:

“If real wages fall, there will be a substitution toward other protein/cheaper meat cuts.”
“Slower growth (even if the U.S. does not endure a recession) will reduce consumer willingness to spend, especially at a time when beef prices, in particular, are high.”
“A downturn in economic growth impacts disposable income and should slow animal protein demand.”
“There is a positive correlation between GDP and meat demand, particularly between GDP and higher end cuts.”
“When the U.S. economy is strong and incomes increase, consumers have more disposable income to spend on meat and higher quality cuts of meat. When the U.S. economy is weak and disposable income tightens, consumers may reduce meat in their diet or turn to less expensive meat options.”

Not all economists expect U.S. consumer demand to fall off though, even if the U.S. officially enters into a recession.

“Labor income is growing faster than inflation. Most U.S. firms are profitable - at least as of current earnings reports,” said one economist.

Another shared, “I do think consumer demand will be lower in 2025 than it was in 2024. That being said - 2024 consumer expenditures and demand were a lot higher than I anticipated at the beginning of the year. Two indicators that are showing up, and are unsustainable right now, are reducing savings accounts and increasing credit card debt. I think it leads to slower meat demand in 2025, partially due to lower meat availability and partially due to slowing consumer demand. Notice I said ‘slowing’ consumer demand and not ‘declining/negative’. Demand does not have to decline year-over-year to impact meat prices. Slowing can do the same thing.”

The GLP-1 Effect
What could have an even bigger impact on meat demand, and even more so than inflation and a recession, is the use of GLP-1 drugs for weight loss. GLP-1 drugs not only moderate users’ blood sugar levels, but also affect their appetites by suppressing hunger cravings.

“U.S. consumer preference for meat demand is strong, though I would be paying attention to the growing use of GLP-1s as it relates to all agricultural product demand,” one economist responded.

The good news is studies have shown those who use GLP-1 drugs often crave healthier items and often consume more protein versus unhealthy foods.

Starting From a Place of Strength
Forecasting meat demand in 2025 relies on a number of factors. But a positive trend is how consumers, especially the millennial generation, are buying more meat. As PorkBusiness.com reported this week, consumers are buying more meat than ever. In 2024, meat sales hit a record high of $104.6 billion and total pounds sold increased by 2.3%, which was cited in the latest Power of Meat.

More people want meat today, but economists are concerned any economic pain could eat into overall meat demand.

Ag Research and Export Markets At Risk Without USAID

Fri, 07 Mar 2025 22:44:05 GMT

When the Feed the Future Livestock Systems Innovation Lab at the University of Florida launched in 2015, it was the only one in the country focused on animals and livestock, conducting research projects primarily in sub-Saharan Africa and southeast Asia. The lab was supported largely by a $59 million award from the now mostly dismantled United States Agency for International Development (USAID).

On Jan. 24, the Trump administration ordered a 90-day freeze to foreign assistance programs along with termination of most USAID-funded grants and contracts , which immediately impacted active Livestock Systems Innovation Lab projects in Rwanda, Kenya, Tanzania, Ghana and Haiti.

“All those projects are now suspended,” says Geoffrey E. Dahl, Ph.D., director of the lab. “We can’t pay staff or maintain infrastructure.”

Among the shuttered Feed the Future projects was one investigating the impact of increased essential nutrients from animal source foods on fetal development and maternal health.

“We had 400 [pregnant] women enrolled, each receiving two eggs a day, with a lot of prenatal oversight,” Dahl says.

Designed to improve maternal and infant health outcomes, the project is one among hundreds of paused food and ag-based research initiatives at 75 universities in 40 states, according to data from a recently furloughed USAID contractor.

Dahl says Feed the Future’s Tanzania and Ghana-based research to develop a Newcastle disease-resistant chicken has also ground to a halt.

“We already completed a 10-year selection of chickens that had resistance to the disease, but now those lines of chickens are not being fed,” he says. “All told, we have 30 projects on complete pause right now.”

Future of Ag Research Lies in the Balance
With nearly half a billion in ag research funding at stake, according to data from former USAID contractor Jordan Schermerhorn, labs around the country are facing personnel layoffs, at best, and shutdown of hundreds of research projects, at worst.

Florida’s Livestock Systems Innovation Lab received most of its funding from USAID, according to Dahl. While the university also receives support from the Gates Foundation, the latter can’t make up the difference.

“Right now [we’re] backstopping the staff because we still have work to do up until the time of the stop work order [on April 15],” Dahl says, “but the university can’t maintain the staff forever.”

Peter Goldsmith, Ph.D, director of the Soybean Innovation Lab (SIL) based at the University of Illinois Urbana-Champaign, is facing similar challenges.

“Our mandate [as a lab] was to establish the foundation for the soybean market in sub-Saharan Africa,” he explains, looking at how to improve yield, seed, supply and mechanization.

SIL had a $30 million award from USAID funded through 2027.

“That money stopped on Jan. 27 at all 19 labs [nationwide]. Everyone on that contract is out of job now.”

Among impacted labs is one overseen by Kerry Clark, Ph.D., director of International Programs for the College Agriculture at the University of Missouri.

“Our research has focused on improving soybean production and use in Africa, but there have been benefits to U.S. farmers,” she explains, pointing out researchers at the university have been working to develop stronger soybean lines with better disease resistance by improving soybean genetics. “Disease could wipe out [U.S. soybean varieties] because there’s not a lot of genetic diversity.”

In her team’s field research on soybeans in Africa, rust already represents a major threat.

“It’s harder to do that research in the U.S. because we don’t want [the disease] here,” Clark explains. “Fungicides are expensive, so developing genetic resistance is important.”

Clark says SIL discovers new diseases in Africa that aren’t in the U.S. yet, such as red leaf blotch.

“This helps protect U.S. farmers as well as African farmers,” she explains. “USAID programs are required by law to have a benefit to U.S. farmers.”

Economic Impacts Extend Beyond Farmers
At present, worries about future pest outbreaks and opening of new markets have become secondary to U.S. producers concerned about maintaining the markets they already have.

“There’s a wait and see on [the research] side,” says Peter Laudeman director of trade policy for U.S. Wheat Associates. “We’ve been focused in the near term on the Food for Peace program.”

In mid-February, Republican Representative Tracey Mann of Kansas introduced H.R. 1207, which, if passed, would transfer the functions of USAID’s Food for Peace to USDA. While the bill remains in committee , Laudeman says he’s optimistic about it moving forward.

“I think it’s really got solid momentum and broad support from key Congressional Republicans,” he says.

In the short term, Laudeman adds any grain already tendered to USAID and in the queue is moving to its destination. However, according to a still active USAID senior humanitarian advisor, who oversees more than $1 billion in U.S. government global food assistance, the agency remains in financial lockdown and is unable to process or distribute shipments.

Members of U.S. Wheat and the National Association of Wheat Growers have expressed support for moving Food for Peace from USAID to USDA .

“If USDA can forecast [humanitarian food needs] better that would be great. Forecasting was hard with USAID,” Laudeman says. “We understand that humanitarian aid can be unpredictable, but in recent years, they haven’t even provided a rough forecast.”

While USAID funds a Famine Early Warning System Network that provides the public with a six-month forward outlook of emergency food assistance needs on a monthly basis ( the site is currently down in accordance with new USAID orders ), Laudeman says USAID does not translate that data into notices to the agriculture sector for the types of food, volumes and locations they intend to program for a given year.

USAID spent about $5 billion in food assistance globally in fiscal year 2023/24, with roughly $2 billion (or 41%) of that going to purchase and program U.S. commodities. To support that emergency assistance, the agency purchased 648,000 metric tons of commodities, worth almost $481 million, from U.S. producers in FY 2024. “The previous year was higher, closer to 1.1 million metric tons.

The $2 billion in U.S. commodity food assistance includes the cost to purchase commodities and move them overseas, he adds: “roughly 30% of that is direct commodity cost that went to farmers.”

The senior adviser also notes USDA (which purchases commodities for USAID) tracks the benefits of exports on the American economy , including payments for warehousing, port facilities and transportation.

“For every $1 that goes to purchasing a commodity, another $1 goes into the U.S. economy,” he says, and every billion dollars USAID invests in procuring American commodities translates into 6,338 American jobs. Some of those jobs are with USAID, many of which have now been eliminated .

When asked about H.R. 1207’s proposal to move USAID’s Food for Peace program to USDA, the adviser says, “I don’t care what agency it goes through. My first priority would be that our assistance continues to reach families facing hunger and famine. USDA has procurement capacity — they already do that for us. What you lose are humanitarian-related skill sets. We have a global footprint of staff who know where food needs to go in their countries.”

As of late February, the senior adviser says USAID partners such as Catholic Relief Services and International Rescue Committee are facing massive staff layoffs and financial cuts of up to 50%.

“All our partners are scaling down activities because they have no funds to continue,” he explains. “Despite humanitarian waivers, finance systems have been locked for anything that USAID has been paying for.

“There is something about America’s traditional values and image abroad, which is in the process of being lost,” he adds. “For ages, Americans have understood that with great power and resources comes great responsibility.”

Researchers Point to Interdependency of Global Markets
U.S. Wheat’s Laudeman says his members are happy for the short term and hopeful about H.R. 1207.

“However, no one is going to say this is as easy as turning a switch off and turning it back on again,” Laudeman says.

Goldsmith at SIL says he hopes industry partners and legislators will give the research programs around the nation that no longer have funding some review.

“These are cherished, highly productive mechanisms based in land-grant universities in 17 states doing good market development work,” he explains. “SIL isn’t the only game in town, but it’s the biggest, operating in 31 countries.”

It also has a huge private-sector network devoted to developing new markets that now won’t develop, he adds: “The U.S. farmer is going to be at a disadvantage.”

Dahl agrees: “Having been in agriculture my whole life, I know there is a linkage not fully appreciated between what we do here in the U.S. and what we’re doing elsewhere. We need to look at improving productivity in these countries, getting them feedstuffs, which may be supplied by U.S. farmers, and technical support provided by U.S. manufacturers.”

But looking past the economic benefits of providing research and food aid abroad, Dahl is worried about long-term impacts on U.S. agriculture, food security and immigration.

“We will have less of a chance to observe disease outbreaks that may end up here from other places,” he explains. “Without our input, you’ll see a continued decline in the ability of some of these places to feed themselves. Hunger is a great motivator to move.”

