Delta Farm Press Logo

Ag Roundtable: Farmers need to diversify; reduce reliance on China

Two key takeways: Don’t rely on China markets or count on MFP payments.

Ark-state-flag-capital-GettyImages-Edited.jpg
Speakers at a roundtable meeting at the Lonoke Extension Center had recommendations related to soybeans, the on-going trade war with China and Market Facilitation Promotion payments. Getty Images

An agricultural roundtable on Monday presented two key takeaways for farmers: find ways to reduce their reliance on China as a market, and don’t count on Market Facilitation Program payments to become permanent.

About three dozen people attended the roundtable at the Lonoke Extension Center, which featured an economic overview by Scott Stiles, Extension economist for the University of Arkansas System Division of Agriculture, and a presentation by U.S. Representative Rick Crawford.

Stiles explained that 2018 began with optimism about soybean prices, but a record crop in Brazil, compounded by China’s 25 percent tariffs on U.S. products, led to large ending stocks of soybeans and a decline in soybean prices. “U.S. carryover is starting to build. You are witnessing something historic here,” says Stiles. “The U.S. Department of Agriculture estimates just over a billion bushels. Ultimately, we could see that number go to 1.1 billion, maybe as soon as the August report comes in.”

With the advent of tariffs, soybean sales to China were down 508 million bushels; sorghum was down 155 million bushels and cotton was down 901,000 bales.

Outbreaks of African swine fever — now reported in China, Cambodia, Vietnam and Europe — may reshape the world’s soybean markets even more than tariffs. The disease is incurable and has an almost 100 percent mortality rate. Stiles said one projection forecasts some 200 million pigs to be culled due to the disease.

“Culling is expected to reduce Chinese soybean demand up to 22 million tons, or 21 percent,” says Stiles. “That could have more of an impact on soybean demand than the tariffs themselves. The bottom line is farmers have to ask themselves, what can we do to diversify and be less reliant on China? And it’s a long-haul game and some argue it may take many years to restore trade to China.”

Market Facilitation Program

Monday was the first day of the signup period for Market Facilitation Program payments (See: http://bit.ly/2GsEtvN), and while the 2018 MFP payments were great for filling gaps left by Agricultural Risk Coverage and Price Loss Coverage payments under the 2014 Farm Bill, Stiles urged caution: “Don’t expect MFP to become a permanent part of your cash flow.”

Crawford underscored Stiles’ points, pointing out that MFP is a Band-aid. He said his office had received several calls about MFP, especially over the differences in county rates. However, he stated that this year was more fairly administered than it was last year.

The congressman also urged farmers to be looking at ways to increase domestic consumption of our commodities. “We need to diversify our portfolio and our crop mix. Relying on the Chinese marketplace to do business, you do at your own peril,” says Crawford, adding that, “…other markets in Asia, such as Malaysia, India, Singapore and Vietnam were starting to look good.”

For more information about agricultural economics, visit www.uaex.edu or contact your county extension office.

Source: The University of Arkansas, is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like