Report: Trade War Taking a Toll on Ag Economy

Despite the strongest global economic growth since 2011, uncertainty around trade is presenting escalating concern to U.S. agriculture, as new tariffs from China and Mexico targeting agricultural products dampen the ag economy’s outlook, according to a new report by CoBank.

Seventy percent of U.S. agriculture exports are to destinations that are in current negotiation or trade disputes, according to the most recent Rural Economic Review from CoBank’s Knowledge Exchange Division.

The shift from trade war rhetoric to reality tempers the optimism felt in the first quarter. Aside from potentially losing market share in emerging markets, the U.S. may face shake-ups in historical supply chain commitments, as competitors seek new trade relationships amid current trade disputes.

“Trade concerns pose the single greatest risk to the projected global economic growth of three to four percent,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange Division. “The U.S. and China have been driving the growth, benefitting emerging markets around the globe. A trade war between the two is dangerous for economies around the world.”

Key Findings
New tariffs from China and Mexico targeting agricultural products dampen the ag economy’s outlook. In mid June, China announced 25 percent tariffs on $50 billion of U.S. goods, including soybeans. Those tariffs are slated to take effect July 6 and may severely impact prices. Other specialty crops like tree nuts and grapes may also face lost market share in valuable growth markets from escalating trade disputes.

Animal-based protein production is rising to record levels, requiring robust exports to prevent domestic markets from being overwhelmed. “This makes trade talks impacting export demand a central focus for the industry,” added Ehmke. “Pork producers may be the most worried, as exports account for 25 percent of U.S. pork production.”

The dairy industry is beginning to see a few rays of hope as prices slowly climb and exports hit an all-time high of 18.8 percent of U.S. production in April. However, in retaliation for newly imposed U.S. steel tariffs, tariffs from Mexico on virtually all types of U.S. cheese are scheduled to ramp up to 20 to 25 percent on July 5.

Last year, Mexico imported 212 million pounds of cheese from the U.S., about 30 percent of U.S. exports. Further, the new trade deal between the EU and Mexico will change Mexican regulations on products labeled with protected names like asiago, parmesan and feta in order to comply with EU rules.

Drought conditions have expanded across the Southwest and more than half of California is now in moderate to severe drought. In addition, nationally, cost per unit of water has tripled since 1990, outpacing other consumer goods. A $106 billion authorization for rural drinking water and sewer infrastructure programs was approved by Congress this spring to address water affordability issues in low-income households.

“Overall current market conditions including rising interest rates, high fuel costs, relatively high land rental rates and little price relief from other inputs point to a decline in net farm cash income in 2018, continuing the trend from the past few years” said Ehmke. “This indicates the potential for increased debt load as the Federal Reserve considers three more interest rate hikes.”

Source: CoBank

Topics: ,

Leave a Reply

Americas

Americas

CropLife America Names Corteva’s Wasson as Chair

Wasson will hold the position for two years and use her diverse background to help guide the association, working with newly hired President and CEO Chris Novak.

Agrichemicals

What to Do If You Have Products Subject to New U.S. Tariffs

The new retaliation lists hit almost every product that the Chinese import from the U.S.

Americas

Trump Tariffs on Chinese Imports to Begin Sept. 24

Starting Jan. 1, 2019, the level of the additional tariffs will increase to 25 percent.

Americas

DowDuPont Announces Corteva Agriscience Leadership

James C. Collins, Jr., currently chief operating officer of the Agriculture Division, will be chief executive officer of Corteva Agriscience.

Americas

Word-of-Mouth Farmer-Dealer Networks Shake Up Distribution

Now the concept’s going global as mom-and-pop dealerships sign on in a bid to boost cash flow.

Agrichemicals

How Higher Tier Testing Would Answer the Neonicotinoid Question

Fera Science has built Europe’s largest free flow mesocosm to test the impact crop protection chemicals like pesticides and biocides have on aquatic ecosystems.

Agrichemicals

Glyphosate Still Under Threat in Brazil – Report

Brazil's farmers will face higher costs if they are forced to procure substitute herbicides.

Agrichemicals

With California Glyphosate Verdict, Full-Blown Chemical Warfare Has Started

God, I sometimes hate being right. Frequent readers of this column might remember that not too many months back I predicted that, since things seemed to be going pretty good for crop protection products in terms of sales, market opponents would begin redoubling their efforts to “take down” this segment in any way possible.

Americas

Labor Shortages Challenging U.S. Ag – Study

The scarcity of farm labor is also exacerbated by the shrinking number of migrant workers from Mexico.

Americas

BASF Launches Credenz with LibertyLink GT27

It allows growers to apply both Liberty herbicide and glyphosate over the top of soybeans for post-emergence control of broadleaf and grass weeds.

Agrichemicals

The Verdict on Dicamba in the U.S., Year Two

Was year two of the new dicamba technologies in the United States a success?

Agrichemicals

Atticus Adds Depth with New Staff Members

Atticus welcomes six new members to its growing team of talent.

Chilean-Farmland
Americas

Chile Fast Becoming an Export Destination for Agrichemicals

That the global crop protection market did indeed turn a corner in 2017 is now confirmed as data from the

Bayer-La-Hornilla-63
Americas

Top 3 Ag Tech Opportunities in Chile

Although companies often have diverse attitudes to various parts of the ag industry, everyone who sat down with AgriBusiness Global

La-Hornilla-Gesex-32-1
Americas

Seeking Stability in South American Agriculture

There are a few different philosophies when it comes to making business expansion decisions. Some entrepreneurs seek to sniff out

Bayer-Forward-Farming-La-Hornilla
Americas

ForwardFarming: Demonstrating Sustainable Agriculture in Chile (Slideshow)

The farms involved in Bayer ForwardFarming – the Bayer ForwardFarms – make use of three basic components: Customized Agricultural Solutions

Americas

Actagro Expands Product Portfolio in South America with Anagra Agreement

Actagro LLC and Anagra, a Mitsui majority owned company, have signed a distribution and development agreement to promote and expand

Agrichemicals

The Verdict on Dicamba (So Far) in 2018

Does 605 official dicamba-related injury investigations and/or approximately 1.1 million acres of dicamba-injured soybean constitute a problem for U.S. agriculture?

Agrichemicals

Platform Confirms Arysta Sale to UPL, to Change Name

Platform has signed a definitive agreement to sell Arysta LifeScience Inc. to UPL Corporation Ltd. for $4.2 billion in cash, subject to customary closing adjustments Closing

Latest News

Markets

Trump Trade War Divides Farming World as China Demand Shifts

Soybeans have become something of a poster child for the U.S.-China trade war, with everyone from Treasury Secretary Steven Mnuchin

Asia

India Could Fill Gap in Agricultural Imports Amid China-U.S. Trade War

The ongoing China-U.S. trade dispute will provide a chance for China and India to strengthen their agricultural trade, which will

Industry News

Escalating Trade War with China Will Increase Damage to American Soybean Farmers

The Administration’s decision to impose 10% tariffs on an additional $200 billion in Chinese imports — and China’s subsequent retaliation

Plant Health

Favorable Soil pH: Does it Really Increase Nutrient Use Efficiency?

More than ever agriculture needs to follow principles of sustainability that ensure build up and maintenance of long-term soil productivity,

Plant Health

Diagnosing and Mapping the Need for Soil Improvement in Brazil

Brazil has lacked the data for creating a soil fertility survey that could be used for assessing if any nutritional