Tough Year

April 23, 2020

Hello everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary –

Look back to when this year started – economists and ag experts were all predicting an
increase in net farm income. We had a trade deal with China which would give a dramatic boost
to grain and meat exports. Nothing could stop us. Then came coronavirus. In the beginning we
didn’t expect that little problem halfway around the world could hurt us. In February Rob
Johansson, USDA Chief Economist had this to say – “we expect to see a $3.1 billion bump in net
farm income. It should be a better year on the crops side and livestock side.” Unless something
unexpected comes out of the blue to rescue us, it will be a tough year. Corn and soybean prices
have fallen more than 20%. Cattle and hogs are down more than 30%. Net farm income is
expected to fall by $20 billion. With the world economy frozen because of the virus, it is not
likely that international demand will come up and bail us out.

There are some positive numbers that should help to lift our spirits. February pork exports to China surged 544% above last year. For the first 2 months of this year, our pork sales to Mexico, Japan, China were up 42% above last year. Beef exports beat last year by 21%. Chicken hit a 6 year high. Some of these export numbers are impressive, but I think as the virus has come to dominate the world, it will be almost impossible to sustain an export surge. Having said that, I still expect China to step up and honor the commitment to buy our products. That could make a big difference. Also, federal government money could be a lifeline. If the economies around the world, including our own, could go back to work, that would help. The coronavirus has ended up shutting down a number of very important processing plants. That has hurt farm prices for most animals.

Anything we can do to get the food system back to normal will be helpful. Opening
restaurants would be great, but we’re not ready yet and when we do, we can expect social
distancing and limits on the number of people allowed in. Yes, the food and ag industry is
paying a big price but so are many other workers. Thank you to our doctors, nurses and
healthcare workers. We all must support each other and fight our way to the finish line.
Until next week, this is John Block reporting from Washington, D.C. If you would like
to review my radio shows going back more than 20 years, just go on-line to
www.johnblockreports.com.