Dahl believes the better job the U.S. does of helping people improve their own productivity, the less likely they will try to emigrate.

Your Next Read: USAID Dismantling: What It Means for Farmers and Ag Research

USDA's Rollins: 'Let's Go Barnstorm The World And Find New Partners' For Trade

Tue, 18 Feb 2025 18:48:49 GMT

On Brooke Rollins’ first full week on the job as Secretary of Agriculture, she addressed the 600 farmers, ranchers and industry leaders in Kansas City for the 2025 Top Producer Summit.

High on Rollins’ list of priorities was the topic of trade and President Donald Trump’s vision for U.S. agriculture moving forward.

While Rollins did not shy away from addressing the administration’s decision to implement trade tariffs, noting “farmer and rancher concerns are legitimate,” she focused on what she sees as her role ahead.

“My job is to ensure that as President Trump and our trade representatives are making their decisions that I am in the room and advocating on behalf of our people, on behalf of all of you,” she told Top Producer Summit attendees.

One of her key objectives, she says, is to find and expand market access for U.S. agricultural products domestically and abroad.

“Let’s go barnstorm the world, and let’s go find some more trade partners and access [to market opportunities],” she says.

Rollins says her goals for trade are a reflection of Trump’s vision and his determination to make agriculture part of the “golden age” he sees ahead for the U.S.

Trump is the consummate deal maker, Rollins notes, able to side-step bureaucracy and red tape in the process to work with world leaders.

“I don’t know that in the last 250 years, we’ve had anyone in office like President Trump,” she says. “He is a very unusual, remarkable and fearless man, and he wants to make a deal, and in the best way, and put America first.”

Agriculture Secretary Brooke Rollins spoke to a crowd of 600 farmers, ranchers and industry leaders at the 2025 Top Producer Summit.

(Jim Barcus)

Making Headway With Trade
Sen. Roger Marshall of Kansas, who moderated the conversation with Rollins, highlighted Trump’s work to build trade during his first term.

“He redid USMCA, and now that’s our largest ag partnership, with Mexico and Canada,” Marshall says. “He gave us South Korea and Japan, which has been so important to Kansas and our cattle industry, as well as trade 1.0 with China.”

Marshall then mentioned the headway he believes Trump and team have made with India.

“I see India replacing China as our major trade partner, as well that China is growing right now,” Marshall says. “I think there’s huge opportunities in India.”

U.S. ethanol, cotton and tree nuts are three of the top agricultural exports to India, a country that has in the past impeded agricultural trade with tariffs and non-tariff barriers alike. Trump called out the barriers to trade following recent conversations with India’s Prime Minster Modi.

A joint statement after the Trump-Modi meeting said Washington welcomed New Delhi’s recent steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.

Rollins says the progress underway with India was just one step forward to address what she described as a trade crisis for the U.S.

“Our exports are down $37 billion this year and likely to be down $42 billion in the months to come. This is a crisis, and this is something that I understand inherently,” Rollins says.

“We have a tremendous amount of work to do,” she adds. “But my promise to you is this, and my commitment will never waver, that every minute of every day for the next four years, I will do everything within my power with hopefully God’s hand on all of us and our work to ensure that we are not just entering the golden age for America, as my boss, President Trump, likes to say, but that we are entering the golden age for agriculture.”

Secretary Rollins joined Chip Flory on AgriTalk. Listen to their discussion about trade policy and tariffs; avian flu; and disaster and economic aid.

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China 2025: 5 Predictions to Watch in the New Year

Thu, 02 Jan 2025 16:36:16 GMT

China was plagued with challenges in 2024. From economic headwinds and an erosion of trust to a deteriorating political environment, those struggles in 2024 aren’t expected to be resolved anytime soon.

James Palmer’s analysis in Foreign Policy’s China Brief described 2024 as a “ relatively quiet if depressing year for China .” But Palmer pointed out 2025 could be a lot stormier, especially when it comes to clashes with the U.S.

Palmer outlined five significant trends shaping China in the coming year:

A harsh trade war: With Donald Trump’s second term, his tariff-heavy policy could escalate economic tensions, intensifying China’s manufacturing struggles while leveraging its global supply chain strength.
Brooding public discontent: Amid record youth unemployment and lingering effects of the pandemic, social disillusionment is growing. U.S.-imposed tariffs could become a scapegoat for economic grievances.
Grassroots government crisis: Local governments face crippling debt and revenue shortfalls, leading to withheld wages and corruption. This financial strain could spark unpredictable public protests.
Global opportunities: As the U.S. withdraws from international organizations under Trump, China positions itself as a stable global leader, particularly in U.N. forums.
The PLA on a leash: Military reforms and anti-corruption drives are curbing the PLA’s capacity for adventurism, with a focus on resolving internal issues rather than engaging in conflict.

Bottom line:
Palmer’s insights underscore both the challenges and opportunities facing China in 2025, painting a complex picture of its domestic and international dynamics.

China’s Manufacturing Slowdown in December
China’s manufacturing sector shows slower expansion in December. China’s private Caixin manufacturing purchasing managers index (PMI) indicated continued expansion for the third consecutive month in December, standing at 50.5, down from 51.5 in November. The slower pace highlights the stabilizing effect of Beijing’s recent economic stimulus measures.

While supply and demand improved, the pace of growth in output and new orders decelerated, and export demand remained weak amid global uncertainties. Employment contracted for the fourth straight month, and business optimism waned due to concerns over economic recovery and U.S./China trade tensions.

Experts suggest policies should focus on boosting household income and supporting disadvantaged groups to enhance economic resilience.

Xi Jinping Acknowledges Economic Challenges in New Year’s Address
In a rare deviation from his usual celebratory tone, Chinese President Xi Jinping acknowledged the challenges facing China’s faltering economy during his New Year’s address. Speaking on state broadcaster CCTV, Xi noted uncertainties in the external environment and the difficulty of transitioning economic drivers but urged confidence, asserting, “These can be overcome through hard work.”

The acknowledgment comes as China grapples with a sluggish post-pandemic recovery, marred by a struggling real estate sector and deflationary pressures. Recent government efforts include increased public borrowing, spending, and interest rate cuts aimed at stimulating weak consumer demand.

Xi confirmed that China’s economy grew “about 5%” in 2024, meeting the government’s target, though analysts question the validity of the figures. The Rhodium Group estimated growth closer to 2.4–2.8%, citing the government’s aggressive economic measures as inconsistent with moderate growth claims. The group projects 3–4.5% growth for 2025, contingent on favorable conditions.

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CoBank: Policy Will Shape Rural Economy In The Year Ahead

Fri, 13 Dec 2024 15:41:33 GMT

CoBank has released its 2025 outlook report , which outlines the key themes the organization expects to shape agriculture and the rural economy in the coming year. While there are several factors to watch, they mainly stem from one place: federal policy.

“The environment we enter in 2025 hasn’t fully defined itself yet, but many of the policies proposed by the incoming administration would likely have a negative impact on U.S. agriculture,” said Rob Fox, director of CoBank’s Knowledge Exchange. “Open access to export markets and labor availability are critically important for agricultural producers and processors. Depending on how policy plays out, those two areas could be big challenges in 2025 and beyond.”

As a new economic era begins, here are the six main forces at play:

Threat of A Trade War
A large focus of President-elect Trump’s campaign was on significant import tariffs. While we don’t know exactly what this policy would look like, it is unlikely to produce a positive outcome for crop or livestock producers.

Fox writes, “These policies could achieve some limited objectives, but it is very hard to paint them as anything but negative for the U.S. farm economy.”

If a trade war was to ensue, it could also be very costly for agriculture. A recent joint study by the national corn and soybean associations estimates the 2018-19 trade war with China cost the U.S. a total of $27 billion in agricultural sales to China over those two years.

Export Competition
Alongside the potential for a trade war, export competition from Russia and South America poses another treat.

According to the report, Russia’s currency is weakening - which is expected to anchor global wheat prices and allow Russia’s wheat to be more competitive.

At the same time, Brazil’s currency is also weakening and exports from the country will be cheaper than those from the U.S. This is coupled with the forecast of record South American corn and soybean crops.

With an abundance of soybeans globally, CoBank is anticipating many U.S. acres to shift from soybeans to corn this year as well.

Labor Challenges
Another likely outcome of the upcoming Trump administration is a decreased labor supply.

The president-elect has proposed deportation and reduced immigration, which could negatively impact the dairy, meatpacking and produce industries by causing labor shortages and driving up costs.

Livestock Sector Investment and Growth
It’s not all bad news for the dairy industry, though. According to the report, the U.S. will see an unprecedented $8 billion in new dairy processing investment through 2026 - and some of those plants will come online in 2025.

The livestock sector as a whole is benefiting from low feed costs, and specifically in the beef industry, a reduced herd size is supporting higher feeder and fed cattle values.

The USDA Economic Research Service projects per capita consumption of chicken, beef, pork and turkey to remain stable or grow up to 2% from 2024 to 2025.

It’s important to note, however, there could be retaliation from potential tariffs placed on major dairy export customers such as Mexico and China.

Tight Margins
Reduced income and tighter margins for the crop industry are expected to continue in 2025.

CoBank anticipates input decisions being driven largely by what provides the greatest return on investment, and farmers may look to switch chemicals to generics.

During this time, it will be critical for ag retailers to provide tailored agronomic advice and technical assistance.

Biofuel Uncertainty
On the biofuel front, headwinds are expected to continue into 2025 - with the Trump administration adding more regulatory uncertainty.

Projections of note include:

A modest increase in biofuel production next year, although ethanol supplies will maintain 2024 production levels of 1.05 million barrels per day, according to the Energy Information Administration.
Renewable diesel production capacity will grow just 100 million gallons from 2024 to 2025 to a total of 5.2 billion and remain steady through 2026, according to an updated analysis from University of Illinois.
Federal and state tax incentives and low carbon fuel policies will drive the future viability of sustainable aviation fuel.

To read the full report from CoBank, click here .

U.S. Agriculture Faces Growing Trade Deficit, USDA Projects a Record Ag Trade Deficit in 2024

Wed, 09 Oct 2024 14:17:33 GMT

U.S. agricultural exports were at $13.01 billion in August, essentially unchanged from July, against imports of $17.19 billion, which were down 2% from July, resulting in a monthly trade deficit of $4.18 billion.

