The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Agriculture Update

08/12/2019

Farmers have long been respected as tough and scrappy, working hard and facing constant hardship — true American heroes.  Today, farming is just another industry, albeit an important one.  I just read an analysis of the agricultural industry that is too dense to summarize.  However, here are some of the factoids I found interesting:

  1. The industry is not hurting as much from the tariffs as the public thinks but hurting more from extreme weather events than expected, i.e., Midwest flooding, including bomb cyclones, as well as Hurricane Harvey in Texas and Hurricane Florence in North Carolina.

  2. Instead of rising, farm prices have been falling.  For example, corn was $7.63 in 2012 and less than $4 now.  Beef & hog prices have dropped from $120 to $60.

  3. China has been our largest or second-largest buyer for the past ten years, until dropping to only fifth largest last year and still dropping.

  4. Investments in new farm machinery has dropped to the 2015 level and is still dropping.

  5. Although I think of my home state (Virginia) as an agricultural state, it is not.  Outside the Northeast, agriculture as a percent of state GDP is the second lowest in Virginia, with Nevada being the lowest.

  6. 78% of farmers believe the trade war is “worth it” and 79% will vote for President Trump in 2020.

  7. The real enigma is that farm prices have not yet fallen significantly.  Either the farming industry is sacrificing other needs, or it believes this current crisis will pass soon, hoping the tariffs end or the weather becomes less unpredictable.

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