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CapitalPress.com
Friday, January 15, 2021
American Farm Bureau Convention
Farm economy finding
its footing, experts say
By MATEUSZ PERKOWSKI
Capital Press
Don Jenkins/Capital Press File
Dockworkers unload containers. Trade decisions by the
Biden administration, as well as the recovery from the
coronavirus pandemic, will be major factors influencing
the U.S. farm economy in 2021.
have amounted to $45 bil-
lion and the federal gov-
ernment is set to disburse
another $13 billion to farm-
ers in 2021, he said.
“The conversation mov-
ing forward is we’re not
going to see that much ad
hoc support flowing into
the agricultural sector,”
Newton said.
Trade plays a significant
role in the strength of the
U.S. agricultural economy
and will be a major focus for
the Farm Bureau as Presi-
dent-elect Joe Biden takes
the reins, he said. “That’s
the big unknown with this
administration.”
The “phase 1” trade deal
with China, announced by
the Trump administration
in early 2020, hasn’t fully
lived up to expectations but
has increased agricultural
exports to that country, New-
ton said.
China
should
have
imported $33 billion to $36
billion in U.S. farm products
in 2020 under the agreement
but was on track to buy less
than $23 billion, he said.
Even so, that amount
marks a near-record level of
agricultural exports to China,
which was a top buyer of
U.S. crops and meat before
a trade dispute erupted in
2018, Newton said.
While the Biden admin-
istration is expected to ini-
tially concentrate mostly on
domestic concerns, there is
a possibility it will re-exam-
ine entering the Trans-Pa-
cific Partnership — a major
agreement among 12 coun-
tries from which the Trump
administration
withdrew,
said Michael Nepveux, an
AFBF economist.
Aside from economic
incentives, the signato-
ries are motivated to re-en-
ter TPP for geopolitical rea-
sons, such a containing the
influence of China, Nepveux
said. “I wouldn’t be surprised
By MATEUSZ PERKOWSKI
Capital Press
if we do end up re-engaging
there.”
Trade negotiations aren’t
the only factor affecting U.S.
farm exports. Demand for
U.S. beef, pork and poultry
products has grown within
China as that nation has
dealt with the devastation
to its domestic hog industry
from the African swine fever
virus, he said.
“It’s still very much a
driver in livestock and pro-
tein markets,” Nepveux said,
noting that U.S. exports to
China surged 132% for beef
and 45% for pork last year.
The coronavirus pan-
demic disrupted major U.S.
slaughter facilities and
caused significant process-
ing backlogs of cattle last
spring, but the cattle industry
largely recovered and ended
the year on a positive note,
said Derrel Peel, an agricul-
tural economist with Okla-
homa State University.
Prices for cattle may rise
by 5-9% during 2021, par-
ticularly in the latter half of
the year if the coronavirus is
brought under control, Peel
said. “I think we’re starting
the year with a little bit of
momentum in these markets
going forward.”
A weaker dollar is mak-
ing U.S. meat products
more attractive overseas,
but the livestock industry
faces headwinds from rising
feed prices and a drought
in the West, he said. The
industry’s recovery is also
contingent on the avoid-
ance of another major eco-
nomic disruption related to
COVID-19.
“Consumers have to have
money to spend,” Peel said.
In the crop sector, the
farm industry is still feel-
ing the effects of weather
problems in 2019 that
delayed planting and har-
vest of corn and soybeans in
major growing regions, said
Shelby Myers, an AFBF
economist.
Production dropped 5%
for corn and 20% for soy-
beans that year, leading to
lower year-end invento-
ries of those major com-
modity crops, Myers said.
Contrary to expectations,
farmers also didn’t produce
record-setting crops of corn
and soybeans in 2020.
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The regulatory pendulum
is expected to swing toward
stricter Clean Water Act
enforcement, though experts
say the Biden administra-
tion’s changes probably
won’t be immediate.
Farmers and environmen-
talists have been in a politi-
cal tug-of-war over the law’s
scope for years, largely due
to ambiguous legal interpre-
tations of the statute.
While Democrats will
now have power over Con-
gress, their majority is too
slim to make changes to
the law, said Don Parrish,
the American Farm Bureau
Federation’s senior director
of regulatory relations.
“We see absolutely no
legislative path to amend the
Clean Water Act, one way or
another,” Parrish said Jan.
11 during the Farm Bureau’s
virtual convention.
With Congress unlikely
to act, that effectively leaves
the Biden administration
to implement its own inter-
pretation of the statute and
associated legal precedents,
much as the Trump admin-
istration did in 2020 and the
Obama administration did in
2015, he said.
