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Marion County farmers hopeful over trade deal

President Trump signed the first stage of a proposed trade agreement between the U.S. and China on Wednesday that would impact farmers in Northeast Missouri and across the nation.
COURIER-POST FILE
By Hannibal Courier-Post
Posted: Jan. 17, 2020 10:27 am

PALMYRA, Mo. | President Trump's signature on Wednesday set into motion a new trade agreement between the U.S. and China, lifting tensions from a trade war that sparked additional tariffs on both sides and drastically affected the agricultural market over the past year.

Trump's signature to the first phase of the agreement caused markets to react “a little bit,” Marion County Farm Bureau President and Palmyra farmer Joe Kendrick said, stressing that months of promising news has caused the markets to respond more cautiously than they did in the past. With the United States-Canada/Mexico Agreement set for a potential vote in the Senate on Thursday, the international trade market could help turn the situation around for farmers recovering from a year fraught with challenges.

In Northeast Missouri and across the country this year, farmers dealt with historic flooding, droughts and trade uncertainty in 2019 — farm bankruptcies were 24 percent higher across the nation, with farm debt projected to reach a record high, according to reports from the U.S. Farm Bureau. Wednesday's news brought encouragement that China — one of the largest importers of U.S. agricultural goods in the world — would resume purchasing American grain, beef and other agricultural goods.

Wednesday's agreement called for China to purchase $40 billion in U.S. agricultural exports over the next two years. The U.S. Treasury removed China from its list of currency manipulators on Monday, and Washington cut a 15% tariff in half for $120 billion worth of Chinese goods.

Kendrick said while corn and soybeans have seen relatively small gains in the market so far, wheat prices have reflected a significant uptick. Kendrick said there's a strong worldwide demand for wheat, and U.S. farmers have been lowering their plantings to adjust the balance of supply and demand. The demand for U.S. wheat has increased because several countries that produce wheat ended up with failure crops in 2019.

“The U.S. wheat market could be a big gainer,” Kendrick said. “They may fare better out of the whole deal than anybody or some of the others because of China's demand for some wheat.”

The beef market is showing improvement, too. Kendrick said some of that growth could be driven by China's purchases, and fat cattle and feeder calf numbers are up after a lull in their populations. Missouri Farm Bureau President Blake Hurst expressed optimism about the first phase of trade deals with China — stressing that the deal could benefit farmers in the area and across the Show-Me State.

“Today's signing of the Phase One Deal is a welcome step forward in what has become a long road to securing a trade deal with China,” said Missouri Farm Bureau President Blake Hurst. “We are optimistic that this preliminary agreement is the first of many steps to come. Missouri Farm Bureau looks forward to working with our partners to ensure our trade agreements are strong, enforceable and beneficial for American agriculture.”

Senate members scheduled the USMCA for a Thursday vote after it passed the House of Representatives in December. The plan includes modifications to 1994's North American Free Trade Agreement that would specifically help dairy farmers — opening the Canadian market to U.S. dairy, poultry and eggs, while the U.S. will purchase more Canadian dairy and peanut products along with a limited amount of sugar. Canada and Mexico are the two biggest export markets for the U.S. agriculture industry.

Kendrick said a clear picture of 2019 wasn't yet available, and United States Department of Agriculture's December report wasn't as positive as some farmers had hoped. Farmers in Northeast Missouri ended up with an average harvest, but their colleagues in other parts of the state harvested lower-quality corn due to weather conditions delaying planting.

“As it turned out, we're going to have to wait until next month to maybe get a better idea and a final number on what 2019 turned out to be,” Kendrick said. “But all in all, I think things are still pretty positive. We're starting to look at this next spring's input, and things seem to be somewhat stable on that side of things.”

Kendrick said fertilizer prices could rise if the winter brings an increase in propane and petroleum usage. Kendrick looked forward to seeing what impact the first phase of the China trade deal and the forthcoming USMCA would have for area farmers, but he stressed markets are reacting more cautiously in the wake of months of uncertainty.

“From my perspective, they cried wolf so many times that they're just sitting back and saying 'ok, do what you say you're going to do, and we'll react to it,'” Kendrick said.

 

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