Election

30 Minutes With Secretary of Agriculture Brooke Rollins In Her First Week On the Job

Wed, 19 Feb 2025 21:12:47 GMT

Since Saturday, Nov. 23, 2024 , Brooke Rollins has been focused on how to build the teams and the plans that impact the trajectory of agriculture and rural America. On that day, while en route with her husband and four teenagers in their motor home to Auburn, Ala., for the Texas A&M football game, she got a call from now President Donald Trump. The purpose of his call: She was his top choice to fill his final significant cabinet position, Secretary of Agriculture.

Obviously, she had to wait for confirmation, which came last week on Feb.13 when the Senate overwhelmingly confirmed her as the 33^rd Secretary of Agriculture , but since that Saturday before Thanksgiving, she’s been on the go with an accelerated enthusiasm to understand the significant challenges facing rural communities that lost 147,000 family farms between 2017 and 2022 and why the cost of inputs are up 30% as exports are down $37 billion this year and likely to fall further in the months to come.

“This is a crisis, and this is something that I understand inherently,” Rollins said to kick off Top Producer Summit in Kansas City on Tuesday. “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 we are not just entering the golden age for America, as my boss, President Trump, likes to say, but we are entering the golden age for agriculture.”

What Has Rollins Been Up to the Past Four Years?
Secretary Rollins and President Trump have worked together for almost eight years. She was in the West Wing with him for years two, three and four of his first term running his domestic policy agenda.

“This real estate guy from New York City brought that vision to life, and then in the last term, was able to really do some remarkable things,” Rollins said in regard to President Trump returning power to the people who just want a chance at the American dream. “I call it the great pause, the four years in between term one and term two. But I think the great pause allowed very intentional planning. It allowed a courageous and bold leader in President Trump to become a fearless leader and to do everything he can to bring America back to greatness.”

In the “dark days of January 2021,” as she described, Secretary Rollins helped launch the America First Policy Institute, a think tank established by former Trump officials to promote conservative policies. The idea was that those policies that made America great in Trump’s first term would continue indefinitely, not just for a second term, but for four years, eight years or 36 years, Rollins described.

First Week On the Job
Since being confirmed last week, Secretary Rollins has been in the Washington, D.C., USDA office for a few hours, but most of her time has been spent in Kentucky at National Farm Machinery Show in Louisville and Gallrein Farms and in Kansas visiting Finney’s County Feeder, High Plains Ponderosa Dairy and the National Beef Packing Plant .

Describing herself as “a reader and a studier,” Rollins seems adamant to hear firsthand from farmers and ranchers. She referenced her visits to the dairy farm and National Beef facility as inspiring, in a good way but also in a way that helps her understand the real challenges at hand.

Speaking to the crowd at Top Producer Summit, she shared her appreciation for the “entrepreneurial American game changers” who are doing their part to feed the world.

“It is so inspiring and a reminder of the very beginning of our country.” Rollins said. “Our revolution was fought by farmers, our Founding Fathers, like Thomas Jefferson and George Washington. The backbone of the great American experiment is this community.”

Thank you @topproducermag for hosting @RogerMarshallMD and me in Kansas City, Missouri, with 1,000 of the Top Producers from across the US to talk about issues like expanding trade access and cutting regulatory red tape for farmers.

Biden’s ZERO trade deals and inflationary… pic.twitter.com/ejMxKxkRMG
— Secretary Brooke Rollins (@SecRollins) February 19, 2025

Farmer Q&A
Watch and listen to what Secretary Rollins, as well as Sen. Roger Marshall of Kansas, had to say on stage at Top Producer Summit about these 7 topics:

Trade and tariffs — “ Let’s go barnstorm the world , and let’s go find some more trade partners and access [to market opportunities],” Rollins said.
Department of Government Efficiency (DOGE) efforts and modernizing USDA — “DOGE is a very valid and important effort across all government. The stories of waste and abuse were really just, not USDA specific but across government, beginning,” Rollins said.
Federal programs, such as CSP and EQIP — “Our commitment is that if there have been commitments made, those will be honored. Getting our arms around all of that right now is really, really, important. Again, going back to the President’s heart and commitment to our farmers, I feel confident we will be able to solve any issues that are in front of our ag community, that are potentially being compromised by the DOGE effort, while at the same time recognizing how very, very important it is,” Rollins said.
Future of USDA — “There’s no question USDA needs some modernization. I’m just beginning to lean into that as well,” Rollins said. USDA has 106,000 employees and 29 departments. “The Secretary is taking over a department where only 6% of the [D.C.] people work in the office,” Marshall added.
Renewable fuels — Prior to President Trump’s first term, he was “the first major candidate to support biofuels, and I think that carried him through Iowa in many ways. … We’ve got E15 year-round. I think that gives us some certainty as well. … The President is supporting that. I think we’re trying to figure out how to save 45Z, but we can’t let China benefit from it. Right now, China is benefiting more from [45Z] than my farmers and ranchers are, so we’ve got to fix that,” Marshall says.
Immigration policies and availability of long-term labor — “I have a full-bodied understanding of the challenges within the labor market, and I believe the President does too. … I believe that we will very soon be talking about it again. Clearly, the H-2A program needs significant reform, and Lori Chavez-DeRemer, she’s going through the [confirmation] process right now. … Hopefully she’ll get her vote very soon. We’ve got a lot of work to do,” Rollins said.
Trump’s cabinet members — “Our cabinet is comprised of people that have been working together and have been friends and colleagues for years, with a few exceptions. Bobby Kennedy is a new friend, but Lee Zeldin and I worked together in America First Works and America First Policy Institute for the last almost four years, Linda McMahon in education and John Brooks — these are our people,” Rollins said.

Do Tariffs Work? Leading Ag Economists Weigh In

Mon, 03 Feb 2025 17:00:00 GMT

Tariffs are a tool used by President Donald Trump during both his terms. But do they work? Not even ag economists are in alignment, as the answer seems to be: It depends.

This past weekend, Trump signed three executive orders for tariffs , the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

By Monday morning, Trump had agreed to delay tariffs on goods from Mexico for one month to allow more time for negotiations. The agreement happened just hours before the tariffs were set to take effect.

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with Trump on Monday. Trump then confirmed the news on Truth Social.

Which Input Could Be Impacted Most by Tariffs?

Tariffs on the U.S.'s top three trading partners could have a major impact on agriculture. The January Ag Economists’ Monthly Monitor asked economists which input is most at risk. The top answer was fertilizer.

Ag Economists’ Monthly Monitor

(Lindsey Pound)

“From a headline standpoint, it’s probably potash,” says Samuel Taylor, farm inputs analyst, Rabobank. “We get 85% to 90% of our potash from imports from the Canadian market. The residual is made up by Russia and Israel, in principle, with some other markets coming in.”

One day after Trump announced he would move ahead with planned tariffs, Prime Minister Justin Trudeau stated tariffs targeting $30 billion in American products, such as alcohol, produce, household goods and industrial materials, will roll out in two phases starting Feb. 4, the same day the U.S. tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized Canada’s response would be “strong but appropriate,” while also considering non-tariff measures such as restrictions on critical minerals.

Do Tariffs Work?

With tariffs and a potential trade war brewing that begs the question: Do tariffs work?

It’s something Farm Journal asked the nearly 70 ag economists part of the Farm Journal Ag Economists’ Monthly Monitor. The survey asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long term.”
“Absolutely, when properly applied.”
“Not over the long term. They tend to affect who gets to supply different markets around the world.”

The Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is: It depends. Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.”

Trump’s Cabinet Nominees Now Up Odds for Expanding U.S. Trade/Economic War with China

Wed, 20 Nov 2024 15:42:28 GMT

President-elect Donald Trump’s selection of Howard Lutnick, the CEO of Cantor Fitzgerald, as Commerce Secretary highlights plans to leverage tariffs in trade negotiations, with Lutnick emphasizing their use as both a revenue source and bargaining tool.

Lutnick has called the tariffs a negotiating tool that could be used to convince other countries to bring down their own levies or to force companies to move production to the U.S. He has said Trump would avoid taxes on products U.S. companies don’t make.

Commerce oversees the International Trade Administration, an agency in charge of enforcing trade laws and investigating unfair trade practices.

The appointment raises questions about the role of Robert Lighthizer, a prominent China hawk and decoupling advocate, who might still secure a key position such as National Economic Council leader or ambassador to China. The nomination marks Lutnick’s transition from co-chair of Trump’s transition team to a pivotal role in shaping U.S. economic policy.

Of note: Trump said that the Commerce Secretary would have “additional direct responsibility for the Office of the United States Trade Representative.” The phrase means that Trump may try to fold the latter position within the Commerce Department, a move that has been tried before to combine government trade work.

Trump’s trade agenda is heavily focused on imposing substantial tariffs, particularly targeting China. He has proposed a 60% tariff on Chinese goods and 10-20% tariffs on imports from other countries. Lutnick has been a vocal supporter of these tariffs, suggesting they could replace income tax revenue over time. He believes that by making American businesses more competitive through tariffs, it could lead to lower overall tax rates.

Lutnick’s vision aligns with Trump’s historical approach to trade, which emphasizes protectionism to bolster U.S. manufacturing and reduce reliance on imports. During a recent rally, Lutnick remarked that America’s economic prosperity in the early 1900s was due to tariffs rather than income taxes, indicating his belief in a return to such policies. Lutnick has said the incoming administration would use tariffs as a bargaining chip with other countries. “We’ll make a bunch of money on the tariffs, but mostly everybody else is going to negotiate with us,” he said on CNBC.

Lutnick’s appointment signals an aggressive stance on trade that could lead to increased tensions with trading partners. The Commerce Department plays a crucial role in enforcing tariffs and negotiating trade agreements, which may become contentious under Lutnick’s leadership. Economists have expressed concerns that such high tariffs could lead to retaliatory measures from other nations, potentially resulting in higher prices for consumers and disruptions in global supply chains.

On China, Lutnick has accused the country of being the source of fentanyl in the US, saying that “China is attacking America from its guts.” Kevin Chen, associate research fellow at the S. Rajaratnam School of International Studies, told the South China Morning Post, “There is little question that he will push forward with tariffs That being said, he has also suggested that the tariffs could be used to negotiate trade deals with other countries,” he said. Chen suggested that the choice of Lutnick —alongside other China hawks joining Trump’s team including Marco Rubio as secretary of state and Mike Waltz as national security adviser — could be “very dangerous for U.S./China relations” given the Commerce Department’s oversight of export controls.

“Lutnick is likely to focus tariffs on China’s manufacturing sector, especially for goods that the U.S. already produces. The likelihood of this leading to another U.S./China trade war is too high to ignore,” he said. “Lutnick fits in well with the trend of Trump’s cabinet picks … [as] he’s a China hawk who shares Trump’s strong views on the threat posed by China and how to address it.”

Asked about Lutnick’s nomination, Chinese foreign ministry spokesman Lin Jian said he would not comment on U.S. internal affairs but added that a trade war “will not produce any winner and is in no one’s interest.”

Treasury Secretary Possibilities

Trump is taking a closer look at Sen. Bill Hagerty (R-Tenn.) to potentially serve as Treasury Secretary, Axios reports. Hagerty, a former private-equity investor who was Trump’s ambassador to Japan, is one of three apparent finalists, along with former Fed governor Kevin Warsh and Apollo CEO Marc Rowan. The Treasury position is key as the Cabinet member will play in a key role in major issues, including:

Rising federal debt
Enacting Trump’s tax cut plan
Helping implement Trump’s tariff plans
Coming up with pay-for plans
Keeping inflation low
Implementing 45Z and other biofuel tax incentive programs (IRS)

U.S. businesses brace for potential Trump tariffs.

American companies are accelerating inventory orders ahead of Donald Trump’s inauguration, fearing the implementation of his proposed tariffs on imports. Trump has suggested levies of 10-20% on all imports and up to 60% on Chinese goods. Firms are also strategizing for potential impacts, including price adjustments and diversifying away from Chinese manufacturers, the Wall Street Journal reports ( link ).

Tariffs and Pricing Impacts

Walmart acknowledged the retailer would probably raise prices on some goods if Donald Trump moves forward with plans to enact sweeping tariffs. Walmart’s CFO John David Rainey stated that prices on some items may increase but it is uncertain which products might see price hikes due to the tariffs. A Walmart spokesperson indicated that any price changes are speculative, but future tariff-induced costs could burden sensitive shoppers.

Lowe’s words were more circumspect, with the home-improvement retailer’s executives noting tariffs would lift costs but also saying they were waiting to see what happens when the new administration takes office in January.

Walmart said shoppers are resilient but are still spending more on food than they have historically.

Lowe’s said homeowners are still waiting for lower interest rates to embark on big home-improvement projects.

Your Next Read: Could Trump Actually Be Good for U.S. Ag Trade?

Could Trump Actually Be Good for U.S. Ag Trade?

Tue, 19 Nov 2024 20:52:48 GMT

President-elect Donald Trump has released a slew of key cabinet and advisory picks at a historic pace the past two weeks, but the agriculture industry is waiting on two key selections — Secretary of Agriculture and the U.S. Trade Representative.