The “Waters of the
U.S.” rule implemented by
the Obama administration
was widely criticized by
farm advocates for taking
an overly expansive view
of the water bodies subject
to federal permitting and
regulations.
The Trump administra-
tion’s “Navigable Waters
Protection Rule” narrowed
the definition of regulated
waterways, which was hailed
as a victory by the American
Farm Bureau Federation but
derided by environmentalists
as increasing pollution.
The Biden administration
will likely want to leave its
own mark on Clean Water
Act enforcement but it has
so many environmental pri-
orities that actual revisions
to the regulation probably
won’t happen for another 18
months to three years, Par-
rish said.
“That’s kind of good
news for us, because I think
we’re going to get a very
consistent application of the
rule during that time period,”
he said.
Once the Biden admin-
istration does take action
on Clean Water Act regula-
tions, however, it’s likely to
broaden the scope of regu-
lated waters to include those
adjacent to wetlands and to
ephemeral streams, Parrish
said.
The “big wild card” in
Clean Water Act regula-
tion will be the 14 lawsuits
that are currently pending
against Trump’s rule in fed-
eral court, he said. The Biden
administration will probably
want to put the litigation on
hold while
deciding
what to do.
If
a
judge does
overturn
the Naviga-
Don Parrish ble Waters
Protec-
tion Rule,
the ruling
may apply
nationwide
or only in
certain fed-
eral
court
Michael
j
u
r
i
s
d
ic-
Sistak
tions, Par-
rish said. It’s also unknown
which regulation would
act as a “backstop” in that
situation.
If federal judges do have
differing interpretations of
Trump’s regulation, it’s pos-
sible the U.S. will face a
“patchwork” of Clean Water
Act enforcement across the
landscape — a fate similar to
that of the Obama adminis-
tration’s regulation, he said.
The shift in direction with
the Clean Water Act will
likely be reflected in other
changes the Biden admin-
istration makes to environ-
mental rules, said Michael
Sistak, AFBF’s grass-
roots program development
director.
“There will probably be
a push to reverse some of
the regulatory efforts of the
Trump administration,” he
said.
Pressure to enact climate
legislation has simmered in
Washington, D.C., for years
and can be expected to reach
a “fever pitch” under the
Biden administration, said
Andrew Walmsley, a con-
gressional relations director
with AFBF.
The Farm Bureau has
anticipated such debate on
Capitol Hill and has been
highlighting the positive
contributions that agricul-
ture makes toward captur-
ing and storing carbon, thus
mitigating climate change,
he said.
While climate legisla-
tion will be a major topic,
Walmsley said he doesn’t
expect Congress to enact a
single legislative package —
rather, climate-related pro-
posals will be included in
other bills.
“It will be an issue that
infiltrates almost every other
issue that’s out there,” he said.
Aside from environmen-
tal policy, the Biden admin-
istration is expected to focus
on labor issues, said Allison
Crittenden, an AFBF con-
gressional relations director.
Labor reforms may cut
both ways for the agricul-
ture industry, which could
face “troublesome” propos-
als such as doubling the fed-
eral minimum wage, impos-
ing overtime wages for
farmworkers and increasing
enforcement by the Occu-
pation Safety and Health
Administration, she said.
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Though the U.S. farm
economy has proven resil-
ient to the shock of the coro-
navirus outbreak, it remains
on precarious footing while
the pandemic rages, experts
say.
Key crop
and
live-
stock sec-
tors appear
healthy in
early 2021
and
have
John
room
to
Newton
improve as
the year pro-
gresses, according to econo-
mists at the American Farm
Bureau Federation’s virtual
convention.
However, as the popu-
lation endures “wave after
wave” of COVID-19 infec-
tions,
the
coronavirus
remains the “most press-
ing issue” facing agriculture
and “mass vaccinations” are
needed to get the industry on
solid economic ground, said
John Newton, AFBF’s chief
economist.
“It won’t be until then that
we start to turn the corner in
the farm economy,” Newton
said Jan. 12.
Farm profits were actu-
ally the second-highest on
record last year, at $120 bil-
lion, but that’s largely due to
“ad hoc support” from the
federal government, New-
ton said.
About 39% of net farm
income in 2020 came from
government
payments,
which have also helped
farmers withstand retaliatory
tariffs in the trade dispute
with China, he said.
Since 2018, trade and
COVID-19 relief payments
Pendulum swings in Clean
Water Act regulation