As Trump Heads to Farmers Convention Today, He Faces Host of Concerns About Shutdown

14 January 2019

As President Donald Trump prepares to address the American Farm Bureau Federation’s annual convention later today, US farmers and ranchers are hoping he is able to allay their concerns resulting from the partial shutdown of the US government.

US farmers are contending with significant gaps in information and services, including payouts by the US government, since the shutdown began on Dec. 22. That has created greater uncertainty and risk for US farmers at a time many of them are making planting decisions for the coming season.

It also has come at a time when US farmers are in the worst financial position they have been in decades. Net income for US soybean farmers, after a recent peak of $224.18 per acre in 2011, has dropped sharply and was just $31.40 per acre in 2017 (see chart below). Earnings in 2018 are also expected to be weak as the US/China trade war depressed both physical and futures prices for soybeans. Analysts expect continued pressure on farmers in 2019 because of low commodity prices and the ongoing trade war.

More than 6,000 farm bureau members from across the nation have convened in New Orleans to listen to farm-sector leaders and help set the bureau’s policies and agenda for the coming year. In addition to President Trump, delegates are scheduled to hear from Agriculture Secretary Sonny Perdue and other US government officials.

The partial government shutdown, now the longest in US history, has forced the closure of the USDA’s Farm Service Agency (FSA), National Agricultural Statistics Service (NASS), and Risk Management Agency (RMA). This in turn has delayed essential services including market facilitation payments and crop insurance calculations, as well as major statistical reports like the World Agricultural Supply and Demand Estimates (WASDE).

Market Facilitation Program (MFP) payments are being provided to farmers by the Farm Service Agency (FSA) to offset the negative price effect on commodities like soybeans due to the trade war with China. Payments are being made in two rounds, with the first round available since September 2018. A second round of payments was announced Dec. 17.

The payments will be provided to farmers who have already certified their 2018 production with the FSA. However, FSA offices have been closed since Dec. 28 as part of the government shutdown. Farmers still needing to certify last year’s production for MFP payments will have to wait until the FSA office reopens.

The USDA’s Risk Management Agency (RMA) manages the Federal Crop Insurance Corp. (FCIC) to provide crop insurance products to US farmers and ranchers.

RMA federal crop insurance activities and coverage are on hold due to the government shutdown, including calculating Average Production Histories (APH) of US farmer production data for 2018. USDA National Agricultural Statistics Service (NASS) county average production data for 2018, which RMA uses for its crop insurance calculations, has also been held up by the government shutdown.

When the government finally reopens, the RMA will be playing catch up on 2018 data, calculating 2018 farmer data and comparing it with NASS county level data, at a critical time before spring 2019 planting season for major crops including corn and soybeans.

At mid-January, some farmers are already finalizing planting decisions (which seed to buy, how much fertilizer to purchase, etc.) starting in the southern US, including Louisiana and Texas, where planting often starts as early February. Without payments from last year, plus one of the biggest farm safety nets—crop insurance—in limbo, decisions on planting are more confusing and difficult.

The USDA’s WASDE report for January was scheduled for release on Jan. 11, but in a rare occurrence the report was delayed because of the government shutdown. The monthly WASDE is the most closely watched report from the USDA for major commodities. Regular, monthly releases of WASDE keep agricultural market participants, from farmers to traders and food companies, up to date, thereby reducing market uncertainty and volatility. The report’s delay makes hedging crop production and locking in stable revenues and income for farmers a more difficult task.

Gro Intelligence on Jan. 11 released to the public its own global crop supply and demand forecasts for marketing year 2018/19, filling a data gap left by the delay of the WASDE report. Relying on its proprietary supply and demand models, Gro generated production, usage, and inventory estimates for all major global crops. In all, over 1,000 forecast models covering 35 crops grown around the world are now available to the public on Gro’s website.

Gro has been offering free subscriptions to its web app since shortly after the US government shutdown began. Interested users can go to https://www.gro-intelligence.com/USGovShutdown to access all of Gro’s data.

Gro will continue to publish its global crop supply and demand estimates free of charge until the US government reopens. We will also be publishing a summary of our methodology on our website in the next couple of weeks. Code to replicate our forecast models will be published in our API library and Gro is offering free 90-day API trials for those interested. Email us at support@gro-intelligence.com to get set up on our API.

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