So far in fiscal year (FY) 2024, exports total $161.3 billion compared to imports of $188.82 billion, creating a cumulative deficit of $27.52 billion. The sector has recorded monthly deficits in 10 out of 11 months in FY 2024, with three months seeing deficits of $4 billion or more and eight months with a deficit of $1 billion or more.

USDA forecasts agricultural exports at $173.5 billion and imports at a record $204 billion for a projected record trade deficit of $30.5 billion.
In FY 2023, the trade gap was $17.1 billion. Based on the FY 2024 forecasts and cumulative trade data, agricultural exports in September would need to reach $12.2 billion to meet the USDA forecast, while imports would need to be $15.18 billion. Historically, the value of imports has declined in September compared to August over the past three years, while the value of exports fell in two of the last three years, with September 2023 being an exception.

Since U.S. agricultural exports peaked at $196.1 billion in FY 2022, they have dropped by 11.5%. USDA’s forecast for exports of $169.5 billion in FY 2025, if accurate, would represent a 15.4% decline in the value of shipments since FY 2022. Meanwhile, imports have consistently set records in recent years, and in FY 2025, they are expected to rise to $212 billion, nearly 4% higher than FY 2024 forecasts.

This trend continues to fuel concerns in U.S. agriculture, particularly over the lack of new free trade agreements (FTAs) pursued by the Biden administration. FTAs are typically aimed at removing tariff barriers for U.S. agricultural products, which can significantly boost market access for American farmers.

Administration Touts Strides in Beefing Up Ag Trade

Just last week the U.S. Trade Representative’s Office and USDA reported the administration has made significant strides in expanding market access and boosting agricultural exports.

The agencies reported the four-year average of U.S. ag exports is 28.5% higher compared to the previous four years. It says the administration has secured more than $26 billion in ag market access globally. The agencies also added that the peak was reached in 2022 with a record of $196 billion in ag export values.

Officials cited the momentum from several key initiatives, including the “Regional Agricultural Promotion Program” and the
Assisting Specialty Crop Exports Initiative,” along with trade relationship improvements with India,
Colombia and gaining access for U.S. fresh potatoes to Mexico.

Washington watchers say some of the increase in export value may also be attributed to higher prices rather than only increased volumes, pointing the to record ag trade deficit on the books today.

China's Economic Slowdown is Leading to a Major Impact on Global Ag Markets

Mon, 16 Sep 2024 18:29:22 GMT

— China’s economic slowdown is leading to a significant impact on global agricultural markets, as the country’s grain reserves swell and demand decreases, Bloomberg reports . This is causing concern for farmers worldwide, as China has long been a major customer.

The effects are already visible, with declining French barley exports to China and the U.S. struggling to sell corn for the new season. Australian wheat farmers, about to begin harvesting, are likely to feel the pressure as they brace for reduced demand. This downturn could signal a prolonged challenge for global agriculture tied to China’s consumption.

China grapples with oversupply as demand slows.

(Bloomberg )

Meanwhile, Chinese authorities face increasing pressure to accelerate fiscal and monetary stimulus to meet the 5% growth target for 2023, following the longest slowdown in industrial output since 2021. Recent data revealed weaker-than-expected consumption, investment, and a sharp decline in home prices.

The People’s Bank of China signaled its intent to prioritize fighting deflation and hinted at further monetary easing. Missing the GDP target could hurt confidence in the economy, with foreign investors already pulling a record amount of money from China in the second quarter.

Investment banks also cut China GDP forecasts. Goldman Sachs and Citigroup each lowered their full-year projections for China’s economic growth to 4.7%. Weak economic activity in August has ramped up attention on China’s slow economic recovery and highlighted the need for further stimulus measures to shore up demand.

Goldman Sachs maintained its forecast for China’s 2025 GDP growth at 4.3%. Citigroup cut its 2025 year-end forecast for China’s GDP growth to 4.2% from 4.5% due to a lack of major catalysts for domestic demand.

China’s Sow Herd Contracts 5.4%

China’s sow herd stood at 40.41 million head at the end of July, down 5.4% from last year, the agricultural ministry said.

Chinese EVs Still Cheaper than Teslas in U.S. After Tariff Hike

The 100% duty on EVs, announced Friday and set to take effect Sept. 27, follows a four-year review prompted by what the Office of the U.S. Trade Representative called unfair trade practices.

China’s Release of American Pastor David Lin Signals Goodwill Ahead of U.S. Election Amid Strained Relations

China’s release of David Lin, a 68-year-old American pastor imprisoned for nearly two decades on fraud charges, can be viewed as a symbolic gesture of goodwill towards the United States. This action may be strategically timed to ease tensions or improve diplomatic relations between the two nations, especially as the U.S. approaches its presidential election. By making such a move, Beijing could be aiming to soften its image, potentially creating a more conducive environment for dialogue, trade, or negotiation.

Some China watchers say the decision to free Lin might be intended to convey a readiness for cooperation, particularly at a time when U.S./China relations have been fraught with economic and geopolitical challenges, including trade disputes, military posturing, and technological competition. The release could also serve as a signal to the international community that China is willing to engage in diplomacy on certain issues, even while broader tensions remain high.

China's Exports Surge Amid Weak Domestic Economy, Raising Global Concerns

Wed, 11 Sep 2024 19:43:39 GMT

China’s soybean imports reached a record high in August 2024, reflecting significant growth in the country’s demand for the oilseed, but meat imports declined.

China’s overall exports surged in the wake of a weakening domestic economy. However, the ag trade picture is mixed. While China is importing a record amount of soybeans, meat imports have seen a rapid decline.

In August, China’s exports surged by nearly 9%, reaching $309 billion, the highest since September 2022, while imports remained stagnant at 0.5%. The strong export growth provided a rare boost to China’s economy, which has been struggling with deflation and a housing slump. The trade surplus for the month was $91 billion.

Despite the positive export figures, the influx of cheaper Chinese goods has sparked concerns in the U.S., South America, and Europe, leading to tariffs on certain products like electric cars and steel. With exports to almost every market growing — particularly to the EU, India, and Brazil — questions remain about the sustainability of China’s growth strategy as global trade tensions rise. Analysts warn that China’s weak domestic demand, coupled with global economic uncertainty, poses risks to its overall economic recovery.

China’s strong export pace

(Bloomberg)

Taiwan’s exports reached a record $43.6 billion in August, driven by surging demand for semiconductor equipment fueled by the artificial intelligence boom. Exports to the U.S. rose 79% to a record $11.9 billion, surpassing shipments to China and highlighting a significant shift in Asian supply chains. Taiwan’s finance ministry expects exports to continue growing in the second half of the year, supported by the peak export season and ongoing AI-related demand.

China’s Soybean Imports Reach Record Levels

China’s soybean imports reached a record high in August 2024, reflecting significant growth in the country’s demand for the oilseed. China imported a record 12.14 million metric tons (MMT) of soybeans in August 2024. This represents a substantial increase of 29% compared to August 2023, when imports totaled 9.43 MMT.

Several factors contributed to this record-breaking import volume:

• Lower prices. Traders took advantage of lower soybean prices in the global market to stock up on supplies.
• Potential tariffs. Concerns about possible tariffs that could be implemented if former President Donald Trump wins the November election may have prompted increased imports.
• Customs clearance:.Ships that had been held up were cleared by customs, contributing to the higher import figures.

For the period of January to August 2024, China’s soybean imports reached 70.48 MMT, marking a 2.8% increase compared to the same period in the previous year.

USDA forecasts China’s soybean imports for the 2024-25 marketing year to reach 103 million metric tons. Increased soybean meal inclusion rates in animal feed, stable demand in the poultry sector, and growing demand in aquaculture are expected to support imports. But weaker demand in the swine sector due to declining production may partially offset the growth in other areas.

Chinese Meat Imports Decline

Chinese meat imports have declined significantly compared to previous years. Through the first eight months of 2024, China imported 4.40 million metric tons (MMT) of meat products, down 13.9% from the same period in 2023. In August 2024, China imported 565,000 MT of meat, which was 9.9% lower than August 2023. Beef imports have been particularly affected, with volumes down 27% year-over-year in July 2024.

Several factors are contributing to lower Chinese meat imports in 2024:

• Economic headwinds are impacting consumption of both pork and beef.
• China has ample domestic meat supplies after building up stocks in 2023.
• Pork production in China remains high, reducing import needs.
• Chinese consumers are seeking cheaper protein options due to economic slowdown.
• Import bans on some U.S. meat facilities have restricted supply.

Pork
• Pork imports may grow marginally to offset a forecasted 3% decline in domestic production.
• China’s pork output fell 0.4% year-over-year in Q1 2024, the first quarterly decline in nearly 4 years.

Beef
• Beef imports are expected to decline in 2024 due to high year-end inventory and flat demand.
• China’s share of global beef imports is forecast to be 5% below 2023 levels.

Poultry
• Poultry meat imports accounted for $282 million in July 2024, resulting in a negative trade balance.

Impact on global trade:
• The U.S. has seen a fall in meat exports as China scales back imports.
• Brazil has increased beef exports to China, up 10.2% in the first half of 2024.
• Australia has shifted more beef exports to the U.S. and Japan as Chinese demand weakens.

Bottom Line

While there have been some month-to-month fluctuations, overall Chinese meat imports remain well below 2023 levels as domestic production remains high and economic factors dampen demand. This has led to shifts in global meat trade flows, with exporters like the U.S., Brazil and Australia adjusting to changing Chinese import patterns.

In First Forecast for FY 2025, USDA Projects A Bulging Ag Trade Deficit to Top $42 Billion

Thu, 29 Aug 2024 14:37:20 GMT

The U.S. agricultural trade deficit is expected to continue growing in fiscal year (FY) 2025, with significant implications for the agricultural sector. USDA provided forecasts indicating that agricultural exports are projected to decrease, while imports are expected to rise, leading to a widening trade deficit.

USDA Raises FY 2024 Forecasts by $3 Billion

USDA raised its forecast for agricultural exports by $3 billion to $173.5 billion, largely due to increased exports of horticultural and grain products.

However, agricultural imports are also expected to increase by $1.5 billion, reaching $204 billion. This results in a projected trade deficit of $30.5 billion, which is a slight improvement from the $32 billion deficit projected earlier in May.

