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A farmer in Nebraska fears that long-term problems will arise in the future because of trade disputes between the United States and other countries. The US Department of Agriculture announced Tuesday a $ 12 billion plan to pay farmers affected by trade disputes. (July 25)
AP
And then came the rain.
US farmers already beset by a biblical procession of woes that includes years of low prices and a trade war with China are now clamoring for record rains in the Midwest that will likely prevent much of this year's harvest from even be sown.
The turmoil has created the worst agricultural crisis since the 1980s, when stock excesses and the US grain embargo against the Soviet Union forced thousands of farmers out of business, experts said.
"It's not the 1980s, but it's as close as we have been," says John Newton, chief economist at the American Farm Bureau.
While some farmers have closed their doors or sold to larger competitors for years while their profits were thinner, analysts believe that 2019 will bring an additional upheaval.
"It's more than a cyclical phenomenon," says Gary Schnitkey, agricultural economist at the University of Illinois. "This is a series of events we have never seen fit together. … It will be a blow to everyone's financial situation. "
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Agriculture accounts for less than 1% of the US gross domestic product, compared to about 8% in the late 1940s, according to JPMorgan Chase. Still is that a downturn in the sector could weigh on economic growth, estimated at 2.2% this year, up to two-tenths of a percentage point, estimates Nathan Kauffman, senior economist at the Federal Reserve. American Kansas City.
Planting delays
Rains and floods that began in March prevented farmers from planting a large portion of their crops during the normal season from mid-April to mid-May in states such as Illinois, the United States, and the United States. Indiana, Iowa, Ohio and Michigan. As of Sunday, 39% of soybean hectares were planted in the 18 largest producing states, compared with an average of 79% in the last five years, according to figures from the Department of Agriculture. Seventy-seven percent of corn acres are in the ground, compared to 96% on average. These delays are unprecedented, says Newton.
The expected yield shortages have at least boosted prices that have long been depressed. Contract corn prices for July delivery increased from $ 3.57 a bushel at the end of April to about $ 4.15. Soybean futures prices increased slightly from $ 8.41 to about $ 8.70. At the same time, the Ministry of Agriculture announced that it would provide this year a $ 16 billion aid to farmers to partially offset the price deficit resulting from the trade fight with China.
Developments have presented farmers with heartbreaking dilemmas that are looming this week, last viable period for planting maize: do not plant in some fields and file an insurance claim for "planting prevented" that would bring in a little less of the half of their normal income. Or go ahead and plant as much as possible, relying on government payments and perhaps crop insurance to cushion the shock. But late planting could result in poor yields that would reduce incomes and limit future payments for insurance.
Megan Dwyer, 30, co-owner of a 700-acre farm with her father at Coal Valley, Illinois, had a few days of dry weather this week and decided to roll the dice and scramble to plant the essentials of your corn in just a few days. days.
Megan Seys Dwyer and Todd Dwyer (Photo: document)
"You always want to produce," says Dwyer, a fourth-generation farmer. "If you produce less, then you fail. … It's hard to change that mindset.
She says that she can always file planting applications prevented, depending on the time that it will make in the days and weeks ahead.
One of Dwyer's fields near a river is still under water. The other plots could not be plowed for weeks because the tractors could not grind in the mud.
A litany of problems
The rainy weather is only the last calamity for American farmers.
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The industry has made good profits after renewable fuel standards in the mid-2000s opened wide markets for corn, which is used to produce ethanol. The drought in 2012 weighed on production, leading to higher grain prices even though insurance covered the loss of production. Rising corn and wheat prices – raw materials for livestock, hogs and chickens – forced farmers to thin their herds, which also led to higher meat prices. Higher prices for crops and livestock led to even greater profits.
But they boosted record production in the United States and around the world, halving the price of commodities. Prices have remained low over the past five years, with net farm income rising from $ 123.8 billion in 2013 to $ 69 billion last year, according to the Bureau of Agriculture. At the same time, the costs of fertilizers, seeds and other materials have increased.
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Then, last summer, China, which buys nearly a third of US soybeans, imposed a 25% tariff on the crop in retaliation for US duties on imports from China. This has dampened demand and pushed prices below profitability, just under $ 10 a bushel. Some soybean producers went bankrupt.