The Financial Times previously reported Robert Lighthizer could make an encore performance as the U.S. Trade Representative under Trump , but nothing official has been announced.

“Trump and Bob Lighthizer are two peas in a pod when it comes to using tariffs to get what they want in amongst our trading allies,” says Jim Wiesemeyer, Pro Farmer Washington correspondent.

If it’s a repeat of the last time, Lighthizer held that seat, there will be an increased focus on trade and using tariffs, which comes as no surprise since that was a major point on the campaign trail

“President-elect Trump was so strong on doing tariffs before that, it’s very likely that he’ll follow through now,” Mary Kay Thatcher, who’s the senior lead for federal government relations at Syngenta, told “AgDay’s” Michelle Rook. “I mean, he’s talked about at a minimum 20% tariffs on everybody. He’s talked about 60% on China, who will likely fall to two or three, but still a very important market. And he’s talked about putting them on Mexico. If Mexico doesn’t stop as many people coming across the border.”

Tariffs were the talk of the campaign trail, not just on commodities, but even ag equipment that’s imported on.

Ag groups want a focus back on trade, but they are also concerned it could come at a cost.

“Mexico, Canada, China are always our No. 1, No. 2 and No. 3 three ag markets,” Thatcher says. “And so, a lot of concern in agricultural circles about the fact that most likely that’s where the retaliation starts first.”

Reality of a Growing Ag Trade Deficit

As tariff talk heats up, there are still tariffs in place today, and a growing ag trade deficit that’s glaring for U.S. agriculture. The ag trade deficit is expected to balloon to $42 billion in 2025, under the current administration. And Indiana farmer Kip Tom, who served as the ambassador to the United Nations in the first Trump administration, argues the focus back on trade could bode well for ag.

“When Trump was president, we did nearly 50 trade deals around the world,” Tom told “AgDay’s” Clinton Griffiths in an interview. “He did the Phase One deal with China. And granted, we didn’t get to Phase Two or Phase Three, but the reality is he got to put together and he got started following the trade war that we had with him for a little bit. So, I think trade is going to be No. 1.”

Tom says Trump’s next four years will be looking at new trade deals, but today, groups like U.S. Meat Export Federation (USMEF) also want any trade negotiations to do no harm, especially considering some meat exports have actually grown this year, in spite of the widening U.S. ag trade deficit.

“I think if you look at 2024 pork exports, we’re pulling our weight. We’re going to have record volume and record value this year, approaching $8.5 billion or so on the pork side,” says Dan Halstrom, CEO of USMEF.

Mexico Becomes U.S. Top Buyer

Halstrom says record demand from pork is broad based, but the No. 1 buyer is Mexico.

“Mexico is being driven by everything,” Halstrom says. “I mean, food service, retail, convenience stores. The buying power of the Mexican trade has been record breaking but also a little bit amazing.”

Earlier this year, Mexico bumped out China as the top trading partner for the U.S. But in the final days of Trump’s presidential campaign, he threated to impose 25% tariffs on all Mexican imports if Mexico didn’t tighten the border. And Mexico’s economy minister said it’s considering retaliatory tariffs of its own.

“I think as long as we don’t have any disruption, then yes, I think the strong export pace is very well positioned to continue,” Halstrom says. “Of course, you have new administrations coming in with a lot of talk about the U.S.-Mexico-Canada Agreement (USMCA). But as long as we stay within the confines of the USMCA agreement and follow that, I think we’re well positioned to continue this momentum in Mexico.”

Dairy and the Importance of USCMA

Another protein seeing positive demand from Mexico through the USMCA is dairy.

“When the administration first negotiated USMCA, which was do no harm to what’s working well, and for us, dairy continues to be overall a really positive relationship. So, working to help preserve that,” says Shawna Morris, executive vice president of trade policy and global affairs at National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council.

The relationship with Mexico within USMCA has been a positive for dairy, but it’s the Canadian side of the agreement that needs work, according to Morris.

“I mean, they’re flat out not doing what they promised to do. And I just don’t see any way around calling them on the carpet for that,” Morris says. “Yes, they eked out a win in the last dispute settlement case the U.S. brought against them, but if one judge had changed their mind, though, we would have been on the winning side. It’s just a three-person panel. This isn’t gospel here; we’re talking about what Canada’s doing is shady. It needs fixed.”

She says between the way Canada administers the dairy tariff rate quota quantities to U.S. competitors, to their excessive exports of dairy protein, dairy is a piece of USMCA that needs to be addressed.

“The last administration tried to deal with that in USMCA,” Morris says. “We had some disciplines to try to tackle it in the agreement. And Canada has found some workarounds that both of those issues are going to need to be on the table. I think just in terms of UCMCA, it’s clean-up and follow through.”

The Biggest Wild Card: China

Even with southeast Asia, Latin America and Mexico carrying the weight for dairy exports, China is still the biggest wild card. We asked Morris if China does retaliate against Trump’s threatened 60% tariffs, if it would have the same impact as it did during the last trade war.

“China, even though it has pulled back on its global dairy imports, it’s still our third-largest export market,” Morris says. “So, it’s a pretty sizable market and difficult to place out into other markets the volume of that production, but I think what we also saw the first time around, in addition to the pain and disruption caused by the retaliatory tariffs that were imposed, was at the end of the process progress having been made.

Phase One Trade Deal with China

Progress in the form of the U.S. China Phase One agreement, which as Tom noted, was negotiated under Trump’s first term. Morris describes that deal as useful for dairy.

“We had a number of different non-tariff barriers, issues that were a drag on our ability to be able to reliably export to that market. And the phase one agreement included progress and dealt with a whole handful of those,” Morris says. “So, I’d say, yes, there’s upheaval. We’ve also seen from the first time around that that can yield significant progress in certain respects, and we’re hopeful that that’s more of what we’ll see this time around.”

China has also scaled back on their buys of U.S. pork, with exports down 11% so far this year, but Halstrom points out even with increased tariffs now entering the picture again, tariffs the past four years never went away.

“The thing to remember on these tariffs is, we’ve had a tariff now for quite a few years on China, on both beef and pork, and it’s not the ideal situation, but it doesn’t it doesn’t eliminate trade,” Halstrom says. “We ended up doing $2 billion in sales on beef with a tariff in 2022, I believe was the year. A lot of that came as a result of the phase one agreement in 2020, but people sometimes forget that there was a tariff involved, and we still had a pretty good outcome.”

Two weeks after the election, and Trump’s playbook seems to be unfolding quickly with all his cabinet picks. But some argue those tariffs might just be threats at first.

“Here’s what the Republicans tell me,” Wiesemeyer says. “Trump isn’t going to invoke these across-the-board tariffs right away. He’s going to use that as leverage to countries looking at their trade relationship with the U.S., and his key word is ‘reciprocity.’ If you don’t treat us like we treat you, then I’m going to invoke tariffs.”

Those close to Trump seem to be in alignment: the U.S. needs fair trade.

“When we’re spending $500 billion in China, and they’re only spending $350 billion with us, we need to level that out a little bit. And maybe it means more agriculture trade going into China to balance that trade out,” Tom says. “I’m very optimistic on trade with Trump. I have no doubts that we’ll get things put together. He knows farmers don’t like to get their money from the government; they like to get it from the market. And so, I’m really excited about that when we talk about trade. But yet, I know everybody’s pretty edgy about it at this point in time.”

Your Next Read: Do Tariffs Work? The Answer Isn’t As Straightforward As You May Think

Unscripted: Will New Policies Reshape the Ag Industry’s Future?

Fri, 15 Nov 2024 22:58:19 GMT

As new presidential and congressional administrations prepare to grab the governmental reins, ag professionals wonder what the new leadership will mean for the industry. Will we finally get a new farm bill? Who will be the next secretary of agriculture? Will we get clarification on nagging questions about biofuels? Will producers continue to face rising input costs and low commodity prices?

Washington D.C. ag economist John Newton sees opportunities for improving the industry’s financial outlook with new leadership in place. On the latest episode of the Unscripted podcast , Newton asks, “What needs to happen to turn this around?” and answers his question with “it all starts with demand.” Noting that corn exports have been strong, he says, “All eyes are going to be on this next administration for how we proceed with agricultural exports to our top markets.”

Increasing exports can give the ag economy a much-needed boost, and he’s optimistic about that possibility. “I’m focused heavily on the opportunities we have ahead of us in U.S. agriculture,” he says. “We’re the best in the world at what we do, we have the highest quality products, we just need an opportunity to deliver those products to the global market.”

He also has a positive outlook on the long-awaited farm bill, which currently remains in the hands of the lame-duck Senate ag committee.

“I’m optimistic we can get it done, but the clock is ticking,” he says. “There’s an opportunity to do something bipartisan for ag, for rural America.” From updated crop insurance to risk management tools to funding for rural childcare and health care to ag trade promotion programs, the bill could address many persistent issues that producers face. “The list,” says Newton, “is long.”

While he recognizes the major obstacles preventing a turnaround for the ag economy, he’s also optimistic about the candidates for the next secretary of agriculture. “There are a number of highly qualified people on the list,” he says. “It’s important to have somebody in that seat who works well with agriculture and is a good ambassador for us in the Oval Office.”

Watch the full episode of Unscripted.

U.S. Ag, Food Industry Groups Express Significant Concerns About Trump's Proposed Mass Deportation Plans

Fri, 15 Nov 2024 20:58:39 GMT

U.S. ag and food industry groups are expressing significant concerns about Donald Trump’s proposed mass deportation plans. These groups worry that such actions could have severe consequences for the U.S. food system and economy.

Key concerns

Labor shortage: The U.S. agricultural sector heavily relies on immigrant labor, with estimates suggesting that 50% to 70% of farmworkers are undocumented. Mass deportations would dramatically reduce the available workforce, potentially crippling agricultural production.
Economic disruption: Farmers and industry advocates argue that a crackdown on undocumented immigrants could bring their businesses to a halt. The American Farm Bureau Federation has stated that “Enforcement-only immigration reform would cripple agricultural production in America.”
Food supply disruption: There are concerns that mass deportations could “decimate our nation’s food supply and economy,” according to some politicians and advocates.
Rising food prices: A reduction in the agricultural workforce could lead to unharvested crops and decreased food production, potentially driving up food prices for consumers.
Broader economic impact: The loss of millions of workers would not only affect agriculture but could disrupt the nation’s economy.

Ag industry groups recognize the crucial role that immigrant workers play in the U.S. food system. They emphasize that these workers often take on physically demanding jobs that many American-born workers are unwilling to do. The Farm Bureau has noted the difficulty in finding American workers attracted to farm jobs, which are often challenging, seasonal, and transitory.

Small farmers and urban farmers also express concern, highlighting the importance of immigrant labor in maintaining the current food system. They worry that mass deportations would make it extremely difficult to find workers willing to perform the necessary labor under often difficult conditions.

Possible Outcomes

If mass deportations were to occur, industry groups foresee several potential outcomes:

• Reduced agricultural production and possible food shortages of some commodities
• Increased reliance on food imports, making the U.S. more vulnerable to price fluctuations and international trade policies
• Accelerated adoption of automation in agriculture, which comes with its own set of challenges and potential job losses
• Economic instability in rural communities that heavily depend on agricultural jobs

Minnesota Federal Reserve President Weighs In

Minneapolis Federal Reserve President Neel Kashkari voiced concern about the impact it wold have on inflation and the broad economy.

“If you just assume people are working - either working in farms or working in factories - and those businesses now lose employees, that would probably cause some disruption,” Kashkari said
while appearing on “Face the Nation” last weekend.

“The implications are not entirely clear to me,” Kashkari added. “Ultimately it is going to be between the business community and Congress and the executive branch to figure out how they would adjust.”

Trump Trade Policy Seen As Wild Card for U.S. Soybean Farmers, Opportunity for Crushers

Wed, 13 Nov 2024 21:45:58 GMT

By Karl Plume and Renee Hickman

American farmers are worried that President-elect Donald Trump’s sweeping tariff plans will curb their access to top soy buyer China, but tariffs could also lure companies to build more U.S. crushing plants, hungry for domestic supplies.

Trump’s plans to roll out blanket import tariffs could slam the door on imported vegetable oil supplies, which renewable energy analysts said could in turn lure the U.S. crush industry to revive lagging plans to build new plants and expand capacity.

Such expansion has faltered over the past year, as the U.S. market was flooded with cheaper global supplies of diesel feedstocks like used cooking oil (UCO) from China, tallow from Brazil and canola oil from Canada.

Now, these supplies are likely targets for Trump’s tariffs while global supplies of other vegoils are tightening and prices climbing, analysts said. USDA data projects that global rapeseed oil supplies will shrink by 13% over the coming year with sunflower seed oil stocks down 24%. Indonesian palm oil shipments have dropped as that country plans to boost biodiesel production next year.

Potential new demand helped send Chicago Board of Trade soy oil futures jumping nearly 6% last week to the highest in seven months, traders said.

