The American agricultural sector is facing difficult times and the situation will not change any time soon, says Roger Johnson, president of the U.S. National Farmers Union.
“It’s as tough as it’s been for some folks since the ’80s. Now I’m not saying it’s the same as the ’80s, there are lots of things that are different. But we have net farm income that’s half of what it was five years ago, six years ago now,” Johnson said to members of North American Agricultural Journalists during its annual meeting in Washington, D.C.
“Prices are largely in the cellar, stocks are at very high levels, in some cases record levels and the likelihood of seeing prices recover is not very high.”
He said agriculture is one of the few sectors that has a trading surplus with most trading partners, and so when there is a trading disruption, agriculture is often hurt first and for the longest.
“I think folks are really naive if they believe that we are going to get an agreement now with China and we’re going to be back to the way things were. Fundamental trading relationships around the world have changed in a very dramatic way,” Johnson said.
He said U.S. President Donald Trump’s negotiating style could have long-term negative consequences for U.S. agriculture.
“You cannot expect that countries are going to forget, when the president of our country spends enormous amounts of time offending leaders of other countries all around the world. This isn’t just about China, it’s all over the place. Those actions I believe are going to have long-term repercussions,” Johnson said.
He said the overproduction problem is not going away any time soon and government programs to encourage farmers to reduce production are needed.
“Because there is no signal that a farmer receives that tells him to reduce production,” Johnson said.
“It doesn’t take much overproduction to really knock markets very low, and it doesn’t take much of a shortage to boost prices very high. But the farmers’ response in both cases is the same. If the price is too low, I’m going to produce more, it’s the only way I have to try and get more income. If the price is high I’m going to take advantage of the high market prices.”
He said the idea that if a grower thinks prices for a particular commodity will be low and they will react and grow something else presumes growers can produce something else that will make them more money.
“The fact of the matter is we all know in agriculture, when the price of wheat goes down, the price of corn goes down, and all of the commodities tend to follow in sympathy. That is just the way it has always been because farmers make adjustments very quickly.”