Are We On The Edge Of An Agricultural Recession?

August 31, 2018 05:00 AM
 
It’s no secret that farm country is suffering from retaliatory tariffs that are the result of President Donald Trump’s trade negotiating tactics, but could the trade war push U.S. agriculture into a recession? Maybe.

It’s no secret that farm country is suffering from retaliatory tariffs that are the result of President Donald Trump’s trade negotiating tactics, but could the trade war push U.S. agriculture into a recession? One Wall Street analyst thinks they could. 

“From an investor's standpoint, what we're seeing on Wall Street is perhaps a little naivety and a little complacency around the impact of tariffs on the ag economy,” Ann Duignan of JP Morgan told Chip Flory on AgriTalk earlier this week. “I think from Wall Street's perspective, the idea is, ‘oh, it's only a small fraction of the economy, it doesn't really matter,’ but when you get out there and you get your feet on the street in the Midwest, you quickly realize that it does really, really, really matter.”

According to Duignan, farmers in North Dakota and South Dakota are experiencing widening basis that will continue to impact their profitability. She said Farm Credit Services is penciling in huge corn acres next year at a price of $3.20 per bu. 

“When my farmer buddies heard that, their jaws just dropped,” she said. “You know, I think where we're standing on the edge of the cliff, and the longer these tariffs stay in place, the higher the risks are, that we could be stepping into an agricultural recession in the next year or two. So, I'm nervous quite honestly.”

What’s worse, she’s also concerned that the tariffs could take markets away from U.S. corn growers long term. One example she used is Brazil. Brazilian farmers currently only plant about half of the acres they have access to when they plant second crop corn, and farmers have the potential to nearly double yields on those acres too. 

“So, we’ve got to be very careful because these other regions of the world can step in very quickly and take some of the market away from U.S. farmers,” she said. “That's what concerns me most.  It doesn't take long to do permanent damage.”

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Comments

 
Spell Check

mr. surovick
fairview, PA
8/31/2018 06:44 PM
 

  I got news for bob in cooper, ia. well bob in case you haven't noticed. we are now suffering with bar non the worst president ever and possibly the worst to ever be.

 
 
Dan
Ripon, WI
8/31/2018 07:54 PM
 

  Yes prices have been dropping, but losing market share is whole new animal. Remember, Trump was never afraid to go bankrupt with some business deals, so why would he care what happens to some farmers.

 
 
Dave
Auburn, IN
9/3/2018 05:34 PM
 

  I got news for mr. Surovick in Pa, Carter, Bush jr, and. Obummer was the worst presidents in history

 
 
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