Analysts cautioned it remained too soon to know how, or if, the Trump Administration will change President Joe Biden’s law providing a decade of lucrative subsidies for clean-energy projects. Building domestic demand for such crops is key for eating through excess stocks, especially without access to the Chinese export market, agricultural economists said.

Hefty global competition could dent incomes for farmers who just harvested the second-largest U.S. soybean crop ever at a time when crop prices hover near four-year lows.

If tariffs prompt retaliation by global U.S. soybean importers, big soy processors such as Bunge Global and Archer-Daniels-Midland Co could benefit from a larger and likely cheaper supply of beans for them to crush in the U.S., industry analysts said.

“If Trump goes the tariff direction, it is friendly for the U.S. crushing industry and capacity,” said Kent Woods, owner of advisory firm CrushTraders. Woods added that U.S. soyoil demand would also rise if Trump blocks imported oils from benefiting from renewable fuel tax credits.

Farmers in rural Evansville, Wis., were still waiting for the state’s first commercial-scale soybean crushing plant, which had been slated to break ground last year.

For Nancy Kavazanjian and husband Charlie Hammer, the plant would mean an end to the nearly 400-mile round-trip to haul their soybeans to an Illinois buyer.

The savings would be huge, Kavazanjian said. “It’s manpower, it’s fuel and it’s time.”

Promise of Riches
Soaring vegoil demand from biofuels makers triggered a flood of projects to build new soy processing plants three years ago.

A mix of state and federal programs aimed at boosting lower carbon intensity fuels got a lift from Biden’s Inflation Reduction Act (IRA) climate legislation in 2022. Since 2021, U.S. renewable diesel production capacity soared 200%.

Six new soybean processing facilities or plant expansions in Iowa, Nebraska and North Dakota opened in less than two years. At least four more projects in Nebraska, Ohio, Indiana and Louisiana are slated to launch through 2026.

Yet in about a half-dozen Midwestern towns, the lucrative promise of riches has stalled.

Crushers blame the delays on the flood of biofuel feedstock imports, soaring construction costs and the end of cheap financing as interest rates surged to a 23-year high.

U.S. farmers looking to boost domestic soyoil demand have unsuccessfully tried to get Biden’s Treasury Department to exclude imported biofuel feedstocks from IRA subsidies known as 45Z. It remains too soon to know if Trump will try to alter the IRA’s clean energy provisions or limit imports of used cooking oil, said Susan Stroud, founding analyst at No Bull Ag consulting.

Election Results
Some firms slammed the brakes on oilseeds plant expansions in order to wait and see how the election will impact biofuels policy. Permitting delays have stalled plant expansions by global oilseeds processor Bunge and joint venture partner Chevron in Destrehan, Louisiana, and Cairo, Illinois, along with slow approvals by the two companies, Bunge told Reuters.

Industry sources said Bunge scrapped plans to expand its massive plant in Council Bluffs, Iowa. Bunge declined to comment.

Work on United Cooperative’s smaller-scale plant in Waupun, Wisconsin, lagged after construction costs rose and interest rates soared, said Woods of advisory firm CrushTraders.

United Coop CEO David Cramer said it will be online within two years; the only delays were in getting equipment.

Soy processors also expect higher construction costs next year. Tariffs on imported steel and processing plant equipment could prove unpalatable for crushers that have yet to break ground.

Evansville Mayor Dianne Duggan said CHS had spoken about approving construction of the local facility as early as spring of 2023. The plant would be able to crush 70 million bushels of soybeans annually - or about two-thirds of Wisconsin’s total crop production, according to company and government data.

Today, it’s an empty field. CHS said the project is still under consideration.

(Reporting by Karl Plume in Chicago and Renee Hickman in Evansville, Wisconsin, additional reporting by P.J. Huffstutter in Chicago; Editing by David Gregorio)

Why John Thune's Election as Senate Majority Leader is Considered Beneficial for U.S. Agriculture

Wed, 13 Nov 2024 19:50:44 GMT

Sen. John Thune (R-S.D.) wins Majority Leader race. Sen. Rick Scott (R-Fla.) was eliminated on the first ballot. And Thune beat Sen. John Cornyn (R-Tex.) 29-24 on the second ballot.

The Thune selection is good for the U.S. ag sector. He has one of the best staff in Congress.

The leadership race unfolded in two rounds of voting: 

In the first ballot, Scott was eliminated. 
In the second and final ballot, Thune secured 29 votes, defeating Cornyn, who received 24 votes.

Donald Trump stayed out of the contest but did make public demands that the incoming majority leader allow him to make recess appointments to his Cabinet. All three men quickly agreed.

Thune’s election as Majority Leader is considered beneficial for the U.S. ag sector for several reasons: 

Agricultural background: Thune has a deep background in ag policy and is a member of the Senate Agriculture Committee. 
Farm bill experience: He has been involved in writing several farm bills, demonstrating his expertise in agricultural legislation. 
Conservation programs: Thune is an avid supporter of conservation title programs like the Conservation Stewardship Program and Conservation Reserve Program.
Bipartisan approach: He is a skilled negotiator, working for the benefit of all.
Constituency focus: Coming from South Dakota, an agriculture-based state, Thune is likely to keep agricultural interests at the forefront of his agenda.  • Experienced staff: Thune has one of the best staffs in Congress, which can be crucial for effective policymaking and implementation.

Of note: This leadership change marks the end of Mitch McConnell’s (R-Ky.) 18-year tenure as the Senate’s Republican leader. Thune will assume the role of Majority Leader for the next two years, coinciding with President-elect Donald Trump’s second term. While Thune has had differences with Trump in the past, he has recently worked to improve their relationship and has pledged to advance Trump’s legislative agenda.

Trump Taps Lee Zeldin to Lead EPA; What Does It Signal for Agriculture?

Tue, 12 Nov 2024 15:36:33 GMT

President-elect Donald Trump has selected former New York congressman Lee Zeldin to lead the Environmental Protection Agency (EPA) in his upcoming administration. This appointment signals a potential shift in environmental policy and regulatory approach. Here are the key points about this nomination:

• Zeldin is a former Republican congressman who represented New York’s 1st congressional district from 2015 to 2023.
• He lacks extensive experience in environmental policy, having not served on committees with direct oversight of environmental issues during his time in Congress.
• Zeldin has a lifetime score of only 14% from the League of Conservation Voters, indicating a record of frequently voting against environmental legislation.

Trump stated that Zeldin would “ensure fair and swift deregulatory decisions” to “unleash the power of American businesses.” The administration aims to maintain “the highest environmental standards, including the cleanest air and water on the planet” while pursuing deregulation.

Zeldin is expected to focus on restoring “U.S. energy dominance” and revitalizing the auto industry.

He may be tasked with rolling back several Biden administration environmental regulations, particularly those targeting power plant pollution and vehicle emissions. There are plans to end the pause on constructing new natural gas export terminals and potentially withdraw the U.S. from the Paris climate agreement.

Zeldin joined Trump and Sen.-elect Dave McCormick in Pennsylvania for a roundtable on agriculture during Trump’s campaign in September. Zeldin praised Trump for addressing the “threat” of foreign entities buying U.S. agricultural land and highlighted Trump’s trade policies, including the U.S.-Mexico-Canada Agreement, which prioritized American farmers and strengthened supply chain resiliency.

Of note to the biofuels sector, In November 2015, Zeldin and several other members of Congress sent a letter to EPA Administrator Gina McCarthy expressing concerns about the proposed 2016 Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS) program. The lawmakers worried that the proposed 2016 RVOs would require blending more ethanol than could be absorbed by the E10 gasoline market, effectively “breaking through” the blend wall. There were concerns that exceeding the blend wall could drive up the price of E10 gasoline for consumers. Ultimately, the EPA did finalize 2016 RVOs that were lower than originally proposed in the RFS statute, but still represented an increase over previous years. The agency attempted to balance the competing interests and technical constraints in the fuel market.

Meanwhile, discussions are underway about possibly relocating the EPA headquarters outside of Washington, D.C.

Environmental advocates criticized the nomination, viewing it as a potential regression in environmental policy. Zeldin’s record includes opposition to several climate-related bills and support for increased fossil fuel production.

Zeldin’s appointment as EPA Administrator will require Senate confirmation.

Will The Trump Administration’s America First Agenda Be Positive for Agriculture?

Fri, 08 Nov 2024 23:54:42 GMT

For the week December corn was 16 ½ cents higher, January soybeans soared 36 ½ cents, December soybean meal was up 90 cents per short ton, December soybean oil rallied 247 points, December hard red winter wheat lost 2 ½ cents, December soft red winter wheat gained 4 ½ cents and December hard red spring wheat fell 1 ½ cents.

Speculation is running high after the election regarding what the Trump administration’s second term will mean for U.S. agriculture, especially when it comes to trade.

Jerry Gulke, president of the Gulke Group, says the election might have brought about a paradigm shift in the approach to agricultural policies.

On the campaign trail, President-elect Trump promised increased tariffs on Chinese imports on day one and threatened Mexico could even face levies if the government doesn’t assist with immigration or border issues.

The USMCA trade agreement is set to expire in 2026, and Trump also has expressed interest in renegotiating portions of the agreement he feels have not been fair for the U.S.

Gulke is hopeful that the lessons learned from the trade war with China in 2018 will guide a better path for trade under the new administration.

In fact, he thinks a new trade spat with China or any other trading partners will look much different this time around.

Gulke is hopeful Trump’s America First Agenda will include agriculture and help the U.S. regain export markets and protect domestic industries like biofuels.

He points to the renewed buying in vegetable oils like palm oil, soybean oil and canola oil as a signal that the market is anticipating that Trump might place tariffs on used cooking oil imports from China or embargo imports all together.

“The current U.S. Ag Secretary was reluctant to address the used cooking oil imports as it might cause consternation with trade, especially China,” he says. “That concern seems to be out the window.”

According to Gulke this could be positive for the future of the biofuels market and help support soybean prices and other veg oil prices.

The fundamental headwinds for price outlook are still in place, with a 470-million-bushel soybean ending stocks figure and 1.938-billion-bushel corn carryover after the updated WASDE on Friday.

Gulke says increased domestic biofuels production that consumed even another 200 to 300 million bushels of soybeans would help chew through the larger ending stocks on hand and be positive for soybean prices.

“The same goes for the higher corn carryover. A mere 12% ethanol blends versus the current 10% mandate result in the disappearance of an additional billion bushels of corn and puts ending stocks down to pipeline levels.

The price of feedstocks related to increased biofuel production in countries like Brazil and Indonesia, he says, is a testament to such a policy.

“And it severs the dependence on the Big Gorilla in the room — China,” he adds.

Gulke says the other change he sees is the Trump administration possibly brokering a deal in the Black Sea that would allow the war to come to an end in Ukraine.

That could also have major implications for the U.S. and global wheat market moving forward.

For more information contact Jerry at info@gulkegroup.com .

Could 100% Bonus Depreciation Make a Return Under a Trump 2.0 Administration?

Fri, 08 Nov 2024 19:59:55 GMT

President-elect Donald Trump is preparing for his second term as president. While it’s not two consecutive terms, his history during the first term could serve as a possible playbook on how the next four years could impact agriculture.

“You have to remember, Trump is a populist,” says Jim Wiesemeyer, Farm Journal Washington correspondent. “He learned a lot from his first four years. So, he’s better prepared now. He won’t choose a lot of cabinet people who will eventually write books negative about him. He learned that lesson.”

The parlor game of whom will be named to key cabinet positions, including the U.S. Secretary of Agriculture , will continue during the next few months. One of the biggest anticipated changes that could impact farms across the U.S. is the possible change to the tax policy.

“You can up the odds that you’re going to have many, if not most, of the expiring Trump 2017 tax cuts that expire at the end of 2025 renewed. That’s good for the U.S. sector because of the estate tax exemptions will probably remain as they currently are,” says Wiesemeyer.

While anticipated changes continued to be weighed by political analysts, one agricultural tax expert thinks farmers can count on one major thing.

“I think we’re definitely going to see no tax increases. That’s for sure,” says Paul Neiffer, Farm CPA and contributor to AgWeb.

Neiffer says even though Trump campaigned on no tax on tips and no taxes on social security, Neiffer doesn’t see those proposals passing, as it would leave too big of a hole in the federal budget deficit.

“But certainly, the lifetime exemption that next year will be almost $14 million, I think that’s going to be made permanent. And that’s great news for our farmers that possibly are facing some estate taxes,” Neiffer says.

Neiffer also thinks the Section 2032A deduction, which permits an alternative method for valuing certain real property used either as a farm for a farming purpose or in a trade or business other than farming, is something that could get bumped up to $14 million per taxpayer. He believes it would be a “good deal” for farmers.

The other benefit, according to Neiffer, is the extension of the Section 199A Deduction and additional changes he expects to occur with the corporate tax rate.

“The lower rates for 199A capital will likely to be extended,” Neiffer says. “We could even see a reduction in the corporate tax rate down to maybe 15% for farmers. And if that happens, you could see a lot of farmers switching from being an individual farmer to being a corporate farmer.”