For FY 2024, U.S. ethanol exports are now seen at a record $4.3 billion, an increase of $800 million over the previous year and $400 million higher than the previous record set in FY 2022. USDA said the volume is seen at 1.9 billion gallons with U.S. ethanol “generally more price competitive with Brazilian product, helping to boost global U.S. sales.” But there are essentially no shipments to Brazil due to the 18% import duty. The U.S. supplies all of Canada’s imports with that country being the world’s top ethanol importer.

Canada is still expected to be the top U.S. agricultural export destination in FY 2024 at $29.3 billion with Mexico in the number two spot at $28.9 billion, with China in third at $27.0 billion.

USDA’s FY 2025 Projections

Looking ahead to FY 2025, which begins on October 1, 2024, USDA forecasts a decline in agricultural exports by $4 billion, bringing the total to $169.5 billion. This decline is primarily attributed to lower unit values of key commodities such as soybeans, corn, and cotton, as well as reduced volumes of beef exports. The decrease in exports to China, projected at $24 billion, is particularly notable and is driven by reduced import demand, strong international competition, and lower unit values of U.S. exports.

On the import side, agricultural imports are expected to reach a record $212 billion, up $8 billion from the revised figure for FY 2024. This increase is largely due to rising imports of horticultural products, sugar, and tropical products.

USDA’s initial outlook for FY 2025 anticipates a record agricultural trade deficit of $42.5 billion, up $12 billion from the current fiscal year. This trend reflects ongoing challenges in the U.S. agricultural trade landscape, including strong competition from international markets, fluctuating commodity prices, and changes in global demand patterns.

A factor in the FY 2025 export outlook is the value of the U.S. dollar which USDA expects will increase another 0.8% in calendar 2025 after a 2.2% rise in 2024.

“Labor talks at U.S. ports on the East Coast and Gulf of Mexico are another risk for shippers already grappling with longer transit times and higher costs,” USDA noted.
For FY 2025, Canada retains the top spot with forecast exports at $29.2 billion while exports to Mexico are seen holding at $28.9 billion but China is seen falling to $24.0 billion, still holding down the third spot. “Uncertainty still looms as China’s economy shifts from growth based, mainly on production and exports, to domestic demand with slowing population growth leading to reduced production capacity,” USDA noted.

Bottom Line

With these forecasts, concerns will increase about the outlook for the U.S. ag sector, with the updated U.S. farm income forecast due Sept. 5. It will also continue to generate criticism of the Biden/Harris administration’s lack of new free trade agreements. USDA has introduced the $1.2 billion Regional Agricultural Promotion Program (RAPP) to support and diversify U.S. ag exports, particularly targeting markets beyond the top buyers. While the program aims to expand export markets, its impact on reversing the current export slump remains uncertain in the short- to medium-term.

Your Next Read: More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

Tue, 27 Aug 2024 16:17:23 GMT

U.S. corn prices hit a four-year low as the prospect for record corn and soybean crops takes shape in the field. The eroding outlook also appeared in the August Ag Economists’ Monthly Monitor as more economists are concerned U.S. agriculture is either already in a recession or on the brink of one, but economists point out if it weren’t for strong cattle prices, the ag economic picture would look even worse.

“When you look at, what we said for both, relative to last month or last year, some of the most pessimistic readings we’ve had, since we’ve been surveying here on 2024,” said Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri who also helps author the Monthly Monitor each month.

August Ag Economists’ Monthly Monitor

(Lindsey Pound)

The latest Ag Economists’ Monthly Monitor tried to get a better gauge of the risk of financial stress in agriculture, and asked the more than 70 economists surveyed if agriculture is on the brink of a recession. Nearly 60% said “yes.”

“Maybe what was even more surprising to me is the responses to the question, ‘Are we already in a recession?’ More than 50% said ‘yes, we’re already in a recession.’ That’s a big change from where we were just 16 to 24 months ago, and it shows a lot of folks are worried about where we sit today.”

The Monthly Monitor also asked economists to provide more explanation of why they think the U.S. ag economy is already in a recession. Economists said:

“At least for most crop producers, the sharp drop in prices and cash receipts has resulted in lower net income and financial pressure on leveraged producers. The picture is generally less dire on the animal agriculture side of the ledger, as prices are up (cattle, milk) for some commodities and feed costs are declining.”
“I do think the U.S. ag economy is in a recession. The projection for 2023 and 2024 farm incomes in real dollars are the two largest declines in history. Costs exceed prices for most commodities. And the outlook doesn’t provide indication of improvement soon.”
“Farm incomes are down. Ag manufacturers are laying people off. Suppliers for those manufacturers are laying people off. What are the bright spots? Cattle, depending on the segment? Trade with Mexico? After that, the list gets pretty thin.”
“We aren’t in one yet, but we are on the brink of one.”
I think we’ll enter into a recession after the election.”

Cattle Are Helping the Overall Ag Economic Picture
As the concerns about the ag economy pour in, Brown points out the net farm income situation would look even worse if it weren’t for more positive prices in livestock.

“Cattle prices, I think, have been helpful in pulling it up. At the same time, we see corn and soybean prices continue to move lower,” Brown says. “We know crop receipts are going to be lower than what they would have said back at the start of the year, cattle probably higher, hogs probably higher and dairy probably higher. But economists also expect production expenses to not go up from where they were originally during the first part of the year.”

Net Farm Income Could Fall Further
U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS) gave its first glimpse at 2024 Net Farm Income in February with the Farm Sector Income & Finances: Farm Sector Income Forecast. At that time, USDA ERS’ forecast showed net farm income to fall after reaching record highs in 2022.

USDA ERS’ forecasts showed:

· Net farm income, which is a broad measure of profits, reached $185.5 billion in calendar year 2022 in nominal dollars.
· After decreasing by $29.7 billion (16.0%) from 2022 to a forecast $155.9 billion in 2023, net farm income in 2024 is forecast to decrease further from the 2023 level by $39.8 billion (25.5%) to $116.1 billion .
· Net cash farm income reached $202.3 billion in 2022. After decreasing by $41.8 billion (20.7%) from 2022 to a forecast $160.4 billion in 2023, net cash farm income is forecast to decrease by $38.7 billion (24.1%) to $121.7 billion in 2024.

USDA is set to revise its 2024 Net Farm Income forecast in September.

(Lindsey Pound)

ERS will provide an updated 2024 forecast in September. Even with improvements in livestock margins, the August Ag Economists’ Monthly Monitor showed the majority of ag economists expect the further deterioration in crop prices to weigh on the overall net farm income picture and force the agency to revise their forecast lower.

· Nearly 57% expect USDA to revise its forecast
· 36% think the revision will be 5% to 10% lower
· 7% think USDA will leave its forecast unchanged from February.

What Will Impact Crop Prices Over Next 6 Months
The August Monthly Monitor also asked economists to outline what will impact crop prices over the next six months. Economists said:

Growing crop size and limited exports
Bioenergy and feed demand
South America’s weather and crop size, specifically the second crop final production numbers and plantings for the first crop
Potential for new tariffs and relations with China
Fertilizer prices and the impact on 2025 acreage.

What Will Impact Cattle Prices Over Next 6 Months
With a more bullish outlook for cattle, the August survey asked economists what will impact cattle prices over the next six months.

Weaker demand
Lower corn prices
Possibility of tighter cattle numbers

“I think the supply fundamentals are essentially unchanged since this spring. The big question is demand. If we have an economy-wide recession, what happens to beef demand,” responded one economist in the anonymous monthly survey.

What to Watch
From geopolitics to the evolving situation in supply and demand across all commodities, the Monthly Monitor asked economists to outline the factors not being covered enough in the media.

“Deterioration in liquidity.”
“Growing gap between the situation for crop and livestock producers.”
“Impact of a Trump vs. Harris win and misconceptions around who is better for the farm economy.”
“Continued high cost for many ag inputs.”
“I’m frustrated by the continued pressure on U.S. farmers to be more sustainable which often results in higher farm costs and could lead to more regulation or hoops to jump through or reduced production. At the same time, South American producers continue to rapidly expand production in a less sustainable way. I’m also concerned that this will lead to vertical integration in crop farming.”
“The cataclysmic risk of rising tariffs.”
“Will congress set in to support farm incomes at these levels? ARC/PLC are ineffective at this point. Ad hoc spending has been rampant.”
“Inflation.”
“Possible government farm program payments this fall (last year’s crop year).”
“Fund manager use of Algo computers.”

Your Next Read: The Ugly Truth: 2023 and 2024 Will Go Down As the Two Largest Declines in Net Farm Income Ever

Global Insights: Exploring Cattle Practices Around the World

Thu, 18 Jul 2024 00:21:28 GMT

“Fill your life with experiences, not things. Have stories to tell, not things to show.” – unknown.

This is exactly how Andrew Uden spent the early days of his career. While growing up, Andrew worked on the family feedlot and ranch. The values of the beef industry and a desire to continuously learn stuck with him through his college years. This mindset and passion have taken him all over the world to learn about the beef industry in various countries and compare them to what the cattle producers in the United States have built. These experiences have given him a great sense of gratitude for America’s beef industry, but also great respect for the entrepreneurial spirits he sees going to work across the globe.

Scotland
Uden’s first experience in Scotland sparked the fire for him to continue traveling. While he was in Scotland, he enjoyed learning about the history of Aberdeen Angus and attending cattle shows as someone who grew up showing cattle.

“I noticed that showing cattle was completely different in the United Kingdom. There weren’t any club calves. They simply showed to display their best genetics and it was really cool to see bloodlines displayed on screens that went back 600 years,” Uden says.

This international experience was the start to an eye-opening career for Uden.

While it was enjoyable for Uden to learn about the history of the breeds he grew up around and experience a different culture around showing cattle, he also came to appreciate the freedom of the United States.

“European cattle producers are still independent, but they all have quotas for what they are allowed to produce. If your quota is so many animals a year based on how much land you own, you’re going to breed monstrously big animals to make up for selling beef by the pound. If your quota is milk fat, you’re going to breed tiny, little efficient cows that have huge milk fat. Nobody ever really takes into question, are these the right cows for my environment, because the government dictates what you can produce,” Uden explains. “Being able to raise cattle that match the environment and natural resources we have is something to be appreciative of.”

Australia
After his time in Scotland, Andrew spent 7 months in Australia split between two internships. One of his internships allowed him to work on a large seedstock operation that practiced intensive grazing. The second internship was on a large collection station. Between these two internships, Uden was amazed at the small amount of people that were able to take on large amounts of work.

