Reflecting Back on Critical Events, Legislation, and More
As 2018 comes to a close, we are taking the time to reflect on what has been an eventful year for the agricultural industry. From tariffs and legislation impacting commodity prices, to natural disasters and technological advancements in farming, 2018 has impacted the ag industry for years to come. In this article, we discuss these events and their outcomes.
Government’s Impact on Agriculture
The government and its legislation impacts farmers, ranchers, and land owners in numerous ways through ag-related programs, regulations, and interest rates. Government programs and policies can result in actions such as tariffs, subsidies, environmental protection, and support for renewable energy. On September 30, 2018, the Farm Bill, which is reauthorized every five years, had expired. Proposed changes and updates to the 2018 Farm Bill are currently in the process and include: reform of government food assistance programs, addressing mental health concerns for farmers and ranchers, and modifications to farm subsidy policy. Since the bill hasn’t been reauthorized yet, over 40 ag-related programs meant to help support and fund farmers and the industry are still on hold.
Additionally, earlier this year, the U.S. entered a trade war with China, Mexico, and Canada with tariffs placed on various exports, such as steel and aluminum. These countries have retaliated with tariffs of their own, the most notable being China, the leading importer of American soybeans. China placed tariffs on soybeans which have devastated the U.S. soybean market, creating an excess of soybeans with limited selling options.
Soybeans, typically used for cooking oil and animal feed, make up about 60 percent of the $20 billion of agricultural exports from the U.S. to China each year, equating to about 37.5 million metric tons. Since the trade war with China began, federal data shows that through mid-October, American soybean sales to China have declined by 94 percent from last year’s harvest. Only time will tell what the final impact of these tariffs will have on the agricultural industry and the economy, and how long China will hold out before exhausting their current resources.
Increase in Natural Disasters
Farmers and ranchers are known for their dedication and commitment to the land they love and operate, but they are even more so defined by their resilient character when faced with challenges outside of their control, such as a natural disaster. Natural disasters impacted the agriculture industry across multiple states this year. Weather experts have long been predicting that hurricanes will become larger, more plentiful, and more powerful and, this year, that prediction was realized as September’s Hurricane Florence and October’s Hurricane Michael delivered devastating hits that resulted in astronomical financial losses for farmers across the Southeast. North Carolina sustained more than $1.1 billion in damages, South Carolina at $125 million, and Georgia at $3 billion.
Moreover, California experienced the most destructive wildfire season on record with 7,579 fires burning over 1.7 million acres – the largest amount of burned acreage recorded. It is too early to know the long-term impact it will have on the state’s $54 billion agriculture industry, but the wide range of crops and varied commodities have made it a top destination for farmers and growers in recent years.
Technology in Farming
Lastly, the use of technology in agriculture has allowed farmers and agribusinesses to be more efficient, profitable, and environmentally conscious. With sophisticated technologies, temperature and moisture sensors, GPS, and drones, today’s farmers have greater access to the insights of agricultural processes such as harvesting, soil maintenance, planting, and irrigation. The use of drone technology has become popular this past year, with an estimated worldwide drone market in agriculture over $30 billion. These advances help make farming more efficient, safer, and produce better quality foods for the consumer.
AgAmerica is at the forefront of industry changes and agricultural trends, ensuring we have a plan in place and the tools needed to assist and position farmers, ranchers, and landowners for long-term financial stability. Whether your operation took a hit from a natural disaster or you’re looking to integrate new technology into your operation, our customized loan packages are the perfect solution to address your unique needs. Learn more by contacting one of our loans experts at firstname.lastname@example.org or 844.516.8176.