By former USDA Secretary John R. Block.
Is this a global economy or what? We have been in a trade war with China for nearly 2 years. Farm and ranch exports have suffered a dramatic set back. Soybean prices are in the tank and corn is not looking much better right now. Our domestic market can’t save us. We need the world market.
Out of the blue comes African Swine Fever. The disease is fatal to hogs but not harmful to humans. In just a short 6 months China has lost 200 million hogs. Noel White, CEO of Tyson Foods, reports that we can expect a 5% reduction in availability of meat world wide because of ASF.
In order to meet their consumer demand for meat China will have to increase their imports of not just pork, but chicken and beef. Farmers and ranchers in the U.S. with increased meat production suffered with low meat prices last year. This has all changed almost overnight. Domestic supplies of meat in the U.S. will come up short, and prices will rise. I am already seeing this as prices of the hogs we sell have gone up. Amazingly on the other side of the world African Swine Fever strikes and my prices go up. We need a big drought somewhere in the world to give our grains a lift. There is no escaping the reality that we live in a global economy.
Another thing to consider. Even if we get a resolution of the trade disputes with China, with less hogs they won’t need as much corn or soybeans. Dead pigs just don’t eat very much.
Trade talks are expected this week with China. Optimism for a resolution is not what it was. President Trump says China has reneged on their trade commitments and he threatens to add more tariffs. Keep your fingers crossed.
We have trade negotiations with the European Union this week. Where that will go we don’t know because they say, “we are not going to talk about agriculture.”
The U.S. agriculture industry is amazingly productive and efficient. Our production exceeds domestic demand by 25%. We don’t have enough mouths to feed. We need the global market.
John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill. If you would like to review his radio shows going back more than 20 years, just go online to www.johnblockreports.com.