Keeping ag exports up adds to farmers and ranchers’ bottom line

This edition’s cover story by Web Editor Shauna Rumbaugh highlights what many in agriculture believe was a year that was hard to top.

In October 2021, all-time record soybean exports to China were listed as an example by Gregg Doud, former chief agricultural negotiator in the Office of the U.S. Trade Representative. Doud led negotiations under former President Donald Trump to get China to purchase more than $200 billion of goods and services over a two-year period.

While it is early in 2022, farmers and ranchers are still reviewing strategies before the fieldwork begins in earnest. Analysts are doing the same, as Rumbaugh writes.

Those who participated in the “Farm Foundation Forum: 2022 Economic Outlook for Agriculture” panel discussion moderated by Doud provided insight into what farmers and ranchers might see in 2022 and thoughts beyond this year.

Coming out of the 2020 pandemic provided some familiar themes of a Phase One trade deal with China combined with fiscal stimulus that led to a weakened dollar. Those factors made United States agricultural products attractive to purchase, as noted by Amanda Countryman, an associate professor agricultural economics at Colorado State University.

While China did purchase much more U.S. commodities in comparison to past years as of Dec. 31, 2021, it did not meet important commitments, but Countryman said China was at 76% of the target for agricultural purchases in October 2021, although manufacturing and energy purchases lagged behind.

This set the stage for Congress to press the Biden administration to make sure that China continues to meet its commitment. Kansas Congressman Tracey Mann, a member the House Agriculture Committee, correctly pointed out that China fell $16 billion short of its nearly $74 billion commitment to buy U.S. ag products. Mann and other lawmakers, on a bipartisan basis, believe the Biden administration should press China to live up to the agreement.

Those who have long studied trade know that one simple rule applies—if you want trade you have to accept trade. Trade in recent years has opened up pork and beef exports to countries that enjoy the benefits of animal protein.

Much work lies ahead, the speakers on the outlook noted in Rumbaugh’s story.

Pressing China to fulfill its commitments on economic fronts is important to the bottom line of farmers and ranchers, and trade reflects opportunities for other countries to buy and sell agricultural products. Countryman noted the importance of the U.S.-Mexico-Canada Agreement that updated the former North American Free Trade Agreement, making it keep trade fair for all sides.

The U.S. may need to look to other partnerships to have success in getting into European markets and other Pacific Rim countries while keeping China honest. Those agreements are not created overnight as they take several years to write and be approved by Congress.

As with any year the crystal ball is hazy at best. Geopolitical events, as we are witnessing with the Ukraine-Russia crisis, can change global markets in a moment’s notice. A dramatic change by the Fed to raise interest rates could strengthen the dollar and make our exports more expensive. A balancing act is going to be necessary.

In all likelihood agricultural producers will need to keep their pencils sharp. The development of major government subsidies and support are probably not in the cards for farmers and ranchers.

They will need to weave their way around higher fertilizer and fuel costs. One benefit could be expanding renewable fuels for domestic use and foreign exports.

The good news for farmers and ranchers is that the 2022 outlook does look sound and we all hope that can continue for the years ahead. As always, stay tuned.

Dave Bergmeier can be reached at 620-227-1822 or [email protected].