According to Neiffer, 100% bonus depreciation could also make a comeback under Trump.

“We think, perhaps, 100% bonus depreciation might be coming back for farmers,” says Neiffer. “When they buy equipment or buildings, farm buildings, etc., they’ll be able to deduct 100% of that in the year of purchase.”

Neiffer points out farmers need to be careful and make sure they optimize their depreciation related to their debt, but the idea of 100% bonus depreciation would be a welcome change for farmers.

Wiesemeyer also says the relief for farmers is there will be no major changes to capital gains taxes, which is something the democratic nominee Kamala Harris had proposed during her campaign.

Your Next Read: Washington Insiders Weigh in on What the Election Means for Agriculture

Grains Mixed After Export Biz on WASDE Squaring: Cattle Fall on Lower Cash and Cutouts

Fri, 08 Nov 2024 15:29:09 GMT

Grains are mixed early Friday, with pressure in the livestock.

Scott Varilek with Kooima Kooima Varilek says cattle futures are under pressure with triple digit losses early in both live and feeder cattle futures.

The market is reacting negatively to the Choice boxes dropping over $6 yesterday.

While there has only been light cash, it has been at mostly $188 in the North, which is down from last week.

Thursday afternoon there was also some light dressed trade in Nebraska at $294, down $3 from last week’s weighted average.

Feb live cattle futures have held support at the 100 day though at $184.85 and Varilek is also watching this week’s low at $185.10 on the charts.

These technical areas need to hold for funds or managed money to defend their long position in the market.

Varilek says while slaughter is running 3% lower than last year total beef production is nearly the same due to the higher carcass weights.

Lean hog futures are following cattle and seeing pressure from lower cutouts.

The pork composite value dropped $4.19 to $97.96, mainly due to a $17.05 decline in belly prices.

Yet, support is still coming from the contra seasonal rise in the Lean Hog Index which now stands at $90.61, up $.37.

Nearby futures remain at a discount to that index.

Grains are mixed ahead of the WASDE and despite more flash corn and soybean export sales this morning.

Private exporters reported 3.9 million bushels or 107,000 metric tons of soybeans for to China , 4.85 mb/132,000 mt of soybeans to unknown destinations and 7.9 mb/200,480 mt of corn to unknown. All for the 2024-25 marketing year.

However, soybeans also may be seeing some profit taking and farmer selling after the 23 cent rally Thursday, plus some spreading between corn and beans.

Who Will Be the Next U.S. Secretary of Agriculture?

Thu, 07 Nov 2024 18:44:22 GMT

Donald Trump won all battleground states in a virtual red wall. Trump is the first candidate in over a century to reclaim the White House after losing it. Trump, who won election in 2016 as the 45th president, now will be the 47th and just the second candidate in U.S. history to win nonconsecutive White House terms.

Now that the results are in, it begs the question: Who will be the new USDA Secretary? That parlor game has returned with a host of possibilities which include:

Abel Maldonado, said to be at or near the top of possibilities, was former California Lt. Gov. from April 27, 2010, to Jan. 10, 2011. He is the oldest son of immigrant field workers and grew up working alongside his father picking strawberries to help support the family. He ran unsuccessfully for California’s 24th congressional district in 2012 and briefly ran for governor in the 2014 election. He was considered for USDA Secretary by Donald Trump in 2017, but was not ultimately nominated. He is currently the owner of Runway Vineyards in Santa Maria, California.
Zippy Duval, American Farm Bureau President, serving in that role since January 2016. He is a third-generation farmer from Georgia with deep roots in agriculture. He operates a dairy farm on land in Georgia, currently raising beef cattle and broiler chickens. He produces over 750,000 broilers per year with his wife, Jennifer. Prior to his role as AFBF President, Duvall served as the President of the Georgia Farm Bureau for nine years.
Kip Tom, Indiana farmer who transformed his family’s farm, Tom Farms, into one of the largest farming operations in Indiana. From April 2019 to January 2021, he served as the U.S. Ambassador to the United Nations Agencies for Food and Agriculture, based in Rome, Italy.
Former House Ag Chairman Mike Conaway, now a private consultant. He is the only person out there, not in office, who’s negotiated a farm bill; led an investigation resulting in debunking the Russia hoax; auditor who would turn USDA upside down investigating where all the debt relief and climate money has gone; knows rural America; aligned with Trump on needed SNAP reforms.
Texas Ag Commissioner Sid Miller, serving in this role since January 2015. Miller was born in 1955 in De Leon, Texas and has deep roots in the state’s agriculture industry. He is a cattle rancher, farmer, and owner of a commercial nursery business. He served six terms as a member of the Texas House of Representatives from 2001 to 2013. He was first elected as Texas Agriculture Commissioner in 2014 and re-elected in 2018 and 2022. He granted “amnesty to cupcakes” as his first official action, drawing attention to the repeal of a ban on junk food in schools. Recently issued an executive order allowing Texas farmers to use water from the Rio Grande for irrigation, addressing water shortage concerns. Miller has faced criticism. He awarded significant bonuses to staffers and created high-paying positions for political allies early in his tenure. Miller has recently been sounding the alarm about water shortages in Texas, particularly in the Rio Grande Valley.
Rep Thomas Massie (R-Ky.). He is a rebel House conservative that most consider a long shot choice.
Ray Starling: A prominent figure in American agriculture policy and law with extensive experience in both the public and private sectors. Currently serves as the general counsel of the N.C. Chamber and president of the N.C. Chamber Legal Institute. In these roles, he sets litigation strategy and leads public policy development, focusing on issues affecting businesses in North Carolina. Previously, Starling held several high-profile positions in the federal government: Chief of Staff to U.S. Secretary of Agriculture Sonny Perdue; Principal agriculture advisor to the President of the United States at the White House; Special Assistant to the President for Agriculture, Trade and Food Assistance on the White House National Economic Council. He also worked as Chief of Staff and Chief Counsel for U.S. Sen. Thom Tillis. He grew up on a Century Family Farm in southeastern North Carolina.
Ted McKinney, CEO of the National Association of State Departments of Agriculture. Before that he was Undersecretary of Agriculture for Trade and Foreign Agricultural Affairs (2017-2021); Director of the Indiana State Department of Agriculture (2014-2017): He served in this capacity before his appointment to the federal government. McKinney worked for 19 years with Dow AgroSciences and 14 years with Elanco, a subsidiary of Eli Lilly and Company, where he was Director of Global Corporate Affairs.
North Dakota Gov. Doug Burgum, who ran briefly for the Republican presidential nomination against Trump before campaigning for him. His term expires in December. Burgum is also being considered for other Cabinet positions. Of note: Every agriculture secretary since Mike Johanns in 2005 was a former governor.

— Potential candidates for U.S. Trade Representative in a second Trump administration include:

Robert Lighthizer is seen as a top contender to reprise his role as U.S. Trade Representative. However, reports signal Lighthizer wants to be either Commerce Secretary or Treasury Secretary. As Trump’s USTR during his first term, Lighthizer was a key figure in implementing Trump’s trade policies, including leading negotiations for the U.S.-Mexico-Canada Agreement (USMCA) to replace NAFTA; Overseeing trade negotiations and disputes with China; Advocating for and implementing tariffs on various imports. Lighthizer remains close with Trump and is widely viewed as a leading candidate for USTR or another top economic post, especially given Trump’s promises to pursue even more aggressive trade policies in a second term.
Bill Hagerty. The Tennessee senator and former ambassador to Japan under Trump is considered a contender for multiple Cabinet posts, including USTR.
Jamieson Greer. Served as chief of staff to Lighthizer at USTR during Trump’s first term and is reportedly a top choice to lead the office.
Robert O’Brien. Trump’s former national security advisor is seen as a candidate for Secretary of State or other foreign policy roles, which could potentially include USTR.

Of note: Trump has expressed a desire to pursue even more aggressive trade policies, including broader tariffs, in a potential second term. This suggests he may favor someone like Lighthizer who has a track record of implementing such policies. However, the final selection will likely depend on various factors as Trump assembles his full economic and foreign policy teams.

— Who will be Donald Trump’s chief of staff? This is one of the most important personnel decisions Trump faces. There are several prominent contenders being considered for the position:

Brooke Rollins: A trusted Trump associate and CEO of the America First Policy Institute, Rollins is seen as a top contender for the Chief of Staff role. She previously served as an advisor on domestic policy during Trump’s first term and is perceived as a more moderate Trump ally.
Susie Wiles: Having led Trump’s successful 2024 campaign, Wiles is also being considered for the Chief of Staff position. Her pivotal role in Trump’s electoral success, particularly after joining his campaign following her work on Ron DeSantis’ campaign in Florida, has put her in a strong position for this role.
Kevin McCarthy: The former House Speaker, who had an unceremonious exit from Washington in October 2023, is widely seen as a top contender for the Chief of Staff position. McCarthy’s intimate knowledge of how Washington works is considered a significant asset for this role. Some people, however, say he likes the money he is making currently.
Robert Lighthizer: While primarily known for his role as a trade representative, Lighthizer is also mentioned as a potential candidate for Chief of Staff. However, he is also being considered for other positions such as Treasury Secretary or Commerce Secretary.

Bottom line: The final selection will likely depend on various factors, including their relationship with Trump, their ability to navigate Washington politics, and their alignment with Trump’s vision for his second term.

Your Next Read: Washington Insiders Weigh in on What the Election Means for Agriculture

Washington Insider Weighs In on What the Election Means for Agriculture

Thu, 07 Nov 2024 16:27:59 GMT

Donald Trump secured a second term in the White House after wins in key battleground states over Democratic challenger vice president Kamala Harris.

President-elect Trump garnered even stronger support in rural America this time around than in 2016.

Farm Journal Washington analyst Jim Wiesemeyer says the support from the heartland was likely backlash against the ag policy moves of the Biden-Harris Administration.

The election results are a bit of a double-edged sword for agriculture.

The good news is a Trump presidency and Republican-controlled Senate might result in fewer regulations and lower taxes, as well as at least partial support for biofuels policy.

The bad news is the U.S. could be headed for a possible trade war with China and other countries.

The future of trade is top of mind post election.

Washington insiders such as Mary Kay Thatcher say President Trump’s trade agenda won’t include renegotiation of a trade deal with China because they didn’t comply with Phase One.

Instead, he’ll immediately increase tariffs on China and other trading partners, which could mean a trade war and the demise of U.S. export markets.

Thatcher, who is senior manager of federal government and industry relations for Syngenta, says: “You have to believe that because President-elect Trump was so strong on doing tariffs before that it’s very likely he’ll follow through now. He’s talked about, at a minimum, 20% tariffs on everybody. He’s talked about 60% on China, who’s still our No. 1 ag export customer, likely to fall to two or three, but still a very important market. He’s also talked about Mexico if Mexico doesn’t stop as many people coming across the border.”

On taxes, it’s possible most of the expiring 2017 tax cuts will be renewed. Yet it might depend on if the House is controlled by Republicans or Democrats since she doesn’t believe Congress will want to increase the deficit.

“Just extending the things that will expire at the end of 2025, such as estate taxes, 199A taxes on co-ops and individual income tax rates — that’s $4 .6 trillion on top of an already really sad budget deficit.”

On energy policy, Thatcher sees at least partial support for biofuels because of rural America’s support for Trump in the election. That includes programs, such as 45Z, tied to climate and conservation and supported in Congress.

However, she says energy policy might be trimmed.

“I don’t look for him to go in and overturn the whole thing, especially if you think about some of those initiatives that have to do with agriculture. There are numerous farmers out there who have benefited from those programs and are going to speak up in support,” Thatcher explains.

There will be fewer regulations under this President and Congress. In fact, Thatcher expects a large share to go by the wayside even before Trump takes office and more to follow.

“Again, if there’s a Republican House, they’ll be using what they call the Congressional Review Act, which means they can look back at regulations written within the last 60 legislative days and they can try to overturn those,” she explains.

Another big election outcome for agriculture, is there are 50 to 60 new members of Congress that need to be educated about the importance of farming and ranching to the country.

Grains Digest Strong Exports, WASDE, FOMC and Election Hangover

Thu, 07 Nov 2024 15:41:10 GMT

Grain and livestock futures are mixed early Thursday.

Mark Knight, Farmer’s Keeper Financial, says soybeans initally saw follow through buying after a nice reversal yesterday and with strong weekly exports of nearly 75 million bushels.

He says soybeans were able to to shake off tariff concerns after the election with ideas it Trump may hold China’s feet to the fire on trade and China may front load more export business.

Corn was pulled down early by wheat despite a strong close above resistance yesterday, exceptional weekly exports of 109 million and a flash sale of 4.7 mb to unknown.

Total commitments stand at 1.125 billion bushels, up 48% from a year ago and Knight thinks the U.S. will continue to see strong export sales with prices at value levels.

Here too he sees front loading on corn exports from Mexico and Japan before Trump takes office but some of that is already priced in.

Wheat futures are seeing pressure from rains that have fallen in Hard Red Winter wheat areas and more in the forecast.

