U.S. farmers in dire straits

Soybean farmer Austin Rincker poses for a photograph near a grain truck and storage bins on his farm near Moweaqua, Illinois, earlier this month. Rincker will farm approximately 2500 acres in the upcoming season, split evenly between corn and soybeans. Young farmers in the United States are feeling the financial pinch of years of low commodity prices.  |  REUTERS/Daniel Acker photo

ORLANDO, Fla. — Young farmers in the United States are feeling the financial pinch of years of low commodity prices.

That was one of the themes that emerged at the 2019 Commodity Classic as various farm leaders spoke to delegates and reporters attending the event.

Daniel Atkisson, chair of the National Sorghum Producers, was by far the youngest leader of the four major commodity groups hosting the event.

He was asked by general session moderator Mark Mayfield how bad things have gotten at the individual farm level.

“As a young producer it’s maybe even more dire than some of my colleagues,” said Atkisson.

“We always hear in the ag media that producers are burning through equity and young producers haven’t had a chance to build that equity.”

Jimmy Musick, past-president of the National Association of Wheat Growers, who was one of the oldest farm leaders at the event, expressed concern about the financial state of the up-and-coming farmers.

“We’re going to lose some farmers,” he told reporters.

“The worst part of that whole scenario is we’re liable to lose some of our next generation and we don’t want to do that, we absolutely do not.”

U.S. Agriculture Secretary Sonny Perdue said a lot of young people got into agriculture during the boom period of 2008-13 and borrowed money to expand. Then prices turned down and haven’t recovered and that has put them in a financial pinch.

“They’re in peril,” he told reporters after his speech to Commodity Classic delegates.

“There are no easy answers.”

Working capital has been eroded. Fortunately, land prices are holding up, which is keeping their debt-to-asset ratios favourable.

Perdue said their fathers and grandfathers have gone through similar times and survived.

“If they can financially, physically and emotionally hang on then I’m bullish on agriculture,” he said.

Last year was particularly tough on American sorghum and soybean growers, who both lost access to their top market due to a trade spat with China.

Even before the trade war erupted, China launched anti-dumping and countervailing duty investigations of U.S. sorghum that resulted in import duties of 179 percent on the commodity in April 2018.

Those duties were soon rescinded but by June China implemented a 25 percent retaliatory duty that is still in place. A market that typically purchased about $1.2 billion of U.S. sorghum a year stopped buying the product.

“2018 is going to be a year that sorghum producers won’t forget for some time to come,” said Atkisson.

John Heisdorffer, chair of the American Soybean Association, said soybean growers are also feeling the pain of the 25 percent tariff with ending stocks set to shatter the previous record. But he remains optimistic.

“We’ll get through this. It’s tough. If the tariffs were rescinded it would help,” he said.

He was asked if soybean farmers are reaching a breaking point.

Heisdorffer said he wouldn’t call it a breaking point but it reminds him of the 1980s when farmers told their sons and daughters when they went off to university not to bother coming back home because there was no future in farming.

“We could get close to that this year,” he said.

China has been buying some soybeans in recent weeks as a goodwill gesture for trade talks.

A sale of 2.6 million bushels of U.S. sorghum to China was also reported in the USDA’s Feb. 28 to March 7 weekly export sales report, the first sale in a year.

“This vessel purchase is great news for U.S. sorghum and we are thrilled to see it on the books going into the 2019 planting season as hopefully a first of many,” Atkisson said in a recent news release.

There has been help for farmers in the form of a US$12 billion trade mitigation program, the lion’s share of which went to soybean growers.

U.S. Congress also passed a new 2018 farm bill during the same year the old one expired, which is a rarity.

Implementing the farm bill as soon as possible is now the top priority of U.S. soybean, wheat and sorghum growers.

Farm groups are generally pleased with the farm bill. They said there is more flexibility in the Title 1 portion of the bill, which administers commodity support programs. A robust crop insurance program is also enshrined in the new bill.

The National Corn Growers Association was also pleased with the Environmental Protection Agency’s release of a proposed new rule for year-round sales of E15 ethanol. It hopes it will be in place by June 1.

“Allowing year-round sales of higher blends of ethanol not only grows a domestic market for farmers but E15 gives consumers more choice at the pump, a lower price option and greater environmental benefits from a cleaner fuel,” NCGA president Lynn Chrisp said in a news release.

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