“You are kind of doing twice the workload of a cowboy in the United States. The difference is they built the infrastructure in a way to make it easy for you to mentally switch back and forth and be as efficient as possible,” Uden says. “For example, 4 people were managing around 5,000 head on a seedstock operation and moving mobs of 600 animals every 48 hours.”

One of the differences Andrew appreciates between the United States beef industry and other countries is the quality grading system.

“We built a quality grading system that is second to none in the world. Because of how we sort carcasses on the hook, we get really consistent product for how we sell to create a better experience for the consumer,” Uden says.

Uden also mentioned that Australia’s beef producers still have a lot of independence, but largely are more corporate with how they do business compared to the United States.

Russia
After finishing his internships in Australia and his Animal Science degree at the University of Nebraska-Lincoln, Uden’s next step was to go to Russia for three months to assist with an intensive breeding program. While the landscape reminded him of his family’s ranch, the pace at which work was done and how cattle were handled were learning experiences. Uden’s job was to assist in breeding heifers. He recounts that while he was AI’ing, there were other employees building the paddocks that these heifers would be moved to the next day. Additionally, Andrew came to appreciate his training with Beef Quality Assurance.

He says, “In the United States, we take BQA for granted. I was used to seeing an occasional animal with an abscess. In Russia, I’d see 200 calves with neck abscesses because the same needle might get used for all the calves regardless of if it was bent or not.”

Not only was Uden learning from his employers and co-workers, but he was also able to teach them more effective management practices too.

Africa
In addition to Scotland, Australia and Russia, Uden has also experienced the beef industry in Africa. His time in Africa emphasized the importance of animal health and disease traceability as every animal had to be tested for Brucellosis and other diseases. It was rare to find a clean herd and when you did, it was extremely valuable. This experience has shaped Uden’s perspective about traceability in the United States.

Uden says, “If we go down a route where each state is making their own traceability regulations, we are going to see pockets of beef production change fundamentally. If things start to isolate, I don’t think that’s good. I think the collaboration we have from coast to coast and north to south is good for our industry.”

His time in Africa was also inspiring as the people have an entrepreneurial spirit like no other to make the most of what they have while working toward improvements.

While these experiences are only the surface of what he’s seen and done, they were greatly impactful in shaping Uden’s view of the United States beef industry. He’s grateful for the freedom we have when it comes to marketing cattle and the access we have to natural resources just to name a few things.

Uden would like to remind cattlemen and women to get involved on local, state and national levels to have a say in any regulations that are or are not made. Additionally, travel the world and learn from others. Uden wraps it up best by saying, “A lot of my travel made me who I am today. It affects my management decisions and helps me come up with new ideas all the time.”

Link to the podcast: https://www.casualcattleconversations.com/casual-cattle-conversations-podcast-shownotes/andrew-uden-travel

Ag Economists Weigh In On the Biggest Opportunities for the Ag Economy in the Months Ahead

Tue, 02 Jul 2024 13:13:50 GMT

Ag economists are growing more negative regarding the financial health of the crops sector of agriculture, but their views on livestock is becoming more positive. The latest Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the U.S., shows the lack of exports, as well as the current crop prices, are eroding outlooks on the crops side. While strong beef demand and cheaper feed prices are creating more optimism in cattle.

The June Ag Economists’ Monthly Monitor, which is a joint survey between the University of Missouri and Farm Journal, continues to track the volatility in ag economists’ views of not only what’s impacting agriculture today, but what to watch on the horizon. The June survey marked the one-year anniversary for the monthly survey, and it showed the risks to agriculture remain a major concern.

Even though economists’ views on the ag economy eroded slightly in June, their projection for net farm income in 2024 actually increased to $113.9 billion, which is up from the $110 billion in projected by economists in May.

Ag economists’ project a slight increase in net farm income, compared to the previous month. The June projection rose to $113.9 billion, up from the $110 billion in May.

(Lindsey Pound)

Weighing in on the Most Negative and Positive Aspects of the Ag Economy

When asked what economists view as the most negative aspect of their outlook of the ag economy, economists said:

Crop output prices retreating more rapidly than input costs
Commodity prices below economic break-even production costs
Export outlook from the U.S., specifically the lack of Chinese demand
U.S. trade policy regardless of party affiliation with more international trade competition
Constant challenges to demand and policy that adds barriers to existing and potential new demand streams

“Some farmers made production and investment decisions assuming that earlier wider margins would persist,” noted one economist.

While the negativity seems to outweigh the positives of the ag economy right now, the June Ag Economists’’ Monthly Monitor also asked economist to weigh in on the most positive aspect regarding the outlook of U.S. agriculture. Economists said:

Over the next couple of years, cow-calf operators should have good profitability, especially in areas of the country with good forage conditions
Adverse world weather boosting U.S. exports
The possibility of good yields that will help farmers hit their financial goals
Discipline by producers to keep acreage expansion in check and U.S. prices being more competitive in the global market.
Farmers eager to make adaptations necessary to stay in business

“There are some really bright producers that are positioned for some quick growth in the next 5 to pp10 years,” said one economist in the anonymous survey. “They will be positioned to buy farmland as older producers transition.”

Ag economy outlook in the June Ag Economists’ Monthly Monitor.

(Lindsey Pound)

The outlook for the U.S. production picture is anybody’s guess right now, but Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri who helps author the Monthly Monitor, says weather continues to be one of the biggest variables in what happens with commodity prices in the months ahead.

“Number one, at the top of the list of almost all of these commodities, of course, is weather,” says Brown. “I think some are seeing some demand weakness as a big factor with soybean prices in particular, and seeing some other vegetable oil substitutes entering the picture. What’s maybe even a bigger factor on the soybean side is Brazilian supplies. A strong dollar continues to be important, in terms of our ability to move product out of the United States.”

Brown says one prime example of this is with cotton where the lack of Chinese trade has had an impact on prices.

“As we look at this month’s Monitor, and when you look at the survey results that comes through with almost all of these commodities with the exception of cattle, survey respondents are saying we’re slightly more pessimistic this month than we were last month,” Brown adds.

The June Ag Economists’ Monthly Monitor showed economists think the following factors will have the biggest impact on the outlook for corn prices:

U.S. and world weather
Better precipitation across the Corn Belt compared to the previous growing season
Growing end stocks continuing to a burden on prices

As for soybeans, economists say U.S. and world weather will also play a significant role in the direction of soybean prices, but other factors that are impacting outlooks on soybean prices include:

Demand is soft and imports of cheaper vegetable oil substitutes is creating more competition
Biofuel and sustainable aviation fuel (SAF) developments will have a bigger impact on prices in the months and years ahead
Expectation for larger soybean supplies in Brazil
Strong U.S. Dollar

The bright spot in the ag economy continues to be cattle prices. According to ag economists, the outlook for prices in the months ahead really hinges on three main factors:

If record beef demand can continue
Growing crop supplies creating lower feed costs
Strong U.S. Dollar

“It‘s hard to keep suggesting higher prices when we’re already at record levels, but when you look at where we’re at in terms of cattle inventory, we’re only going to get tighter,” says Brown. “USDA’s 2025 estimate for beef production is a decline of more than 1 billion pounds. That tells me we’re not done getting tighter.”

Brown says the one wild card for beef prices is demand. So far, demand has seem unfazed, despite record prices. Export demand remains strong, but so does demand for beef within the U.S. Those are underlying factors that are also supporting cattle prices. keep saying I’m not sure we’re done with record prices. So I think all hinges on demand staying strong for us beef, especially here in the United States.

The “Why” Behind a Growing Ag Trade Deficit in the U.S.

While meat exports have been strong, other commodities continue to struggle and at the same time, the U.S. is importing more ag products and goods. USDA’s Ag Economic Research Service (ERS) now projects the agricultural trade deficit to climb once again to $32 billion in fiscal year 2024, an increase of $1.5 billion from the February projection.

What factors are most important to the increase in the trade deficit? The June Ag Economists’ Monthly Monitor asked economists that exact question. Nearly every ag economist noted the strong U.S. dollar as one reason the trade deficit continues to grow, but other factors, according to the economists, include:

Increased used cooking oil imports for renewable diesel
Increased imports of horticulture products
Softer U.S. ag exports

ERS also projects Mexico to beat out China as the top buyer, with China projected to fall to third biggest importer of U.S. ag goods at $27.7 billion. ERS expects Canada to claim the number two spot and Mexico to reach number one at $28.7 billion, an increase of $300 million.

The rise of Mexico’s imports have come in spite of the ongoing GMO corn battle between the U.S. and China. In 2023, Mexico officially banned GM corn for human consumption. That same year, Mexico also made its largest corn purchase from the U.S. of 15.3 million metric tons.

Some economists say Mexico is treating U.S. corn as a threat, and while exports are up, it’s having a big hit on GM corn demand.

“It has impacted white corn demand specifically, and the reason that when we look at overall corn demand and we still see Mexico as being a big buyer, is because white corn is such a small percentage of our total corn,” says Krista Swanson, lead economist for National Corn Growers Association (NCGA) who also participates in the Monthly Monitor survey. “So, if you look specifically at white corn exports, you do see that impact. When we talk about the total corn complex, though, Mexico’s had a drought that has reduced their production. They already consume quite a bit more than they produce, so they tend to be an importer. But this year they’ve had to import more than normal. And so that’s where we’re seeing those big buys coming in from, from Mexico and where that’s really boosted U.S. corn exports this year.”

Future of Interest Rates

Higher interest rates are impacting farmers and major equipment manufacturers. On the heels of the Federal Reserve deciding to leave interest rates unchanged during their June meeting, the June Ag Economists Monthly Monitor asked the economists how many rate cuts, if any, we will see this year. 73% said one. 18% think two rate cuts this year. And 9% say there will be no rate cuts in 2024.

73% of ag economists think the Federal Reserve will make one interest rate cut this year, according to the Ag Economists’ Monthly Monitor.

(Lindsey Pound)

With the expectation for higher-for-longer interest rates, farmers are scaling back on big-ticket item purchases, which includes buying equipment.

The May Ag Economists’ Monthly Monitor asked economists to rank where they think farmers will look to cut costs. While all economists said scaling back on equipment purchases is either most likely or somewhat likely, 65% of economists think farmers will look for lower operating interest rates and 17% think it’s most likely.