Weekly exports came in at 13.8 million bushels and total commitments are now at 510 million bushels, which is up 18% from last year.

Markets are also positioning ahead of the Fed decision with an anticipated .25 point cut but what the FOMC signals for the rest of 2024 could be the key.

Grains are also squaring ahead of the WASDE on Friday although Knight isn’t expecting much change in the balance sheets for any of the grains.

Trump Return Likely to Slow, Not Stop, U.S. Clean-energy Boom

Wed, 06 Nov 2024 21:02:45 GMT

Donald Trump’s return to the White House will refocus the nation’s energy policy onto maximizing oil and gas production and away from fighting climate change, but the Republican win in Tuesday’s presidential election is unlikely to dramatically slow the U.S. renewable energy boom.

Investor fears of a reversal under Trump sent clean-energy stocks down sharply on Wednesday. The MAC Global Solar Energy index was down 10% in midday trade, while shares of top renewable project developer and owner NextEra Energy slid 6.2%.

A Biden-era law providing a decade of lucrative subsidies for new solar, wind and other clean-energy projects would be near-impossible to repeal, however, thanks to support from Republican states, while other levers available to the next president would only have marginal impact, analysts say.

“I don’t think a Trump president can slow the transition,” said Ed Hirs, energy fellow at the University of Houston. “This is well under way.”

Renewable energy sources such as solar and wind are the fastest-growing segments on the power grid, according to the Department of Energy, driven by federal tax credits, state renewable-energy mandates, and technology advancements that have lowered their costs.

President Joe Biden in 2022 signed into law the Inflation Reduction Act guaranteeing billions of dollars of solar and wind subsidies for another decade as part of his broader effort to decarbonize the power sector by 2035 to fight climate change.

Before the election, Trump slammed the IRA as being too expensive and promised to rescind all unspent funds allocated by the law - a threat that, if accomplished, could pour cold water over the U.S. clean energy boom. But dismantling the IRA would require lawmakers, including those whose states have benefited from IRA-related investments such as solar-panel factories, wind farms and other projects, to vote to repeal it.

“The jobs and the economic benefits have been so heavy in red states, it’s hard to see an administration come in that says, ‘we don’t like this,’” said Carl Fleming, a partner at law firm McDermott Will & Emery, who advised the Biden White House on renewable energy policy.

Many of Trump’s allies also benefit from the IRA through their investments in clean-energy technologies, Reuters has previously reported.

Fleming said Trump could, however, slow things down around the margins by hindering federal agencies that deliver IRA grants and loans, or by reducing federal leasing for things such as offshore wind.

“You could see a new administration come in and they can very quickly begin to cut budgets or restrict budgets or restrict the freedom of agencies to do certain things that are tied to funding,” he said. “But I think that’s a smaller subset of the larger renewables market that’s really relying on those, so I don’t think it would have a shocking effect.”

The Biden administration has rushed to ensure it spends the majority of available grant funding under the IRA before a new president arrives, Reuters has previously reported.

One way Trump could slow the transition is through executive action by changing public lands leasing, analysts said. The Biden administration had sought to expand lease auctions for offshore wind in federal waters, along with solar and wind on land.

“I think you would see more preference given to fossil-fuel extraction on public lands and waters,” said Tony Dutzik, associate director and senior policy analyst at Frontier Group, a non-profit sustainability think-tank.

That could have an outsized impact on the offshore-wind industry, which aims to site projects in federal waters. Most onshore solar and wind projects are located on private property, as is the vast majority of oil and gas drilling. Trump has said he intends to end the offshore-wind industry “on day one,” arguing it is too expensive and poses a threat to whales and seabirds, a dramatic policy reversal after his first administration supported offshore-wind development.

Bernstein Research said Trump is likely to enact a moratorium on new offshore-wind lease sales. Meanwhile, U.S. fossil-fuel production is likely to look much the same under Trump, experts said. The U.S. has already become the world’s largest oil and gas producer, under the watch of Biden, thanks to a drilling boom in fields such as the Permian Basin under Texas and New Mexico.

The production boom started under former President Barack Obama and has continued through the Trump and Biden presidencies. Even so, Trump’s campaign has sought to claim credit, saying his efforts to slash regulatory red tape during his 2017-2021 term paved the way, and arguing he could further expand U.S. fossil-fuel production in a second term by rolling back Biden’s climate initiatives.

“Presidents can make a lot of noise about plans for U.S. oil and gas, but ultimately it’s individuals and companies responding to prices of a global commodity that make the decisions on when to drill,” said Jesse Jones, head of North American upstream at Energy Aspects.

Dan Eberhart, Trump donor and CEO of oilfield-services company Canary, LLC, said he supports Trump’s encouragement of increased oil-and-gas drilling, saying it could further lower energy prices for businesses and consumers.

He added he would also welcome a move by Trump to once again withdraw the United States from international climate cooperation, like he did in his first term, arguing other big greenhouse-gas emitters were not doing enough.

“The Paris accord was aspirational and meaningless if China and India don’t participate,” he said, referring to a landmark U.N. deal in 2015 to limit global warming.

Grain and Livestock Futures Shake Off Election, Tariff Fears and Soaring Dollar

Wed, 06 Nov 2024 20:59:18 GMT

Grain and livestock futures closed mostly higher except for wheat.

Darren Frye, Water Street Solutions, says it was an impressive close especially for soybeans which were down 18 cents overnight in reaction to former President Trump’s election win and the possibility of increased tariffs on China and other export customers and another trade war.

However, the grains were also able to shake off a sharply higher dollar.

It may be tied to hopes export business will pick up before January 20.

“It could be the fact that we have an export window now until January until Trump takes office and there will be a lot more buying up until then. It could be that the commercials are seeing that exports aren’t going to be that bad. We kind of thought they were going to be zero if he got elected but with their economy isn’t in as good a shape as four years ago and maybe they can’t take his harassment or tariffs. Maybe they have to play nicer,. Maybe they’re going to do some business with us,” he says.

Or Frye says the market may sense that exports won’t be as bad as feared, as these low price levels have stimulated demand.

The key will be for the grain markets to see follow through buying on the strong closes.

“That’s the million dollar question. I mean the charts really look good going home Wednesday. You saw a huge range in soybeans a huge shadow on the candle stick chart. You saw corn close through some key resistance areas. Closing above the $4.24 to $4.25 areas was really important on December corn so we should get some follow through but as always time will tell,” he adds.

Frye was surprised by the strength and new highs in the stock market in reaction to the election.

“I expected the market to be higher but not 1,500 points on the DOW and 500 on the NASDAQ. I mean everything was up small caps, large caps, mid caps. Bit coin was up over $6000 a coin,” he says.

The rally in the financial markets spilled over to help support the livestock futures as well, despite the higher dollar and the trade and tariff fears.

Trump has also talked about raising tariffs on Mexican imports if the president does not provide help with the immigration and border issues.

Mexico is a top customer for U.S. pork and especially hams and so tariffs could hurt the export dependent hog market.

The big week continues with the FOMC decision on Thursday and the WASDE on Friday.

Frye says the bond market is pricing in a .25 point cut in interest rates but the last time Jerome Powell spoke he was a bit hawkish and with the run up in the stock market that may signal inflation is going to reignite.

“So it will be interesting to see what the Fed does with that,” he says.

As far as Friday’s WASDE, Frye isn’t looking for much change in yield, production or ending stocks for corn or soybeans.

“I think they got things pretty close to the mark. Many people were wrapping up harvest, they had a lot of the plots in the October report,” he says.

"

A Win for Private Property Rights, Voters Reject Carbon Pipeline Measure in South Dakota

Wed, 06 Nov 2024 18:22:25 GMT

A key state ballot issue in South Dakota is poised to go against carbon pipelines, according to Farm Journal Washington Correspondent Jim Wiesemeyer. The referendum let voters decide whether to uphold a pipeline bill that was passed by legislators.

90% of votes were in as of mid-morning Wednesday, and 60% voted no and 40% voted yes. A “no” vote means the state law in question would be rejected, and that raises fresh questions about the Summit Carbon Solutions pipeline and similar projects.

Proponents of the law argued it would create a revenue stream for counties with a a $1-per-foot surcharge of pipeline projects. They also argued it would serve as a compromise between landowners and pipeline companies.

However, landowners didn’t agree and fought against he bill saying the law would take power out of the hands of the counties and infringe on personal property rights.

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Carbon Pipeline Plans

The vote could have a direct impact on Summit Carbon Solutions pipeline. The company’s planned Midwest Carbon Express pipeline would be the largest in the country, spanning across 2,500 miles. It would cover several hundred miles in eastern South Dakota and is estimated to cost $8 billion.

The company said the goal is to remove carbon dioxide (CO2) from the exhaust stream of 57 ethanol plants in a five-state region in Iowa, Minnesota, North Dakota, South Dakota and Nebraska, according to Jimmy Powell, chief operating officer for the Ames, Iowa-based company.

On June 25, the Iowa Utilities Board approved the permit for the pipeline. For construction on the pipeline to begin, permits must be secured in North Dakota and South Dakota.

Referred Law 21 was originally passed by legislators and signed by Gov. Kristi Noem (R). The law was meant to ease the path of carbon dioxide pipeline construction. But after garnering enough signatures, the law was put on the November ballot.

According to legal expert John Dillard, state governments have the primary authority to approve the siting and construction of CO2 pipelines as well as the eminent domain authority of the pipeline companies. These laws vary state-to-state, but they generally require pipeline companies to address safety and environmental concerns, provide notice to potentially impacted landowners, and minimize damage to landowner property. Some states preempt or restrict the authority of local governments to restrict pipelines while others allow zoning laws that would make construction difficult or impossible.

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Grain and Livestock Markets React to Election Results

Wed, 06 Nov 2024 15:40:07 GMT

Grains start lower in reaction to the election but quickly come off lows and corn even finds some buying. Livestock are mixed.

Kevin Duling with KD Investors says he wasn’t surprised to see the lower trade in soybeans with the market fear of increased tariffs and a possibe trade war with China under the Trump Administration.

Trump has also threatened tariffs on Mexico is their president doesn’t help with the border and immigration crisis.

Duling says he is impressed at how well the grain market is handling the possible trade disruptions but thinks it may be because this could bring a huge flush of export business to the U.S. before January 20.

The stock market is also soaring, crude oil is lower and the dollar sharply higher in reaction to the election which isn’t all positive for the ag markets.

It may also be resulting in money flowing out of the ag markets, into the equity sector.

One exception is the cattle futures are rallying along with the stock market.

Duling says it will be interesting to see what all of these means for the Fed decision on Thursday.

Meanwhile, the market is also gearing up for the WASDE on Friday with trade estimates showing slightly lower yields, production and ending stocks.

Grains End Higher, Livestock Mixed Ahead of Election Results, FOMC and WASDE

Tue, 05 Nov 2024 21:00:30 GMT

Grains end mostly higher Tuesday, wtih cattle mixed and hogs lower.

Jeff Hoogendoorn with Professional Ag Marketing says the grain markets were positioning ahead of the election, the FOMC decision regarding interest rate cuts and Friday’s WASDE.

“The WASDE Report obviously the grain market is going to be pretty focused on that. Are we going to take yields down a bit? From my perspective if we don’t take them down this time we’ve really got a solid trend that these yields are here to stay,” he explains.

Plus, underlying demand has been strong especially for corn with another flash sale of 4.9 million bushels to unknown destinations for 2024-25.

Hoogendoorn says with the recent uptick in exports for corn there will be some in the trade looking for an upward revision by USDA on Friday.

A lower dollar index and higher crude oil were also supportive.

December corn closed above some key moving averages like the 100-day but all the grains remain fairly rangebound.

He says there is a chance the results of the Presidential race will not be known Tuesday evening and that uncertainty could cast a shadow on the markets, especially the meat sector where funds are heavily long.

Live cattle closed mostly higher except Dec with unwinding of bull spreads.

Deferred contracts bounced off the 200-day moving average with funds defending their long position with the futures discount to cash and higher Choice boxed beef cutouts.

After seven higher weeks cash cattle trade was only down around $.23 last week at $189.82.

Hoogendoorn says, “I have been impressed with the strength of the cash market. I would think we could trade some solidly steady cash trade this week.”

Lean hog futures saw follow through selling and fund long liquidation after the bearish technical reversals Monday.

Hoogendoorn says its has been an impressive run pushed by technical buying and strong demand but it is possible the market is in the process of topping.

“That market has been crazy high. You just look at the strength in the cutouts and demand and it has been driven by the higher belly market. However, I would not be surprised to see big chunks taken out of the market in a hurry, " he states.

Which Presidential Candidate Is More Likely to Tame Inflation or Support Farm Policies and Biofuels?

Mon, 04 Nov 2024 19:29:26 GMT

The presidential race is a close one , according to election analysts. And when it comes to agriculture, there’s an immense focus on the potential impact on trade, inflation, farm policy and biofuels.

Ahead of the election, the October Ag Economists’ Monthly Monitor asked economists which presidential candidate will be better for agriculture on taming inflation, providing more certainty on farm policy, as well as more likely to support biofuels policies. The Monthly Monitor is an anonymous survey of 70 ag economists from across the U.S.

