Focus on Ag: Farmfest forums attract large audiences

Kent Thiesse
Farm Management Analyst and Vice President, MinnStar Bank

Each year many key issues are discussed as part of the various feature forums at Farmfest. The 2019 farm show was held on August 6-8 in Redwood County, Minnesota. A variety of National and State agricultural leaders and policy makers, including the U.S. Secretary of Agriculture Sonny Perdue, attended Farmfest and discussed many of the current key issues affecting farm families and rural communities across Minnesota and the Midwest.

Whether it was comments by Farmfest forum panel members or the farmers attending the event, the current tight margins and low profitability in farming was on everyone’s mind. Profit margins in crop production have been quite tight in recent years, and for many producers are at a negative level for the 2019 crop year. Crop production expenses and land rental rates have remained relatively high for many producers, while crop prices for corn, soybeans and wheat have remained below breakeven levels. For farm operators that may have below average crop yields in 2019, due to weather issues, the financial situation may be even more severe.

The livestock sector is not faring much better from a profitability standpoint. Dairy farmers have been dealing with very low milk prices for the past several years, which has resulted in many dairy producers exiting the industry in the past couple of years. Cattle feedlot operators have also faced negative margins at most times during the past year or so. Hog producers were able to show a slight profit margin earlier in 2019, following a short-lived rapid price increase; however, the return to lower market prices in the summer of 2019 has again created profit challenges for the hog industry.

Most farm operators attending Farmfest expressed concern about the continuing “trade war” between the United States and China, as well as the associated tariffs. Shortly before Farmfest, the Trump administration announced added tariffs on a wide range of Chinese goods being imported into the U.S. China countered by announcing that they were restricting all U.S. ag imports into China. In the past year, added Chinese tariffs on ag imports from the U.S. has greatly lowered U.S. exports of soybeans, pork and other ag products to China, resulting in much lower commodity prices in the U.S.

The other trade issue that garnered considerable attention at Farmfest was passage of the United States-Mexico-Canada Agreement (USMCA) by the U.S. Congress. USMCA was agreed to by the leaders of the three nations earlier this year and has been approved by Mexico. USMCA would replace the current North American Free Trade Agreement (NAFTA) between the three countries, which has been beneficial for many agricultural products. Canada and Mexico, along with China, are the three largest trading partners for U.S. ag exports. USMCA now awaits approval by the U.S. Congress, which many ag leaders hope will occur later this year.

Due to the ongoing trade issues with China and other countries, USDA has announced another round of market facilitation program (MFP) payments in 2019. The first round of MFP payments was made in 2018, based on actual farm-level crop production levels and a set price for various commodities. In 2019, the MFP payments will be based on planted crop acres by farm operators, regardless of the crop that was planted in 2019, with a set payment rate per acre. There is a minimal MFP payment per acre for 2019 crop acres that were prevented planted due to weather conditions, provided that an approved cover crop was planted. Producers should contact their local Farm Service Agency (FSA) office for more details or to enroll in the 2019 MFP program.

Crop conditions and yield potential, following a challenging spring planting season in 2019, were a frequent topic of discussion at Farmfest. Many areas of Minnesota and the Upper Midwest had corn and soybeans planted much later than normal this past spring. Even though more favorable weather conditions in late July and early August have improved crop prospects in some areas, many concerns remain with the 2019 corn and soybean crop. Most crop experts agree that the Upper Midwest will need to avoid a frost until October and have some favorable growing conditions late in the growing season in order for the later planted crops to reach maturity. Most farm operators and agronomists expect highly variable corn and soybean yield levels in 2019.

Many farm operators, agriculture and rural community leaders, as well as investors in renewable energy plants, are concerned about government policies related to the development and use of renewable energy. Many States in the Upper Midwest have a very strong and well-established corn-based ethanol industry, which utilizes over 35 percent of the corn produced each year in the United States. In the past couple of years the U.S. Environmental Protection Agency (EPA) has issued numerous waivers to gasoline refiners, which has reduced demand for ethanol and resulted in over-supply in some areas. The ethanol industry has also been concerned by the slowness to implement E-15 as an ethanol fuel blend.

There has also been a growing biodiesel industry in the U.S. that utilizes a significant amount of soybeans each year, which is very important at this time due to the challenges in the soybean export markets. In addition to the direct benefits to farmers, renewable energy plants have become cornerstones in rural communities by providing jobs, adding to the local tax base, and enhancing the overall economic vitality of the communities. Even with all the economic, environmental, and community benefits of renewable energy, many special interest groups are calling for reductions or elimination of the Federal renewable fuel standards (RFS), and other measures that would hurt the current renewable fuels industry.

Most farmers and residents of Minnesota have ideas on how State Government can better serve families and industries in the State, including farm families and the agriculture industry. Governor Walz addressed a large audience at Farmfest, which was followed by a panel of ten State agency commissioners and deputy commissioners. The State agency leaders discussed programs and efforts to work with farm businesses, families and rural communities in a variety of ways. This included dealing with the economic challenges currently being experienced by farm operators and rural businesses, family health care challenges, and other issues affecting rural communities. Those in attendance had numerous questions regarding specific state programs, as well as application methods or implementation of various programs and services.