Ongoing negotiations regarding the North American Free Trade Agreement and a looming trade war with China have spurred great uncertainty among Texas agriculture producers, according to a Texas A&M AgriLife Extension Service economist.
China has set 25 percent tariffs on billions of dollars in U.S. goods, including commodities such as cotton, sorghum, soybeans and beef. The federal government has responded with a $12 billion stimulus package to reduce losses to U.S. farmers, but it remains unsettled how those dollars will be distributed.
Meanwhile, trade negotiations with Mexico and Canada regarding the 1994 NAFTA agreement, which could have enormous impact on the Texas agriculture industry, continue.
Uncertainty surrounding those political policies can lead to producer anxiety when survival and sustainability are at stake, said AgriLife Extension economist Dr. Luis Ribera, College Station, because it tends to lead to volatile, unpredictable prices and markets.
“When things are normal, supply and demand can be calculated, and producers have a good idea what to expect,” Ribera said. “When decisions are policy driven it’s hard for everyone to react to the market.”
Soybeans for example, experienced a 20 percent price decrease based mainly on the news of Chinese tariffs, Ribera said. Meanwhile, Chinese market demand has been filled by Brazilian soybeans.
Ribera said there is still no certainty or stability for U.S. soybean producers as they near harvest.
“It’s likely that prices will rebound, but to what degree is anyone’s guess,” he said. “The Brazilian harvest was complete, and as we enter the fourth quarter of 2018 there will be Chinese demand for U.S. soybeans. But it’s anyone’s guess as to what the demand will be or how it will affect prices.”
Ribera said Texas soybeans make up less than 1 percent of U.S. production. Individual farmers who planted the crop could be hurt, but overall soybeans will be a minor hit for the state.
But Texas, which accounts for 46 percent of U.S. cotton production, exported $449 million worth of the commodity, just under half of U.S. exports, to China. Texas producers exported to China $208.9 million in grain sorghum, a 25 percent share of U.S. exports of $835.6 million. Texas pecans, soybeans, pork, corn, wheat and beef accounted for another $44.7 million in Chinese trade that is now in question.
Historically, loss of export market shares rarely recover because businesses and nations build relationships with other businesses and nations, Ribera said. Ultimately, he said, everyone loses when it comes to trade wars, especially producers and consumers.
“When you mix politics with economics, you hope that economics influences your political decisions and not vice versa” he said. “But once politics get involved you really don’t know how markets will react.”
AgriLife Extension district reporters compiled the following summaries:
The 12 Texas A&M AgriLife Extension Districts
CENTRAL: Conditions were hot and dry. A very light rain delivered 0.25 of an inch to some areas, and more rain was in the forecast. Conditions were very dry, and moisture was needed for hay production. Livestock were in good condition. Trees were dying and pastures were browning up. Supplemental feeding was necessary for livestock. Crop yields were below average. Nearly all counties reported poor soil moisture. Overall rangeland, pasture and crop conditions were poor in most counties.
ROLLING PLAINS: Spotty showers and cooler temperatures were reported, but farmers were afraid the moisture won’t be enough for this year’s cotton crop. Earlier planted cotton bloomed out the top while later planted cotton was stunted. Some dryland cotton was plowed under while irrigated fields in some areas looked decent. Producers were hopeful for some rain to allow some type of feed crop to be planted. Cattle were receiving supplemental feed due to a lack of forage. Hay supplies were low and some producers were shipping hay in to feed cattle and hold them until pastures and winter wheat can support them. Other producers will likely cull their herds in September to avoid supplemental feed costs.
COASTAL BEND: Scattered showers made cotton harvesting a challenge. Variations of maturity will keep the cotton harvest going for several weeks. Defoliant applications were delayed due to rain. Yields of dryland cotton were average or below at 1-1.5 bales per acre. Corn and sorghum harvest neared completion while rice harvest continued with varying yields reported. Soybean harvest was expected to begin soon. Recent rains caused concern of possible depleted soybean quality due to disease. Native pecans were dropping nuts prematurely due to hot, dry weather. Pasture conditions continued to deteriorate, and supplemental feeding increased due to short forage in continuously grazed pastures. Livestock remained in good condition.
EAST: Drought conditions took a toll on crops throughout the district. Several pasture and forest fires were an issue in Cherokee County. Producers were hopeful pastures would green up in Henderson, Marion, Sabine, Jasper, Smith and Gregg counties where rainfall was reported. Anderson County cotton was in the boll stage, and much of the cotton was self-defoliating due to hot, dry conditions. Anderson County also reported watermelon, peas and tomato crops were burned up by dry conditions. Topsoil conditions were adequate in Henderson, Angelina, Sabine, Jasper, San Augustine and Gregg counties and short to very short in all other counties. Subsoil conditions were adequate in Henderson, Sabine, Jasper, San Augustine and Gregg counties with all others reporting short to very short conditions. Pasture and rangeland conditions were excellent in Sabine County, fair in Shelby and San Augustine counties and good in Jasper and Gregg counties. All other counties reported poor to very poor pasture and rangeland conditions. On average, forage producers district-wide were making about half to one third of their normal hay crop. Anderson County reported producers were selling hay at $65 to $90 per bale. Trinity County producers were trying to purchase hay from other parts of the state as well as out of state. Beef producers began culling herds in Anderson, Cherokee, Gregg, Smith and Trinity counties. Trinity County reported a few cattle producers sold out completely because of drought conditions. Livestock were in fair condition in Smith County. Sabine County producers fertilized pastures after recent rainfall in hopes of continued grazing and hay production. Livestock prices were steady in Shelby County and up in Gregg County. Anderson County and Cherokee County were selling calves at lighter weights and cheaper prices per hundredweight. Wild pigs continued to cause difficulties in Wood, Shelby, Trinity and Henderson counties. Armyworms continued to decimate what little growth there was available in pastures in Marion, Shelby and Sabine counties. Henderson County reported high fly numbers.