Purchase changes

(Lindsey Pound )

USMEF Promotes Beef and Pork in Home Meal Replacements Kits Around the Globe

Tue, 30 Apr 2024 20:20:54 GMT

Putting a fresh, delicious, healthy meal on the table relatively quickly has become increasingly easier with home meal replacements kits — and the global market is seeing greater demand for these meal options. The U.S. Meat Export Federation (USMEF) marketing staff from around the globe recently met in Korea to learn more about the opportunity home meal replacements kits provide for U.S. beef and pork producers.

“One of the largest drivers of red meat consumption globally has been the convenience factor,” says Dan Halstrom, USMEF president and CEO. “When I say convenience, I’m talking about home meal replacement, I’m talking about restaurant meal replacement – prepared meal kits, this sort of thing. There’s a real demand and there’s no bigger demand than what we’ve seen in Korea.”

Jihae Yang, USMEF vice president of Asia Pacific, confirms the growth of home meal replacements kits in Korea has been driven by consumer demand for convenience.

“In terms of freshness of diversified recipes, it’s developed in the way that the Korean consumer wants,” Yang explains.

USMEF’s goal with this meeting was to give international staff ideas to develop products that fit the customers in their own markets.

Through support from USDA, the Beef Checkoff Program and the National Pork Board, USMEF promotes the use of U.S. beef and pork in home meal replacements kits in Korea and other markets where these products are gaining popularity.

“We’re in a situation, especially on the beef side, where there’s reduced production,” Halstrom adds. “This is an opportunity to add value to the supply chain, even though we have less production, and I think that’s one of the exciting things. One of our jobs at USMEF is to show options, show alternatives, for the marketplace.”

Batista Brothers are Back on the JBS Board

Tue, 30 Apr 2024 00:50:57 GMT

At the annual shareholders’ meeting of JBS SA on April 24, brothers Wesley Batista and Joesley Batista were voted back onto the board of directors of the largest meat processing enterprise in the world.

JBS released a statement that the brothers, along with nine other board members would be serving a two-year term. In addition, the Batistas were elected to the Pilgrim’s Pride Board in February.

The appointments come amid continued controversary as JBS SA and the Batistas have been involved with numerous legal cases resulting in fines and jail time.

In a letter dated Jan. 11, a bipartisan group of senators expressed concerns to the Securities and Exchange Commission (SEC) Chair Gary Gensler in regards to the company’s continued pursuit of an initial public offering on the New York Stock Exchange, which has been over a decades long endeavor.

From a Recession in China to $4 Corn, Here Are 10 Potential Surprises Ag Economists Say Could Impact Agriculture in 2024

Fri, 22 Dec 2023 20:01:22 GMT

From the election to world trade, as well as geopolitical factors that have the potential to shape agriculture in 2024, ag economists think the coming year is poised for several possible surprises that could have a direct impact on farmers across the U.S.

The December Ag Economists’ Monthly Monitor, a survey conducted by University of Missouri and Farm Journal, shows economists’ views on the ag economy are slightly more positive compared with the past month. While expectations about 2024 net farm income remained steady, ag economists’ outlook for the year ahead grew slightly more pessimistic.

(Farm Journal)

Nearly 70 ag economists are invited to participate in the survey each month. When asked the two most important factors driving agriculture’s economic health today, as well as over the next 12 months, views were mixed.

“Macroeconomic influences, including persistent interest rate pressure and dollar value,” responded one economist in the anonymous survey.

“Declining prices for most major commodities reducing receipts and tightening margins despite some input prices retreating,” said another economist. “There is also some concern about multiple years of lower net farm income beginning to weaken relatively strong farm financial positions.”

“Macroeconomic influences, like interest rates and dollar value, and the impact of funds positions in the commodities markets are impacting the current environment,” was another response from the survey. “There’s been some improvement in recent months, but farmers are still facing relatively high costs and low commodity prices resulting in tight margins. Over the next 12 months, I marked unchanged for state of the ag economy on the expectation for continued improvement in macro influences and margins, but also multiple years of lower net income environment beginning to weaken the strong farm financial positions of the past few years.”

Expect the Unexpected

Looking ahead at 2024, economists in the December Ag Economists’ Monthly Monitor were asked, “What unexpected news headline would you not be surprised to read in 2024?” Ag economists said:

China falls into big recession.
A second extension of the farm bill.
Corn prices test $4 again.
Inflation supports managed money returning to the commodities again.
World ends, poor hurt worst.
Record beef imports in 2023.
National corn yield >190 bpa; U.S. embargoes ag exports to China.
End to Russia/Ukraine war bumps global food grain supplies and cuts prices.
2024 planted acres across all crops similar to 2023.
Economic woes unfold for U.S. agriculture as input costs remain high and farm prices falter.

What Shaped Crop and Livestock Prices in 2023?

When asked the biggest event or factor that impacted crop prices in 2023, ag economists said it’s all about supply and demand, sprinkled in with impacts from the strong U.S. dollar. They said:

Large corn acreage and rebound in the U.S. corn crop, despite weather challenges.
Build back of stocks levels globally for crops, including exports from Brazil, Russia and other key areas.
Price retreat based on weak demand and rebounding yields; also higher interest rates contributing to stronger dollar and weaker demand.

For livestock prices, ag economists say 2023 was more about cow numbers.

Low beef cow inventory due to continuing effects of weather challenges and economics supporting high prices.
Price pressure among other livestock commodities.

2024: Biggest Economic Concerns

Ag economists were also asked to look ahead at 2024. When asked what they are most concerned about when it comes to the ag economy, geopolitical issues and the U.S. presidential election rose to the top of their concerns, including:

Geopolitical factors, including war and disruption, global competition and other potential disruptions.
Domestic politics, including the 2024 election and policy detrimental to biofuels use, and government debt leading to rising interest rates and finance costs.
Decline in commodity prices paired with increasing input and land costs, leading to squeeze in margins.

“Crop prices could fall further, adding to a price-cost squeeze for many crop producers. Such a development would, of course, tend to help the livestock sector. We could be entering a period where the fortunes of crop and livestock producers may diverge,” said one economist this month.

“South American competition as well as authoritarian governments in places like Argentina, the Netherlands and possibly the U.S.,” responded another economist.

Optimism for 2024

There is also optimism for the year ahead, which is sprouting from the possibility for continued improvement in drought as well as new areas of demand. Ag economists were asked what they’re most optimistic about when it comes to the ag economy, and economists surveyed said:

Demand opportunities through domestic soybean crushing, renewable fuel, SAF and global oilseed.
Robust domestic consumption and opportunity for competitive pricing of U.S. commodities in global markets.
Improved farm-level conditions related to efficiency, moisture conditions and farm income above historical averages (if a recession is avoided and input costs come down); many ag producers still have a strong balance sheet.

Recession or Soft Landing in 2024

The U.S. avoided a recession in 2023, and majority of ag economists think the U.S. won’t enter a recession in 2024. After the Federal Reserve hinted toward interest rate cuts in 2024, some think there’s still a chance the country will see a slight increase in rates in 2024. The majority said they expect a 0% to 1% decline in interest rates in 2024.

(Farm Journal)

While one economist warned of the impacts if the Fed were to start cutting rates too soon, economists point out the general economy has been resilient in spite of wars and inflation.

“It now looks like a fairly soft landing,” said one economist regarding the outlook for interest rates and whether the U.S. will enter into a recession next year.

“Some leading indicators continue to point toward recession, but so far, the economy has avoided recession. The December FOMC dot plot and post-meeting comments reiterate their efforts to guide the economy to a soft-landing,” said another economist

“There are certainly risks, but the odds of ‘muddling through’ appear to be rising,” said one economist in the survey. “With inflation declining, the Fed may be able to relax interest-rate policies in late 2024.”

(Farm Journal)

However, not all economists are in the camp the Federal Reserve will cut interest rates next year.

“It may be a mild one if it occurs. If it doesn’t occur, that will suggest risk of higher interest rates,” said another economist.

“There are a lot of mixed signals in the economy,” pointed out another economist. “GDP is growing, inflation is cooling off, low unemployment, growing stock market — all positive. Higher interest rates, credit card balances are negatives.”

View more results from the Ag Economists’ Monthly Monitor here .

The U.S. And Europe Are At Odds Over Trump-Era Tariffs, And It's Now Causing Strained Relations

Mon, 16 Oct 2023 17:11:58 GMT

The U.S. and Europe are preparing for a one-day summit this week. On the agenda is the continued tiff over Trump-era tariffs, and the outcome of those talks could impact more than just trade, as there are now geopolitical implications both countries must weigh.

President Biden will host European Commission chief Ursula von der Leyen, along with European Council head Charles Michel, on Friday. It’s a one-day summit that is aimed to show transatlantic unity toward Ukraine, but economic topics are also on the agenda, including discussing tariffs.

The U.S. and Europe are at odds over Trump-era tariffs, straining trans-Atlantic relations, according to a report from the Wall Street Journal . Former President Donald Trump imposed tariffs on U.S. steel and aluminum imports in 2018, sparking tensions with U.S. allies and retaliatory measures.

While the U.S. and EU aim to make progress during an upcoming summit, reaching a final agreement is uncertain, the WSJ article notes, potentially extending the tariff dispute into the next presidential election. This issue has significant implications for U.S./EU ties, climate goals, and geopolitics.

The Biden administration initially allowed European steel and aluminum imports into the U.S. without tariffs, as long as import volumes remained below historical levels, signaling an attempt to reset the relationship after tense years under the Trump administration. This move also led the EU to suspend its retaliatory tariffs on various U.S. products. However, economic tensions flared up again, driven by provisions linked to clean-technology subsidies in the U.S. Inflation Reduction Act (Climate Bill). This resulted in some European companies considering shifting investments to the U.S. Some European politicians also accused the U.S. of taking advantage of European energy shortages related to the Ukraine conflict by charging high prices for liquefied natural gas, raising industrial costs.

In the current negotiations, the U.S. is seeking EU tariffs on Chinese steel, which it believes contributes to global oversupply and harms U.S. producers. Simultaneously, the U.S. is hesitant to completely remove tariffs on European metals and instead seeks commitments from the EU to impose tariffs on Chinese steel in exchange for maintaining the suspension of tariffs on European imports.

The EU’s position is that it seeks a definitive end to U.S. tariffs and insists that any trade measures must comply with World Trade Organization rules.