On the question of which candidate would be more effective at taming inflation, 53 percent said Donald Trump.
When it comes to providing more certainty on farm policy and crop insurance, 61 percent of economists said Trump will provide more certainty.
However, when looking at policies that benefit biofuels, 53 percent of economists said Kamala Harris.

45Z and Biofuels Tax Credit in Question

Today, there is no clarity on 45Z that’s causing soybean processors like Cargill and Bunge to possibly slow or even idle production by the end of the year.

“We have industry looking to shut down production of biofuel. If we don’t get the 45Z requirements here released soon, and that doesn’t look likely, unfortunately, that’s going to hurt demand for soybean crushing for soybeans per se,” Suderman said.

“The fact that we don’t have those today, I think, is impeding investment in the sector. And people are asking for that before they spend millions of dollars to do that. And I think that has been a hiccup,” said Brown.

Role of the Federal Government

Heading into a crucial election with not just the presidential race, but also the House and Senate, the October Ag Economists’ Monthly Monitor asked, “What is the most important role of the federal government?”

Forty-six percent of economists ranked financial aid as the top priority. Nearly 43 percent said it’s passing a farm bill.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

“There’s all this discussion that the safety net is inadequate relative to commodity programs, and there’s the potential for some rather large ARC and PLC payments to come,” said Brown. “But are they too late? That’s the question. Is it too late in the cycle? Does any type of ad hoc support through a farm financial package bridge that gap?”

The October survey of economists also asked them to weigh in on the fate of the farm bill. The majority of economists think Congress will pass a new farm bill in 2025, but 21 percent think it could be 2026 before it crosses the finish line.

Farm Bill Ag Economists’ Monthly Monitor

(Lindsey Pound )

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Hours Until the Election, 2024 Presidential Race is a 'Pure Toss-up’

Mon, 04 Nov 2024 16:54:30 GMT

Election analyst Nate Silver described the 2024 presidential race as a “pure toss-up,” giving former President Donald Trump a slight advantage over Vice President Kamala Harris. Silver’s latest forecast indicates Trump has a 51.5% chance of winning the Electoral College, compared to Harris’ 48.1%, as reported on Substack. He noted that while New York Times swing state polls favor Harris and Morning Consult polls lean toward Trump, neither has a decisive lead.

David Wasserman on presidential contest. “As you know, a week ago I considered Trump a 60%-40% favorite. But Trump has had a terrible past week between “floating garbage,” “taking care of women whether they like it or not,” water fluoridation, etc. Might still give him a tiny edge but outlook has tightened considerably the more off-message he’s been.”

Trump said yesterday that if elected, he would consider taking action against vaccines and fluoride in the country’s water supply, two public health issues championed by Robert F. Kennedy Jr.

Wasserman is election analyst for the Cook Political Report with Amy Walter.

Of note:

The race tightened over the weekend as the Des Moines Register’s final presidential poll shockingly had Harris up three points in the state, underscoring that the election will be closer than current market expectations. The Iowa/Selzer poll has roiled the political betting markets. Following its publication, Trump’s odds of victory fell on platforms including Polymarket, after they had climbed in recent weeks, in tandem with crypto and other elements of the Trump trade. Trump’s odds on Polymarket were at nearly 58% this morning, down from 67% on Wednesday. (Polls measure how voters intend to cast their ballots, while prediction markets track the odds of a candidate’s victory implied by bets on a platform.)

— Tom Essaye from the Sevens Report notes some key points about the 2024 presidential election:
• The 2024 presidential race is shaping up to be extremely tight, despite markets having priced in a Trump victory. While stocks have rallied and Treasury yields have risen on expectations of a Republican win, the reality, he says, is that either candidate could still emerge victorious.
• As Essaye notes, “The Real Clear Politics national average has Trump ahead by just 0.3 points (48.4 to 48.1). That’s razor thin.”
• He emphasizes that in the seven key swing states that will decide the presidency, three have polling differences of less than 1%, while the remaining four are within 3%. The election will likely come down to seven “toss-up” states: Georgia, North Carolina, Pennsylvania, Wisconsin, Michigan, Arizona and Nevada. Trump currently leads in all seven according to RCP averages, but by narrow margins.
• Essaye advises watching North Carolina and Georgia early on election night as potential barometers — if Trump wins these decisively it could signal overperformance versus polls, while close races or Harris victories would suggest the opposite.
• Importantly, Essaye points out that winning just the Sun Belt swing states is not enough for either candidate. They must win at least one Rust Belt state (Pennsylvania, Wisconsin or Michigan) to reach 270 electoral votes. He notes that if Trump wins Georgia, North Carolina, Arizona and Nevada, but Harris sweeps the Rust Belt, Harris would win 272-268.
• Given the tight race, Essaye warns that we may not have a clear winner on election night or even Wednesday morning. However, markets will likely begin pricing in the probable outcome based on early results and projections. Overall, his analysis underscores that despite market expectations of a Trump win, the election remains very much up for grabs heading into voting day.

— Overseas Americans seen as key factor in tight 2024 presidential race. Americans living abroad — numbering at least 4.4 million with 2.8 million eligible to vote — are becoming a focus for both parties in the tight presidential race between Kamala Harris and Donald Trump, Time reports ( link ). Historically low overseas voter turnout, only 7.8% in 2020, prompts efforts by Democrats Abroad and Republicans Overseas to mobilize voters, emphasizing digital outreach and local campaigns. Key issues include foreign policy and “double taxation,” a rare bipartisan concern. Trump pledged to end overseas tax filing requirements, highlighting the expat vote’s potential. However, GOP lawsuits challenging overseas ballots in swing states were rejected by courts, with critics calling such actions voter suppression.

— In the final days leading up to the presidential election, Donald Trump and Kamala Harris were actively campaigning across key swing states. Trump, in Pennsylvania, used fiery rhetoric, joking about extreme measures against media and making baseless claims that Democrats were attempting to steal the election. He also expressed lingering resentment over his 2020 loss, suggesting he “shouldn’t have left” office.

Kamala Harris adopted a hopeful and unifying tone during her campaign stop in Michigan. She aimed to appeal to voters by promising a break from fear-driven politics and pledged to work toward ending the conflict in Gaza. Her focus on Michigan reflects its strategic importance in securing a pathway to victory through the rust belt states, which are crucial for Democratic success.

Today’s agenda: Harris will spend her final day of campaigning in Pennsylvania, with rallies in Allentown, Pittsburgh and Philadelphia. Trump will be in three battleground states, holding events in North Carolina, Pennsylvania and Michigan.

— NBC aired a short video message from Donald Trump after coming under fire for allowing Harris to appear on Saturday Night Live, a sketch-comedy show, on Saturday. On the program, Harris told her mirror-image to “keep calm-ala and carry on-ala” and poked fun at her opponent. A member of the Federal Communications Commission suggested that the appearance violated the “equal time” rules that govern political programming.

— D.C. gears up with heightened security measures ahead of presidential election. Washington, D.C., is ramping up security as authorities and businesses brace for potential unrest following Tuesday’s presidential election, the Washington Post reports ( link ). New security fencing has been set up around the White House, Capitol, and Vice President Kamala Harris’s residence. The city, still marked by 2020’s protests and the Jan. 6 Capitol attack, has prepared for possible disruption by deploying all 3,300 police officers on 12-hour shifts. Business owners have reinforced properties with private security and boarded windows as a precaution, despite officials saying there is no credible threat. The Secret Service emphasized that the measures are part of broad public safety preparations.

— The dollar index falls the most in more than a month as polling data signaled the Democratic candidate Kamala Harris might be edging ahead in some swing states. Bonds and stock futures rose. Cash trade in U.S. Treasuries trade was closed in Asian trading hours as markets in Japan were closed for a public holiday. In stocks, traders are betting on volatility with the closely watched “fear index” signaling rising market stress.

— U.S. interest rate cuts are returning, with the Fed expected to announce a 25-basis-point cut on Thursday. Traders are anticipating this move, and there remains one more opportunity for a cut in December. However, JPMorgan’s strategy chief noted that a potential Trump election win could make the Fed reconsider further rate reductions.

— Harris vs. Trump: How their policies would affect U.S. consumers. The policies of Vice President Kamala Harris and former President Donald Trump present stark differences with significant implications for U.S. consumers:
• Investing: Trump aims to lower the corporate tax rate from 21%, potentially boosting corporate earnings, while Harris plans to raise it, which could have the opposite effect.
• Cost of Goods: Both propose tariff policies, but Trump’s more aggressive 10%-20% tariffs on imports may increase consumer prices. Harris seeks a federal ban on price gouging during emergencies.
• Housing: Harris aims to build 3 million housing units to increase supply, while Trump focuses on reducing demand through immigration measures, including deportations and restricting mortgages for undocumented immigrants.
• Taxes: Trump plans to extend tax cuts, fueling investments by companies and individuals, while Harris’ tax plans focus on aiding lower-income Americans while pledging to not raise taxes for those earning under $400,000 and to institute a minimum tax on billionaires.
• Childcare: Both propose expanding the child tax credit, but Harris wants to cap childcare costs at 7% of family income. Neither has addressed funding childcare facilities or workforce hiring.

— Control of the Senate is at stake in Tuesday’s election, with Republicans favored to win the majority, but Democrats still have a chance. Despite challenges, including the retirement of West Virginia Sen. Joe Manchin making the map tougher for them, Democrats’ well-funded candidates have often outperformed expectations in key races. Additionally, potential Democratic gains have emerged in states like Texas and Nebraska, providing opportunities to counterbalance Republican advances.

The Cook Political Report sees the GOP gaining control of the Senate with 51-54 seats.

Most see control of the House, like the White House, a jump ball.

— China’s legislature begins crucial session on economic stimulus amid investor concerns over potential Trump tariffs. The Standing Committee of China’s legislature has begun an important five-day session in Beijing, where economic stimulus measures are set to be discussed. The measures approved during this meeting are expected to signal the leadership’s approach to handling the country’s economic challenges. Key elements of the anticipated package include potential bank recapitalization, refinancing of local government debt, and possible support for households. This package will be closely watched by investors looking for signs that Chinese policymakers understand the gravity of the economic situation and are prepared to allocate sufficient resources to address it.

Another significant concern for investors is how China will respond if Donald Trump wins the U.S. presidential election. Trump has threatened severe tariffs of 60% on Chinese imports, which, according to UBS, could reduce China’s GDP growth by 2.5 percentage points over the following year. If such tariffs are implemented, China might need to adopt a more aggressive economic stimulus to counteract the impact.

Your Next Read: Which Presidential Candidate Would Have the Biggest Impact on Ag?

Which Presidential Candidate Would Have the Biggest Impact on Ag?

Fri, 01 Nov 2024 20:57:57 GMT

With early voting well underway in the presidential election, agriculture producers must decide which candidate will better serve their needs and what they want the next president to do. On the latest episode of Farm Journal’s Unscripted podcast , long-time Washington insider Jim Wiesemeyer shares what he’s hearing about who that next president could be. He tells hosts Tyne Morgan and Clinton Griffiths that early voting among Republicans could make a big impact.

With polls showing razor-thin margins between the candidates, it’s still too close to call, particularly in the swing states, Wiesemeyer says. At a recent event in Colorado Springs, CO, he heard David Wasserman from the Cook Political Report give Donald Trump a 60 percent chance of winning. “Republicans historically vote far more than Democrats on election day,” he says. “This year, more Republicans have voted early. They could gain some key votes in key states simply by voting earlier.”

On the podcast, Clinton offers, “It feels like there’s so much pressure at the polls to get it right. Everybody’s kind of on edge, which I’m okay with. I want it to be right.” When the counting is done, however, which candidate will be better for agriculture? Tyne reveals that surveys in this month’s Ag Economist’s Monthly Monitor and a Farm Journal survey of more than 4,000 ag producers tell different stories.

Key issues for the industry include the 45Z program for biofuels, farm policy, tariffs, crop insurance and inflation. Jim says, “When I talk to top producers, one thing is clear on differentiating the candidates — tax policy. Farmers like that 20 percent pass-through. They like less estate taxes, less capital gains taxes. When you talk to farm country, production agriculture, those are the things I’m told.”

They agree that the delay in clarification on the 45Z biofuels tax credit is, as Tyne says, “a complete disaster.” Is it going to happen next year? Soybean processing plants are slowing purchases because they’re not sure about receiving the credit. “As for why it’s taking so long, it’s up to the treasury department and the IRS, because it’s tax incentives,” Jim explains. “They just don’t know agriculture. Companies are starting to pull back their investment plans because they don’t know the rules. We have to know if corn-based ethanol is going to comply.”

It’s a spirited, illuminating discussion on a range of issues that farmers, ranchers and other ag professionals need to consider seriously as they cast their votes.

Watch the full episode of Unscripted.

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A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

Fri, 01 Nov 2024 19:49:39 GMT

In September, 75 percent of ag economists warned of an impending agricultural recession. October brought slight optimism to the Ag Economists’ Monthly Monitor, attributed to rising U.S. corn export demand and forecasts about cattle herd rebuilding. Yet, economists remain cautious about the potential impact of the upcoming election.