SOUTH PLAINS: Subsoil and topsoil moisture levels improved with recent showers. Irrigated cotton continued to mature and looked very good despite bollworm and weed issues. Peanuts, corn and sorghum continued to benefit from additional moisture. Pastures and rangelands should improve as well. Cattle were in good condition.
PANHANDLE: Temperatures were slightly below average. Some moisture was received, with amounts from a trace to 1 inch. More moisture was needed throughout the district. Soil moisture remained mostly short. Armstrong County reported dry conditions, but also regular small showers that have helped sorghum progress. Pastures were still dry but improving. Irrigation of crops continued. Dryland crops and pastures should respond well to the rain. Potato harvest began, and some wheat was planted. There was very little grass production on rangeland, and many producers were taking advantage of disaster grazing of U.S. Department of Agriculture Conservation Reserve Program lands. Rangelands in some areas were in excellent condition. Cattle were in excellent to good condition. Without significant rainfall in the next couple of months, many producers will head into fall and winter with limited forage. Cotton was progressing with many fields ahead in maturity compared to last year. Sorghum was heading out in some areas. The short grain sorghum crop was struggling from lack of rainfall and sugarcane aphids. Silage harvest was starting slowly.
NORTH: Topsoil and subsoil moisture levels were mostly short, with some counties reporting very short. Some counties received sporadic showers of up to 5 inches of rain with cooler weather. Camp and Cass counties were still very dry and under burn bans. Rain was needed for pastures, hay fields, soybeans and cotton. Corn harvest continued with about 50-60 percent of the crop harvested so far. Yield reports indicated an average crop with some fields producing around 100 bushels per acre. Cotton looked bad and was still setting bolls, which were low in number. Soybeans didn’t look good either, with poor pod filling and very few pods per plant. Hay supplies were short and many cattle producers were scrambling to find enough hay for winter. Pastures were greening up from the few rains received. Producers hoped to receive enough rainfall soon to provide another cutting of hay. Livestock were relieved from hot weather but were dealing with insect pest population increases.
FAR WEST: Temperatures averaged highs in the upper 90s and beyond 100 degrees with lows in the 60s. Scattered showers averaged 0.2 of an inch to 3 inches of recorded rainfall. Pastures looked slightly better. Pecan trees needed water. Pecan insects were reported, and a few trees showed zinc deficiencies. The pecan crop looked to be average. Fire danger in the area was still a concern. Producers continued to water cotton. Hay grazer was cut and baled. In El Paso County, pima and upland cotton looked good with some pest pressure and some rust, but both were manageable. Alfalfa production was exceptional in some areas and fields were holding on in other areas. Martin County had experienced severe drought for a few months, and conditions completely destroyed any kind of dryland crop and created poor rangeland conditions. Any rain will be too late to salvage dryland crops.
WEST CENTRAL: The district was mostly dry with isolated rain late in the reporting period. Cotton was in mostly fair to good condition, but many acres continued to be declared failed due to drought conditions. Rangeland and pasture conditions were mostly poor and showed severe drought stress. Rains should improve conditions somewhat in areas that received moisture. Hay and forage conditions were very poor to fair. More than 3,000 head of cattle were sold at local sale barns. Stocker steers and heifers sold $2 higher per hundredweight. Feeder steers and heifers, packer cows and bulls sold steady. Livestock continued to require supplemental feed. The pecan crop appeared to be average.
SOUTHEAST: No report.
SOUTHWEST: High heat and dry conditions have diminished topsoil moisture in most counties. Forages are becoming limited in some areas. Pasture and range conditions were brown and dry. Some producers are looking for hay to have on hand if the drought conditions persist. Supplemental feeding of livestock is evident in some areas.
SOUTH: Conditions were hot and dry with short to very short moisture levels. Scattered showers were reported in some areas, including reports of up to 1 inch of rainfall. Peanut fields continued to receive irrigation. Dryland cotton was harvested and irrigated cotton was a couple of weeks from harvest. Cotton yields in Jim Wells County were one bale per acre. All grain crops were harvested. Pasture and rangeland conditions were poor and continued to deteriorate in dry areas, and livestock supplemental feeding continued. Irrigated crops were in good condition. Pecan orchards were also in good condition with no pests reported. Some producers were hauling water, and others were moving livestock to different pastures. Livestock were in good to fair condition.