EU officials have expressed willingness to pursue an anti-subsidy investigation into steel originating from non-market economies, but they have resisted Washington’s push for specific actions against Chinese products, citing WTO rules. The WSJ article says the EU is reportedly planning to announce such an investigation targeting steel during the upcoming summit (Friday, Oct. 20), potentially using it as leverage in negotiations with the United States.

Bottom line: The outcome of the negotiations will not only impact trade relations, but also have broader geopolitical implications.

More Tariffs Planned for China

The Biden administration is planning to announce new controls on artificial intelligence chips and equipment that can be sold to China, administration officials told Axios ( link ). The new restrictions, likely to be announced early this week, will broaden a White House effort to prevent China from gaining a military advantage in artificial intelligence.

The controls will also limit the export of equipment used to produce advanced semiconductors, bringing the U.S. into line with regulations imposed by Japan and the Netherlands.

Is A Recession Imminent? Here Are The Red Flags Ag Economists Are Now Watching

Thu, 05 Oct 2023 14:37:50 GMT

Recession talk has been rampant for more than two years. While ag economists continue to be at odds when it comes to the likelihood of a recession in the United States, there are also concerns about economic woes around the globe. Some economists doubt the United States’ biggest importers will be able to avoid a recession over the next 18 months.

In the latest Ag Economists’ Monthly Monitor, a survey of nearly 60 ag economists from across the country, the economists were asked if the United States’ major importers will avoid a recession over the next 18 months. Of those who answered the question, nine said “yes,” but eight responded “no.” Four remained unsure.

The economists were then asked to explain the reasoning behind their response. The answers revealed a host of concerns, including labor shortages, risks in China and Europe as well as the strength of the U.S. dollar, as to why the economists think a recession might be imminent for those countries.

“The slowdown in global trade and the strength of the dollar are placing excessive pressure on importers,” said one economist in the anonymous survey.

“Of the countries the United States exports product to, China is the only one I have large concerns about. Europe has seen an economic slowdown, but I think they will avoid a recession over the next 18 months,” said another ag economist.

“It’s hard to imagine that much of the world won’t continue to be squeezed by too much private and government debt and rising interest rates, which ultimately ripples through all economies. The United States is the prettiest of the ugly horses,” was another response.

Out of all the responses, the biggest concern continues to be China. While economists say pork and beef exports might be the most at risk, a ripple effect around the globe is possible.

“The economic slowdown will result in some of our major importers entering a recession. It will remain slow recovery and growth longer term,” said one economist.

“China appears to have some economic problems. They have emerged as major importers of pork and beef, but they also remain a trading partner that contributes market uncertainty. On meats, traditional partners will be more important,” said another economist.

In the United States, economists have been largely impressed by the resiliency of American consumers, but many point to red flags that continue to flash caution signs moving forward. One is the fact credit card debt is climbing at a time when inflation continues to eat away at consumers’ spending power.

“The U.S. economy has proven to be more resilient than many expected with low unemployment and moderating inflation,” said one economist.

“It’s touch and go in the United States,” was another response. “However, it’s becoming increasingly difficult for companies to raise prices and pass through higher input prices. That’ll likely mean margin compression, which translates to the need for layoffs. This won’t necessarily be deep, thus avoiding a recession, but there’s still some pain ahead for the economy.”

Economists point out every recession is different, and the signs vary. So, what are economists watching to know if a recession in the United States is imminent? The September Ag Economists’ Monthly Monitor revealed some of those signs.

When asked to list the top three general economist indicators to gauge the likelihood of a recession, economists in the anonymous survey said:

“There is too much reliability in the inversion of the yield curve predicting a recession. Given the length of time the yield curve has been inverted, it is going to be difficult to not expect a recession. It is going to be exceptionally difficult and will take longer with more interest rate hikes for the Fed to achieve a 2% inflation rate than what the market is prepared for.”
“I follow Fed monetary actions, interest rates and unemployment levels.”
“I follow unemployment rate, hourly wage rate and consumer prices.”
“I don’t think the Fed can get inflation down to the 2% mandate without a recession, if it holds to that mandate.”
“Employment growth remains fairly strong, and the U.S. unemployment rate remains historically low. As long as there is not a sizable decline in demand for labor (which is what I believe), the U.S. should at worst have a shallow and relatively short recession.”
“I tend to watch GDP and the Conference Board Leading Economic Index because that is a compilation of 10 leading indicator components. I watch on the inversion in the spread of long- and short-term treasuries yields, although that is also part of the LEI.“
“I like to look at GDP, real incomes and savings rate. Consumer debt like credit card debt is an interesting data point. I don’t do a lot of recession or general economic projections.”

Ag economists’ view on the overall ag economy is also starting to erode . The September Ag Economists’ Monthly Monitor shows lower commodity prices, concerns about demand and a negative outlook for China’s economy are all contributing to the changing views, even as the cattle herd and U.S. corn and soybean crops continue to shrink. But the most influential piece of the farm economy might be the price of corn .

Related Stories:

The One Factor That Could Make Or Break the Farm Economy Over the Next 12 Months

Out Of The 10 Biggest Ag Commodities In The U.S., Leading Ag Economists Are Most Bullish On Beef Cattle

Bank of America Says a U.S. Debt Default is "Likely"

Wed, 18 Jan 2023 19:30:48 GMT

Bank of America analysts wrote in a note to clients this week that a U.S. debt default in late summer or early fall is “likely,” while Goldman Sachs called the possibility that the U.S. government would not be able to make good on its bills a “greater risk” than at any time since 2011.

Issue

Today entitlement spending comprises 64% of the federal budget and continues to grow unsustainably. That is why a small group of House GOP hardliners want significant spending cuts in return for increasing or suspending the $31.4 trillion debt limit.

House Speaker Kevin McCarthy (R-Calif.) negotiated on this topic with his 20 conservative holdouts to finally attain the speakership. He agreed that the GOP House wouldn’t move to lift the debt ceiling unless Congress slashes at least $130 billion in federal spending next fiscal year or addresses broader fiscal reforms that tackle the ballooning debt.

Read more: Kevin McCarthy Finally Won the House Speaker Gavel, Now What?

Timing

Wrightson Research’s debt default deadline current estimates suggest that it is unlikely that the crunch date will arrive as early as the first half June.

“If the Treasury is able to stay in business without a debt ceiling fix until June 15, it would probably not face a new deadline until mid-July at the earliest. June 15 individual and corporate taxes would tide it over the second half of June, and some additional accounting flexibility would become available at the end of June. In our base case, things might start to come to a head quickly in the second half of the month.”

Read more: U.S. Could Run Out of Money by Thursday if the Debt Limit Isn’t Lifted

Treasury Secretary Janet Yellen suggested last week that the deadline won’t be before “early June,” but she didn’t provide a specific deadline.

Political Waves Begin

Senate Majority Leader Chuck Schumer (D-N.Y.) in a statement said: “America pays its debts. Period. There should be no political brinkmanship with the debt limit. It’s reckless for Speaker McCarthy and MAGA Republicans to try and use the full faith and credit of the United States as a political bargaining chip. A default would be catastrophic for America’s working families and lead to higher costs.”

As for the White House, “We’re not going to negotiate on this,” White House Press Secretary Karine Jean Pierre reiterated to reporters Tuesday, insisting that the debt limit will be raised “without conditions.”

Strategy

Politico says the White House “is already working behind the scenes to work around...McCarthy, including dispatching its top advisers to meet with moderate Republicans – particularly those who won in districts...Biden won in 2020 – in hopes...those GOP lawmakers [will decide to] cross the aisle and lift the debt ceiling.”

Read more: Senate Ag Committee Chairwoman Will Not Run for Office in 2024

But other House Republicans “think the White House needs to come at it differently for officials to have any hope at cross-aisle cooperation.”

Impacts

The New York Times says , “Wall Street analysts and political prognosticators are warning that a perennial source of partisan brinkmanship could finally tip into outright catastrophe in 2023.”

According to the NYT, “Big investors and bank economists” are “assessing what it could mean if the government is unable to pay some of its bondholders and the country defaults on its debt. And they are gaming out how to both minimize risks and make the most of any opportunities to profit that might be hiding in the chaos.”

Bottom Line

“It’s playing a game with the U.S. economy and people’s lives that I think is irresponsible.” — Wendy Edelberg, a senior fellow in economic studies at the Brookings Institution, on the debate in Washington over whether Congress should raise the debt ceiling to allow the country to pay its obligations, including to Social Security recipients and federal contractors.

U.S. Could Run Out of Money by Thursday if the Debt Limit Isn't Lifted

Tue, 17 Jan 2023 21:03:39 GMT

U.S. Treasury Secretary Janet Yellen sent up a warning Friday that the government could run out of cash as soon as mid-June if lawmakers don’t soon lift the roughly $31.4 trillion debt limit.

If the nation’s debt hits that marker — it’s on track to do so by this Thursday — the Treasury will need to take “extraordinary measures” to help pay for the government’s operations and ward off a historic default, including:

1. Redeeming existing, and suspending new, investments of the Civil Service Retirement and Disability Fund (CSRDF) and the Postal Service Retiree Health Benefits Fund (Postal Fund)

2. Suspending reinvestment of the Government Securities Investment Fund (G Fund) of the Federal Employees Retirement System Thrift Savings Plan.

According to Yellen, Congress has already provided Treasury the authority to implement the two steps. She says prior Treasury Secretaries have implemented the measures to reduce debt and make financing available.

However, she underscored how the measures are a bandaid for a bigger wound.

“While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June,” Yellen said in a letter to Speaker Kevin McCarthy (R-Ca.).

Failure to meet the government’s obligations would cause “irreparable harm” to the U.S. economy, the livelihoods of all Americans, and global financial stability, according to Yellen.

Read more: USDA is Making Additional CFAP 2 Payments

A House Divided

The obligations may go unmet, however, as some hardline House conservatives want to use “leverage” they think they have relative to the topic to garner reforms in the budget and spending process.

House Republicans face an internal fight on where to cut federal spending. The dispute pits GOP lawmakers who want to protect military spending against those who see such expenditures as fair game in any negotiations alongside cuts to domestic programs.

Republicans must also decide whether to pursue money-saving changes to Medicare and Social Security, which many would like to consider, despite being politically perilous.

Rep. James Comer (R-Ky.), who leads the House Oversight Committee, told CNN’s “State of the Union” that Republicans in the House “won’t budge” on their demands for spending cuts in exchange for raising the federal debt ceiling, noting that the GOP’s midterm campaign promises included getting “serious about spending cuts.”