Harvest is winding down across the Midwest, and some farmers saw a record harvest pace in 2024. Harvest is typically the time of year the market sets harvest lows, but this year, commodities, like corn and wheat, came to life.

“I think over the last month, we’ve seen a little bit of a rebound or stabilization of prices, if you will. Some of that’s simply been fund short covering that is supported, some of it is a little better long-term picture for wheat and for corn, although for soybeans, it’s still looking somewhat bleak long-term,” said Arlan Suderman, chief commodities economist with StoneX Group.

The latest Ag Economists’ Monthly Monitor, which is a survey of nearly 70 ag economists and conducted by Farm Jounal each month, reflected that with short-term sentiments among economists seeing a slight improvement, but a bigger jump when asked to compare them to last year.

“We could have told you two to three years ago that, after a period of high prices, eventually we were going to have a recovery in production and that was going to suppress prices probably more than input costs. We knew that. I think when you take into account expectations heading into the year, has it deteriorated more than expectations? Probably not. We just know that we’re worse off today than where we were,” said Ben Brown, an agricultural economist with the University of Missouri.

Each month, the Monthly Monitor asks economists to list the factors that could impact crop prices over the next six months. In the latest survey, economists said:

South American weather
U.S.-China trade relations
Election outcomes
Global geopolitical risks
Biofuel demand

The Biggest Wildcard: South America

“The biggest thing that will l impact the markets is going to be South American weather. What happens in Brazil and Argentina and what’s the size of the soybean crop they’re going to get? Right now, it is raining. The crop is being planted late. Our people on the ground in Brazil are expecting a big crop if these rains continue,” Suderman said.

While the soybean crop could see suppressed prices if Brazil grows a big crop this year, the later-planted crop could eat into the supplies of corn.

“Even where we’re at today could have an impact on that second-crop corn, given that I anticipate that we’re going to see a very robust corn export picture even without a shrinkage in that second-crop Brazilian corn. I still think there’s an upside potential for the corn market, and it’s going to be based on the size of that second-crop corn in Brazil,” said Brown.

A Recent Surge in Corn Sales

The corn export demand picture has been strong, which is thanks to a surge in sales to Mexico. T hat’s one significant factor currently fueling corn prices .

“If we didn’t have it, corn prices would be a lot lower today than where they are,” said Brown.

“When we look at the export pace that we’re on right now, it’s stronger than what we normally have at this time of year, and it’s largely been because of Mexico. Mexico has been a very aggressive buyer of U.S. corn here, at what they perceive to be the harvest lows,” Suderman said.

Outlook for Livestock and Dairy

The October Monthly Monitor asked economists to list the factors that could impact livestock and dairy prices over the next six months. Economists said:

Herd size and tight cattle supplies
Outcome of the election
Health of general economy in the U.S. and consumer demand changes
Disease issues (H5N1, etc.)
Developments in China and other major importers
Consumer demand given high meat and dairy prices
Weather in the Corn Belt and Great Plains

When Will Beef Producers Start to Rebuild Their Herds?

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

The October survey also asked economists when they think producers will start to rebuild their cow herds:

50 percent said in the first half of 2026
30 percent think it’ll happen the second half of 2025
20 percent said in the first half of next year.

“We’ve seen a slowdown of cow slaughter. That’s step one, but that’s not rebuilding,” said Suderman. “It really comes down to when do we turn this weather pattern around and start getting the pasture, the feed necessary in the West in order to incentivize rebuilding the cowherd? That is the problem right now.”

Other than weather, what else is preventing producers from starting to rebuild? Economists say it’s the average age of producers, replacement costs and heifer prices.

“I also think there is this economic pull on producers of ‘how can I justify retaining these heifers when they’re bringing the prices that they are?’” said Brown.

The Inflation Factor

When you look at what could impact both livestock and row crop producers over the next six months, a major wild card is interest rates. The October survey asked economists how much farm interest rates need to fall to find economic stability for farmers, and 46% said 2%.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

But even with the Fed cutting the benchmark interest rate last month, interest rates have actually gone up, not down.

“The two-year break-even inflation rate is what the market trades. It’s expectations of what inflation’s going to average over the next two years. And over the last six weeks or so, we have seen it jump a full percentage point. That is a significant short-term jump, saying that reinflation fears are coming back in a hurry,” Suderman said.

Suderman points out the Fed can influence mid- and longer-term rates, but the agency can’t control them. And it’s concerns about inflation that are pushing those rates back up again.

“That could all change over the next couple of weeks, or it could be reinvigorated. I think longer term, what I’m looking for is a return to the interest rates that we saw in the ‘90s and early 2000. But I think there’s going to be a lot of volatility in getting there,” Suderman said.

Election Impact on Ag

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

Ahead of the election, the Monthly Monitor asked economists which presidential candidate will be more effective at taming inflation. Fifty-three percent said Donald Trump.

When it comes to providing more certainty on farm policy and crop insurance, 61 percent of economists said Trump will provide more certainty.

However, when looking at policies that benefit biofuels, 53 percent of economists said Kamala Harris.

Today, there is no clarity on 45Z that’s causing soybean processors like Cargill and Bunge to possibly slow or even idle production by the end of the year.

“We have industry looking to shut down production of biofuel. If we don’t get the 45Z requirements here released soon, and that doesn’t look likely, unfortunately, that’s going to hurt demand for soybean crushing for soybeans per se,” Suderman said.

“The fact that we don’t have those today, I think, is impeding investment in the sector. And people are asking for that before they spend millions of dollars to do that. And I think that has been a hiccup,” said Brown.

Role of the Federal Government

Heading into a crucial election with not just the presidential race, but also the House and Senate, the October Ag Economists’ Monthly Monitor asked, “What is the most important role of the federal government?”

Forty-six percent of economists ranked financial aid as the top priority. Nearly 43 percent said it’s passing a farm bill.

October Ag Economists’ Monthly Monitor

(Lindsey Pound)

Farm Bill Ag Economists’ Monthly Monitor

(Lindsey Pound )

Conclusion

The October Monthly Monitor reflects cautious optimism in certain areas of agriculture, marked by export strengths and potential price recoveries. But the optimism is shadowed by long-term rebuilding challenges, weather dependencies and the impact of the upcoming election.

A New Era: The Ag Equipment Industry's Sugar High Is Over

Thu, 31 Oct 2024 18:36:04 GMT

One of my first story assignments as an agricultural journalist was covering a liquidation auction of repossessed farm machinery in Columbia, Missouri.

It was late summer 1985, and the 1980s farm crisis was at its zenith. I can still envision the endless row of used corn heads across the length of the fairgrounds. In total, 174 pieces of agricultural equipment hit the auction block that day.

This was certainly not the “feel-good” story I had envisioned to start my journalistic journey in the field of agriculture, but I learned about our industry’s fragility.

Fast forward to today, and I’m reading a story by Bloomberg news that proclaimed used equipment, not new technology, was this year’s star of the Farm Progress Show. The article highlighted that BigIron Auctions, a provider of used farm machinery and one of the show’s exhibitors, had its biggest-ever offering. Although this may be good news for the auction company, it is likely a prophecy of bad news to come for the rest of the industry.

You may ask, how bad? When agricultural equipment manufacturers start shedding union line workers, shuttering plants and shifting factories to Mexico, and there’s a glut of used equipment covering dealer lots, you know the tide is quickly turning.

What Goes Up Comes Down
Many of us have observed farm economic cycles. This time, despite the sharp rise in input costs, commodity prices more than kept pace, and ultimately, net farm income tallied $182 billion in 2022. Those good times are in the rearview mirror, though. For 2024, projected net farm income drops to $140 billion.

Not surprisingly, farmers bought fresh paint during the boom period. U.S. farm equipment manufacturers and machinery dealers recorded some of their best sales in more than a decade in 2021, and strong sales continued through most of 2023. Although sales of new small- and medium-sized tractors peaked in 2021, sales of bigger horsepower tractors and combines held their own—until early this year.

The Party’s Over
This most recent sugar high for the ag equipment industry was foiled by high inflation, high interest rates and falling crop prices. New machinery prices ramped up 30% on average in the past four years. In 2020, the average price of a new tractor was $363,000. In 2023, it skyrocketed to $491,800.

Since March 2022, the Federal Reserve has raised the interest rate 11 times to curb inflation. So not only does that fresh paint cost at least 30% more, but also the money borrowed to purchase capital items is 161% higher. Now with commodity prices falling faster than either interest rates or equipment prices, this boom time hayride is over.

The Fallout
The Association of Equipment Manufacturers says June 2024 sales of new two-wheel drive tractors were down 16.3% versus 2023. Combine sales were down 31%.

Farm Journal’s machinery analyst Greg Peterson, who leads the popular online platform Machinery Pete, says BigIron Auctions’ expanded presence at Farm Progress is a sign dealers are trying to get ahead of the train. He notes the night-and-day difference in the OEM-dealer response to this downturn compared to the previous one in 2014 to 2015. This time around, dealers have been aggressively paring down large late-model used inventory. In the first eight months of 2024, the market saw a 450% increase in the raw number of one- to two-year-old equipment units taken to auction compared with ’14 and ’15.

Peterson projects used equipment values will continue to deteriorate in the short term. However, the change in those values may not rival the percentage drops seen in the previous down market. Why? Online bidding.

It is a market force that was in its infancy a decade ago. Machinery auctions used to be a local affair. Now, they are regionalized, perhaps nationalized. Even 65-year-old-plus farmers are bidding on tractors being sold eight states away.

Despite the unprecedented number of large late-model used equipment transactions, Peterson points to a potential silver lining in seeing such a quick spike. The sooner the glut of inventory turns, the sooner the equipment industry will return to brighter times. How quickly this happens is going to depend on a lot of things, so it may be prudent to nudge the market in the right direction.

Craving Certainty
With the politics of this election behind us, there’s a lot that could be done to give the marketplace more certainty. I made a “to-do list” for our newly elected officials to follow to address this issue.

Pass a new farm bill. This is the roadmap for everything from conservation programs to public food policy. Get it done!
Make the expanded Section 179 and bonus depreciation incentives permanent. Incentives from the Tax Cuts and Jobs Act of 2017 are winding down or expiring. U.S. ag manufacturers don’t need less incentive for customers to buy.
Pause new EPA and climate change regulations. Saddling manufacturers with more regulations in a crisis is simply not smart.
Do not raise corporate or personal tax rates. Raising taxes domestically only gives U.S. manufacturers another reason to relocate more factories and jobs out of this country. Maybe it’s time Washington, D.C., starts viewing U.S. agricultural manufacturing to be as important as producing semiconductor chips domestically. If semiconductor chip production is that critical to our national security, then I would argue food security ranks right up there.

According to market analysts, we will be at the bottom of this rollercoaster ride for the next year or so. The good news is that long-term, all signs point to a very healthy recovery of agricultural manufacturing by the end of the decade. As robotics, AI and information systems become increasingly integrated, the U.S. ag machinery sector is poised to grow from $39.56 billion this year to $53.7 billion in 2029.

Of course, hitting such numbers depends on how rough the road is financially between now and then. All I know is we do not need history repeating itself. The last thing I want is to have one of the last stories of my journalistic career mimic the heartbreaking one I started with nearly 40 years ago.

2024 Could Go Down as the Worst Financial Year for Farmers Since 2007

Mon, 21 Oct 2024 13:44:45 GMT

Farmers are seeing heightened volatility in commodity prices as harvest season progresses. The lates t Ag Economists’ Monthly Monitor from Farm Journal showed a slight rise in optimism compared to the previous month, but economists remain worried about the current state of the agricultural economy when compared to last year.

“The margins that farmers are facing on average are really a tough place to be in for 2022 to 2024,” says Krista Swanson, lead economist for the National Corn Growers Association (NCGA). “According to USDA, the cost to produce corn dropped 5%, but the price was down 37%. And when we look at those average numbers from USDA, looking at cost of production for corn prices and yield, that comes out to average losses of $125 per acre.”

Revised Projections on Net Farm Income for 2024

USDA’s revised Net Farm Income projections were released in early September, and the updated figures were surprising to many economists. The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is down about 7% from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year which suggested net farm income would fall 26%.

The latest Ag Economists’ Monthly Monitor survey, which is an anonymous survey of nearly 70 economists, asked those economists, “What was the most interesting thing you noticed in USDA’s September Farm Income update?” Economists weren’t surprised the livestock picture improved from the February report, but they pointed out the following:

“Increase in farm asset value and equity.”
“The ‘dog that didn’t bark.’ Many people expected a more dire picture in 2024, but the drop in crop prices was only a little more severe than earlier expected, and the necessary downward correction in estimates of 2024 feed costs (the earlier estimate was unreasonably high, given what was known about feed prices at the time) helped moderate overall 2024 costs. There were also adjustments upward in receipts for crops other than grains and oilseeds that boosted the receipt and income figures.”
“The simultaneous downward revision in the net farm income estimate for 2023 paired with the upward net farm income forecast for 2024, causing the year-over-year 2023-2024 decline to shrink substantially.”