The Chapter 12 farm bankruptcies rose from 1,513 in 2014 to 1,940 last year, according to the Kansas City Fed. Although still well below record levels, the total number of filings was 512 for the first three months of 2019, the highest quarterly total in almost seven years. Farms have been on average slightly profitable in recent years, but they will likely be in the red in 2019, says Schnitkey.
China resumed buying US soybeans earlier this year as talks between the two countries resumed. But the Chinese authorities have recently announced that they will end all their purchases after President Donald Trump has tightened tariffs against the country last month.
There is more. An African swine fever virus could inhibit the production of Chinese pigs – which feed on soybeans – for years. And last week, Trump threatened tariffs on all Mexican imports to push the country to reduce illegal immigration from Central America. Mexico has promised retaliation that could lead to tariffs on US exports such as corn, dairy products and beef.
It would hurt even more the profits of Dwyer and her husband, Todd, who also owns a herd of 60 cows.
"It's always one thing after another," she says. "We can not seem to catch a break."
While most economists believe that the United States and China will probably resolve their dispute later this year, Dwyer fears that the stalemate will force Chinese customers to turn to other countries for good. soybean producers.
That's what happened in the early 1970s, when President Richard Nixon stopped soybean exports to Japan to ease inflation, prompting Japan to invest heavily in soybean production in Brazil. and reduce US imports, said Jonathan Coppess, agricultural economist at the University of Illinois. Brazil is now competing with the United States as a soybean producer.
"We have no idea of the impact that these decisions will have on China in the long run," Coppess said.
Kauffman, of the US Federal Reserve in Kansas City, estimates that farm income is likely to remain under pressure from low prices in the coming years, due to abundant supplies and slowing global demand.
The Dwyers canceled their plans to buy a $ 20,000 trailer to transport goods. They are saving at the grocery store and are thinking of giving up swimming lessons for their three kids this summer.
Like many millennial farmers, Dwyer has several part-time jobs to supplement his income: seed sales, farmer advice, and technical writing. Her husband, Todd, is developing products for farm equipment manufacturer John Deere.
Dwyer is now considering finding a full-time job. But she can not imagine abandoning agriculture.
"It's never the same every day," she says. "Plant a seed and wait for it to grow, see a newborn calf – it's something you'll never see sitting in a booth."
Wisconsin farmers hit hardest
In Wisconsin, planting delays exacerbate the dairy crisis fueled by global overproduction of milk and prices have fallen by 40% since the end of 2014. Wisconsin has lost nearly 700 dairy farms in 2018.
As of February 1, Wisconsin had 8,046 dairy herds, down 40% from 10 years earlier, according to state data.
At the same time, foreign markets for US dairy products have declined due to Trump 's tariffs on foreign steel and aluminum. Cheese shipments to China fell by nearly 65% and exports to Mexico by more than 10%.
Mexico and Canada have targeted rural America as a means of punishing Trump, and the economic damage could be felt for years, said Laurie Fischer, CEO of the American Dairy Coalition.
This spring, farmers are facing crucial decisions. Some lack food for their livestock. Are they looking for farm loans to plant crops for livestock feed? Or do they stop and reduce their losses, which can reach thousands of dollars a month?
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At Shell Lake, dairy farmers Sue and Chuck Spaulding were hooking up and processing about 60 cows on their 300-acre farm that Chuck bought while he was only 17 years old.
Seven years ago, they borrowed a lot to modernize it. Almost every dollar the Spauldings have earned with their milk in recent years has been spent on their debts and farm insurance, leaving them with little income, aside from Chuck's social security check and the sale of cattle and hay. .
Spauldings' youngest daughter and son-in-law, Christy and Jeremy Spexet, also depend on the farm for their livelihood. They live in a mobile home nearby and spend long hours milking.
But Chuck and Sue can not afford to pay them a lot. Like other farmers, Sue launched a GoFundMe campaign to get help from the public.
"We set a goal of $ 30,000 for our campaign because we did not want to scare people," said Sue, "but we probably need about a quarter of a million dollars."
Contributor: Rick Barrett, Milwaukee Journal Sentinel
For Brian Duncan, a pig farmer in Illinois, Donald Trump's tweets and threats of a trade war with China are in the foreground. Angela Moore reports.
Video provided by Reuters
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