Rep. Ro Khanna (D-Calif.), appearing separately on CNN, agreed that debates on future spending are “legitimate,” but “you don’t debate whether you pay your debts” and “you don’t debate the prestige of the United States.”

The Budget Plan

House Republicans are preparing a plan that would provide direction to the Treasury Department on how to prioritize the payment of U.S. debt should Congress and the White House fail to come to an agreement on raising the debt ceiling, according reports.

The early draft of the plan would instruct the Treasury to make only the most critical federal payments; Rep. Chip Roy (R-Texas) said House Republicans would pass the plan by the end of the first quarter of the year.

Read more: A Trade Panel Backed Mexico and Canada in a Dispute With the U.S.

Settling Differences Overseas

Meanwhile, U.S. Treasury Secretary Janet Yellen will meet with senior Chinese official Liu He this week to rekindle a relationship that accounts for much of the world’s economic activity but has grown tense over technology access, trade policy and Taiwan.

The pair will meet Wednesday in Zurich, where Yellen is stopping ahead of a multicountry tour through Africa that is aimed in part at countering China’s influence on the continent.

Liu, who is expected to step down from his post in March but is close to Chinese President Xi Jinping, is expected to attend the World Economic Forum in Davos, Switzerland.

The two sides arranged to meet in a third country while they are both abroad.

Chinese Delegates Meet with Top U.S. Officials in New York

Tue, 22 Nov 2022 20:23:07 GMT

Beijing shut parks, malls and museums on Tuesday while more Chinese cities resumed mass testing for COVID-19. This news follows China’s move to rescind restrictions last week.

China reported 28,127 new domestically transmitted cases for Monday, nearing its daily peak from April, with infections in the southern city of Guangzhou and the southwestern municipality of Chongqing accounting for about half the total. The wave of infections is testing recent adjustments China has made to its zero-COVID-19 policy, aimed at making authorities more targeted in clampdown measures and steering them away from blanket lockdowns and testing that have strangled the economy and frustrated residents.

Some analysts are saying 20% of China’s economy is being negatively impacted by the lockdowns.

China’s Oil Front Amid Lockdowns

Analysts are cutting forecasts for China’s year-end oil demand after cases surged to near record levels, forcing authorities to reinstate mobility curbs, and delaying recovery at the world’s top crude importer.

“We cautiously lower our expectations for China demand by 1.2 million barrels per day (bpd) in 4Q ’22,” Goldman Sachs analysts said in a note. “Confidence remains high in a 2Q 23 China reopening.”

Sun Jianan, an analyst with consultancy Energy Aspects, also revised down China’s oil demand forecasts, by 200,000 bpd for November and December, and 190,000 bpd for the fourth quarter to 14.45 million bpd.

Big Trouble in Little China

The Wall Street Journal reports that a few days before Chinese leader Xi Jinping’s summit last week with President Biden, Beijing dispatched a delegation of senior policy advisers and business executives to New York to meet with a U.S. counterpart group set up by insurance executive Maurice “Hank” Greenberg. Such a high-level group hasn’t come to the U.S. since the COVID-19 pandemic started, and in that time, U.S.-China relations plunged.

Distrust between the two countries is still high, but Xi’s approval of the delegation’s visit signals his intention to prevent the relations from going off the rails and to find a way to communicate.

Chinese officials begin meeting with counterparts from U.S. Defense Secretary Lloyd Austin met his Chinese counterpart, Wei Fenghe, for the first time in months.

More on China :

China Looks to Move Away from Strict COVID-19 Restrictions as Imports, Exports Slow
U.S. Relations with China to “Elevate” Following Biden, Jingping’s First Face-to-Face Meeting on Monday
China Cites U.S. Ag for Why It’s Chosen Not to Invade Taiwan

Demand Drivers: Livestock

Fri, 20 Nov 2020 05:52:26 GMT

Strong global, domestic demand provides a bright spot for U.S. grain

The U.S. livestock sector is poised to expand to meet growing demand for meat. During the next decade, the industry will be a key driver for corn and soybean demand.

After several years of steady declines, U.S. consumers are adding more protein to their plates. This is coupled with increasing incomes in developing countries — a huge growth area for U.S. meat products and feed grains.

U.S. exports of meat have grown at an average of 4% per year during the past decade, and USDA expects that trend to continue.

As markets becomes more global, and the middle class expands, consumption of protein will increase, says Don Close, Rabo AgriFinance, senior animal protein analyst.

“I think we’ll see a transition for the U.S. to become a larger exporter of animal protein versus raw commodities,” he says. “The efficiency of shipping containers full of meat is far greater than hauling raw commodities and then converting them into protein products.”

GROWING MEAT SUPPLY

Robust demand has encouraged U.S. livestock producers to increase production. “We’ve been on quite an amazing expansion when you look at beef, pork and chicken,” says Scott Brown, University of Missouri economist. “The fairly strong domestic demand in the last several years has helped maintain livestock prices that would have otherwise fallen a lot more given this kind of expansion.”

MEAT’S PLATE SHARE GROWS

U.S. red meat and poultry consumption are expected to reach record highs in 2018. For the next decade, USDA predicts U.S. consumers will retain their taste for meat.

MORE MEAT PER ANIMAL

Improved feed efficiency has contributed to faster growth and higher animal weights at slaughter. “We’re producing more meat with less livestock,” says John Nalivka, president of Sterling Marketing.

STRONG GLOBAL MEAT DEMAND

Meat exports will increase by 7.5 million tons by 2028. While tariffs have slowed exports for 2019, the future trend looks sound. “With record U.S. production, it makes exports more crucial to maintain the economics of an industry,” says John Nalivka, president of Sterling Marketing.

NAFTA Talks Bogged Down as U.S. Partners Resist Hardline Demands

Fri, 20 Nov 2020 05:49:05 GMT

(Bloomberg) -- Canada and Mexico are holding firm in their resistance to addressing America’s most contentious proposed changes to Nafta in the latest talks, with the parties making some slow progress on areas of greater consensus.

The U.S. is frustrated with what it perceives to be the reluctance of Canada and Mexico to present counter-proposals to U.S. positions on key issues such as regional content requirements and dispute settlement, said a person close to the negotiations. American officials are especially discouraged by Canada for publicly stating that the U.S. proposals are unacceptable, without presenting alternatives at the negotiating table, said the person, who spoke on condition of anonymity.

The fifth round of talks, which began in Mexico City on Nov. 15 and wrap up on Tuesday, is the first held without the top trade chiefs from the three countries. That’s allowed the respective teams to work on the challenge of updating the more mundane facets of the nearly 2,000-page North American Free Trade Agreement, which started in 1994 and is undergoing a major overhaul.

Progress was slow over the weekend. While hundreds of hours of talks are unfolding on issues ranging from car manufacturing to telecommunications, negotiators have punted decisions on the most divisive issues to future rounds. The three countries have extended the deadline for the talks to March, when they could be complicated by elections in Mexico and U.S. midterms.

Mexico and Canada are holding out hope the U.S. will bow to domestic pressure from lawmakers and industry groups to soften its demands -- and Canada is warning there won’t be a deal if it doesn’t.

Since talks left off in October, U.S. companies and business groups, led by the U.S. Chamber of Commerce, have mounted a campaign to mobilize Congress and convince the White House to back down from proposals they see as damaging to corporate interests. The Chamber on Friday warned that an American pullout would hit hardest some of the swing states that President Donald Trump took on his road to power.

Key Demands

The fate of the talks may hinge on that lobbying effort and whether the U.S. relaxes key demands. With Washington lawmakers focused on tax reform, that’s a question expected to linger into 2018. Two Canadian government officials, speaking on the condition of anonymity, said this weekend there’s no chance of any deal without the U.S. significantly altering its most contentious proposals.

That message was echoed by a prominent Canadian union leader. “As long as the U.S. has those proposals on the table, nothing is going anywhere” on less controversial issues, Jerry Dias, head of Canada’s largest private-sector union, said Sunday in Mexico City. “These negotiations are going nowhere fast.”

The fifth round of talks has produced no substantial breakthrough so far and has largely avoided the most divisive U.S. proposals on dairy, automotive content, dispute panels, government procurement, and a sunset clause.

Weekend Talks

Talks over the weekend focused on a wide range of subjects, and officials said they made progress in less-contentious areas. Negotiators are scheduled to spend much of their time on auto rules of origin, which govern how much of a vehicle must be produced in North America to trade without tariffs, though discussions on that have centered on mundane details such as paperwork requirements.

“It’s very important to have advances, not just on the most controversial topics, to be able to continue with a pace of advance and so that the cost of leaving for the U.S. keeps rising,” Moises Kalach, the head of trade for Mexican national business chamber CCE, said on Friday in comments aired on El Financiero Bloomberg TV.

Sensing danger, the auto industry has stepped up its lobbying to preserve Nafta. A coalition of industry associations called Driving American Jobs traveled to Mexico City to make its case.

Auto Rules

That’s because the White House has proposed major changes to Nafta’s auto requirements, introducing a stipulation that 50 percent of parts or vehicles be U.S.-made, and increasing the minimum amount of regional content needed to 85 percent from 62.5 percent.

Tightening the rules of origin would make auto manufacturing in the region less competitive, said John Bozzella, president and chief executive officer of Global Automakers, a lobbying group that represents the U.S. operations of foreign automakers and suppliers.

More than 70 House Republicans and Democrats in a recent letter threw their support behind the auto industry’s opposition to changes sought by the Trump administration.

Mexican Economy Minister Ildefonso Guajardo said last week that Mexican negotiators planned to ask the U.S. for a more detailed explanation of the autos proposal and the reasons for it, but didn’t yet plan to present a counteroffer. A person familiar with discussions said Mexico views the U.S. position as completely unworkable.

Canada will respond to the U.S. auto proposal this round by detailing why it thinks implementing the plans would harm the sector, but won’t formally propose a counteroffer, one Canadian official said.

Dias, the Canadian union leader, has regularly predicted talks to save the Nafta accord will fail, and did so again on Sunday in remarks to reporters. “The Canadian team is not going to move at all as long as the United States continues to hold some ridiculous proposals,” Dias said. “The problem you’ve got now is you can’t even get any sort of consensus on the small stuff, because as long as there’s a perception that Nafta is falling apart, nobody is in a position to really make any moves.”

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