Input Costs and Breakeven Challenges for Farmers

One issue in the row crop sector is the fact input costs are still a weight on balance sheets. Michael Langemeier, Purdue University agricultural economist, said that means the breakeven price for farmers is higher than the price of corn today.

“Even with the really strong yields we’re looking at this year, we’re looking at a breakeven price of $4.70. It’s that combination of a drop in prices and the fact that input costs are relatively high, that I think is just explaining why sentiment is so low.”

Michael Langemeier, Purdue University

Farmers are looking at ways to cut costs even more for the 2025 growing season. The September Ag Economists’ Monthly Monitor asked if farmers will cut back on fall fertilizer. Seventy percent of them said “yes.”

“I think a lot of farmers have already made some trims to fertilizer, where they probably can for the ’24 year. And so you run up on this situation where a lot of times fertility in the soil is supported well enough that if you’re in a high-cost year, you can trim back some and still have good yields. But you only do that for so long,” Swanson says. “That also may cause some farmers to shift to soybeans.”

The Septemeber Ag Economists’ Monthly Monitor asked if economists will cut back on fall fertilizer applications.

(Lindsey Pound/Farm Journal)

Potential Recession in the Agricultural Sector

The survey also asked if agriculture is on the brink of a recession. Seventy-five percent said yes, which is up from the 56% who responded that way in the previous month’s survey. However, 54% of economists argue agriculture is already in a recession, with some economists pointing to only the crop sector seeing recession concerns.

“I think yes, and it depends on how you define a recession. I define a recession as this is one of the worst years we’ve seen in the last 20. So my short answer to the question is yes. Just looking at where the price is currently at, this is about the worst year since 2007, which was the start of the ethanol boom.”

Michael Langemeier, Purdue University

When asked if the economy was on the brink of a recession, 25% of economists responded with “no.” It’s clear not all economists are in agreement, but when asked to expand on why, economists said:

“Financial health is weaker but still pretty strong.”
“For select crops and regions of the country farmers are facing significant financial pressure.”
“The cost-price squeeze facing the crop sector is severe and will have larger implications if it persists. Many crop producers were profitable in 2021 and especially 2022, so they had some ability to absorb a more challenging environment over the last two years. But that ability is running out, especially for producers who rent much of the land they operate or who are heavily indebted.”
“Over-production globally and exports are soft, while biofuel policy does not support consumption of surplus.”
“The farm structures across all farms does not suggest a recession. A higher portion of farms have off-farm income to support cyclical changes. Most farms have healthy balance sheets (thanks to increased land values), and there are positive returns in certain sectors of the industry supporting those that are diversified. Areas of the ag economy that will struggle are those that are highly or fully concentrated in row crops, are full-time commercial operations between 1,000 and 2,000 acres, and have a high proportion of cash-rented acres.”
“Highly-leveraged producers are feeling economic pain already. If supplies continue to remain large, lower prices may last for a longer period of time and could result in highly-leveraged producers leaving the industry.”
“The livestock sector, specifically cattle and dairy, is performing well relative to hogs and the crop sector.”

September Ag Economists’ Monthly Monitor

(Lindsey Pound/Farm Journal)

The economists were even more divided when it came to answering whether the ag economy is already in a recession. Economists said:

“The challenges faced by the crop sector are at least partially offset by a more positive story for cattle producers, in particular. For other animal sector producers, the drop in feed costs has made 2024 a little better than 2023.”
“Farmers are already feeling the pinch, and they are looking for ways to slash expenses.”
“Lenders in our state are very concerned about the outcomes for this year and the outlook for next year.”

Livestock and Dairy Prices Outlook for the Next Six Months

Cattle and dairy prices are stronger than crops. The survey asked economists, “What factor(s) are you watching that you expect will impact livestock and dairy prices in the next six months?” Economists said:

The outcome of the 2024 election
Drought
Health of the ag economy
Meat demand at restaurants
Feed costs
High beef prices and the impact on beef and pork demand

Key Factors Affecting Crop Prices

The survey then asked economists to list the factors they’re watching that could impact crop prices over the next six months. Economists responded by saying:

Final 2024 U.S. crop production numbers
South American weather
Fall planting in South America (timing and acreage)
China’s economy/geopolitical tensions
Policy changes after the election (tariffs, impact on trade and biofuel policies)

Discovering New Corn Demand

Low prices cure low prices, and that’s the case for corn. The corn demand has picked up pace due to the U.S. price being more attractive than Brazil’s. Swanson says in order for prices to see a bigger boost, the U.S. will need to find new demand.

“I think when we talk about an immediate help, or immediate action, it’s definitely higher blends of ethanol,” Swanson says. “We are getting outrun by other nations in this. We just saw last week Brazil pass a new piece of legislation that allowed for higher blends there. They already have higher blends than us. And again, other nations are using higher blends than we are.”

Tariffs and Trade: A Continued Debate

The September Ag Economists Monthly Monitor, a Farm Journal survey of nearly 70 ag economists, revealed a mixed view of the presidential candidates’ impact on trade.

(Lindsey Pound)

Another area is exploring new export demand. Ag economists pointed out the outcome of the election could impact both crop and livestock prices. The September Monthly Monitor asked economists if the two presidential candidates would help or hurt trade.

55% said a Harris administration would hurt trade.
86% percent of economists said a Trump administration would hurt U.S. trade.

“Farmers are definitely concerned about trade,” says Langemeir, who helps author the Purdue University/CME Group Ag Economy Barometer and is one of the economists surveyed by Farm Journal each month. “We don’t ask specific questions related to tariffs in the Ag Economy Barometer, but one question we do ask is if they expect exports to increase, decrease or stay the same? Really, this is the most pessimistic they’ve been for about five years with regard to trade.”

Tariffs are a tool both the former Trump administration and the current Biden/Harris administration have used.

During the first presidential debate, Trump didn’t waver from his staunch stance on tariffs and trade, reiterating his plan to use tariffs to protect U.S. industries and increase revenues. Trump reinforced his plan to impose a 10% tariff on all imported goods and a 60% tariff on goods from China.

During the debate, Harris stated tariffs are essentially a “sales tax” on American households. The Biden/Harris administration recently extended the Trump-era tariffs, while also imposing its own set of tariffs in May. Biden directed the U.S. Trade Representative to “increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses.”

“That’s why I get really worried when both candidates start talking about tariffs. It’s really uncharted waters, if you will. There’s already the perception we’re struggling a little bit with trade. As we enter these uncertain waters, we’re going to struggle more,” Langemeier explained.

Do Tariffs Work?

The controversy over tariffs and whether they’re a good trade policy tool is long-standing. The September Ag Economists’ Monthly Monitor asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade-flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long-term.”
“Absolutely, when properly applied.”
“Not over the long-term. They tend to affect who gets to supply different markets around the world.”

The September Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is ‘it depends.’ Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to a trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.

Conclusion: A Complex Road Ahead for U.S. Agriculture

As U.S. agriculture faces multiple challenges, from high input costs to volatile prices and geopolitical concerns, farmers are forced to find new ways to adapt. Economists emphasize the need for new demand sources, particularly in exports, to help stabilize prices and support the sector moving forward. With the outcome of the 2024 election and global market dynamics set to play pivotal roles, the agricultural sector will need to remain flexible to navigate these uncertain times.

Your Next Read: Presidential Poll Results: How Farmers and Economists View Candidates’ Impact on Agriculture

Government Price Controls Didn't Work The First Time, And They Won't Now Either

Fri, 20 Sep 2024 19:37:09 GMT

Do you ever get the feeling that you may be living in a time warp? I mean, doesn’t it seem just a little weird that bell-bottom pants and Marcia Brady hairstyles are the latest rage? I don’t know about you, but one trip through the 1970s was good enough for me.

Unfortunately, bad fashion sense and bad hairdos are not the only bad idea that has been resurrected from this tumultuous decade. Recently, the idea of reviving government price controls on food and other consumer staples has been injected into the public forum.

Why Now?
It’s an election year, and a presidential election year at that. We all know politicians will say almost anything if it will mean just one more vote come election day.

On Friday, August 16, Democratic presidential candidate Kamala Harris floated a public policy that hasn’t been tried since the Nixon administration. To address rising food prices, Harris proposed a federal ban on price gouging, focusing on “excessive” and “unfair” mergers and acquisitions that give big food companies the power to “jack up” food and grocery prices.

There is a reason that such a heavy-hand tampering by the government in the supply and demand workings of the marketplace was banished from the political landscape as we know it. Former president Richard Nixon tried it, and it failed miserably! It would have been prudent for Vice President Harris to have brushed up on her history before rolling out this bad batch of political candy to lure the last group of undecided voters.

The twist of historical irony is that Nixon rolled out his first series of economic control measures, including wage and price freezes, almost 53 years to the day that Harris publicly floated her ideas. On August 15, 1971, in a nationally televised address, Nixon announced, “I am today ordering a freeze on all prices and wages throughout the United States.”

After a 90-day freeze, increases would have to be approved by a pay board and a price commission, with an eye toward eventually lifting controls — conveniently, after the 1972 election. Unfortunately the American people would pay the price — but not until after Nixon coasted to a landslide re-election in 1972 over Democratic Senator George McGovern.

Not Then, Not Now
By the time Nixon reimposed a temporary freeze in June 1973, Daniel Yergin and Joseph Stanislaw explain in “The Commanding Heights: Battle for the World Economy,” it was obvious price controls didn’t work: “Ranchers stopped shipping their cattle to market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets.”

When price controls were implemented in 1971, inflation stood at 5.8%. By the summer of 1975 it had ballooned to 8.7%. For the rest of the decade, inflation totally derailed the U.S. economy. The real pain came with what it took to ultimately slow that train. The Federal Reserve took the Fed Funds rate from a low of 3.75% in 1971 to an astronomical 19.29% in 1981.

For U.S. agriculture, these were the worst of times. As interest rates rose and land and commodity prices bottomed, U.S. agriculture endured one of the darkest periods in modern history. The final governmental gut punch came in 1979 with President Jimmy Carter imposing a grain embargo on the Soviet Union, resulting in a 20% decline in agricultural exports.

Farmers saw the rally cry to “plant fencerow to fencerow” and “feed the world” turn into prayers so that they could feed their family. Bankruptcies and suicides became all too common as the fabric of rural America ripped apart. Government had failed them, and their best hope was that Willie Nelson would show up to do another Farm Aid concert in their back 40.

With farm income expected to record its largest year-to-year dollar drop in history, now is not the time to roll out love me ’til election day economic proposals. Still reeling from supply chain chaos caused by the Covid-19 pandemic, U.S. agriculture is in a weakened state.

The Real Drivers
It is important that all links of the U.S. food supply chain remain strong. With average profits of less than 3% for farms and only 1.6% for grocery stores, one has to wonder who the government is going to have to squeeze if price controls were implemented. Vice President Harris specifically pointed her finger at large corporate food processing companies and suppliers.

Although the Harris proposal was light on specifics, it marshals the Federal Trade Commission and state attorney generals with new authority to “impose strict new penalties” on companies that price gouge. She also said her administration would address “unfair mergers and acquisitions” that contribute to higher priced food and groceries.

One would hope if these government agencies were currently doing their day job, then the above mentioned issues should not be a problem in the first place. We don’t need a governmental “grocery czar” telling us what a box of Cheerios should or shouldn’t cost.

Our government needs to look in the mirror to see the key factors that have really driven up grocery prices. Energy costs and interest rates are two of the biggest. Both have a huge impact on food production costs and the price paid at the grocery store. Over the past four years, the consumer price index for energy has risen 32%. In that same time, the prime interest rate has gone from 3.25% to 8.50%.

Even Captain Obvious could connect the economic dots from the current administration’s policies and legislative actions to the reality that is happening to consumers at the checkout line. On day one in office, President Biden canceled the Keystone XL pipeline, and he and Harris have continued for the past three-and-a-half years to throttle the traditional fossil fuel industry at every turn. Meanwhile, the Congressional Budget Office projects that under Biden’s four-year term $7.902 trillion will have been added to our overall national debt. Such actions and polices have been a lead foot on the gas pedal that is driving inflation.

It’s That Bad
So, before we grant our government Wizard of Oz powers over the nation’s food supply chain, it might behoove Vice President Harris and her economic advisers to address the root cause of inflation. Instead of trying to fix it artificially through failed policies of the past and election year pandering, they should address the real issues behind high food prices and inflation as a whole. When friendly press allies such as the New York Times, Washington Post and CNN all shot the Harris plan down from the moment it left her lips — you know it’s bad. The Washington Post called it a “populist gimmick”, and personal finance guru Dave Ramsey said, “It’s not sustainable because it’s artificial.”

Let us hope and pray that such policies will forever remain as a footnote in our history books and not become part of our future economic reality. Whenever I hear something like this I’m always reminded of what Ronald Reagan considered the nine most terrifying words of the English language, “I’m from the government, and I’m here to help!”