I'm neither a farmer or rancher, so I'm asking for opinions here.

A lot of people are hurting because of the tariff war with China.  How do you see things?  What's your opinion on this?  
Another question: when were some of the best years for farming and ranching, in terms of prices, profit, etc...  Why were those good years?  What happened?  Was it just a good cycle, or was there something the government did or didn't do to effect the market in a good way?

Are you optimistic that with new trade deals with the USMCA, Japan, Korea, and hopefully Great Britain and China, that things will get better?  

Some say that farmers claim they don't actually want subsidies....all they want is a "level playing field".  Do you agree?  If so, how do we get there?  What constitutes a level playing field?

Just want to get some honest input/opinion here.  

Good questions, Bear.  From what I see personnally (owner of stockers, goats) and I work for the FSA office there are variables to this question.

First, lets talk about the producers that I serve at the FSA office - some seem to be hurting for money due to the tariffs of crops between us and China. Some of the bigger producers don't seem to be affected yet.   This is where the MFP payments have come into play.   IF we have a program that pays, the prodcuers are here signing up for the programs.  They are getting crop insurance payments (depending on type of CI that they carry, lots of different options of CI), FSA payments, market price for their commodity crop.  In speaking with  loan officer, the above MFP payments have been a life saver for them and as covered their cost of living. Where their LOC  has not been maxed out or close to it, the MFP has saved them.  many do state they would prefer to have the market and not the subsidiary payments.  With the new 2018 farm bill signup will begin for the 2019/2020 year where producers will be choosing their elections  of ARC/CO or PLC for the crops. ARC/CO is based off county yield and price ; PLC is price loss coverage of crops -  payment if earned is not paid until a year after the final marketing month. So we are always paying 1 year behind.  Some crops pay, some don't.  It is complicated.  Each crop that they have established on the farms they operate has an election.

Over production in my eyes.... supply and demand - look at the world.

I hope with the USMCA the cattle market somewhat stabiizes, because it has been very violatile the past few years.  This year has been a stracht your head kinda year.  The month the processing plant burned in KS - that affected the cattle market by $10-20 cwt and that should not happen.  Period.  We should not be that vulnerable.   The packers are making way more than we are $500-600 a head - we are lucky to break even at $50 or you hope you do.  You hope you hit the market on a high day -  We need more markets and I'm glad to see that we struck a deal with japan -  when the cattle market was sky high - the cow situation was no numbers, when that market crashed, it hurt a lot of people that are still paying for it.  To buy a heifer for 3500 you would never het her paid for... 

so many variables -

The loss of cattle in the NE and Iowa during last spring will now play into the markets this coming year. 

Good post.

now with swine flu -china is loosing their pork population, and they eat a lot of pork.  however, they are buying their pork from other countries, because of the tariff currently in place with us and them... 65% I think.  In watching the market i think the pork market has stabilized but it would be a boost to our pork producers to get the China deal.

China needs to actually sign something and follow thru however.

Farm marketer/merchandiser here.  Great question and I wish more folks would ask instead of just assuming - but I expect no less from you.

The last few years have been tough, but have presented opportunities for growers who spend some time on a marketing plan and execute.  A larger producer can't afford to not have a plan.  By and large most producers will say that marketing is their weakest part of their operation.

Trade deals will help stabilize the markets, but we are entering a period of surplus vs the demand driven market we have been in - which will keep them somewhat less predictable.  

China's problems with the African Swine Flu hitting almost as soon as the trade war began really changes the hand of cards they were playing with and helped prolong it in my opinion - they didn't have as many hogs to feed and therefore didn't have the demand.  Now the pork production issues are really starting to hit home, got to feed your people if you're going to keep them in line and reasonably happy.

Oh man, I'm out of my league here!  I wasn't even sure I knew what FSA stood for.  
I do appreciate the time and effort you folks put into trying to educate me. 
To me, Ag economics is a little complicated because of so many variables and moving parts.  I feel a little lost, to be honest.  Let me try a different angle.  

Describe to me a time period when a particular market was real good....say the beef market.  Give me the rough years, and tell me what happened that paved the way for a great market.

Now do the same, except tell me of a period when the market was real bad, and give me your take as to the reason.

The most important question is this....what should our government do to optimize farm/ranching stability?

Not claiming to be an expert by any means, but Mother Nature seems to be a big player for us. The cost of feed and how much feed available is the driver. Too much/too little rain and when. For us, the government/fsa has no real play. They may fill in a gap, but if they are filling in the gap it's not good. 

To answer your question, what sets up a great year(s) is hard for me to answer. It seems the stars have to align for a balance between feed and cattle cost.  When they are you had better manage your money well.  For us, we are fairly even from year to year barring a drought, a packing plant catches fire, mad cow, or some other event takes place.

We always follow what corn is doing. Farmers around here either seem to be filthy rich or going broke. 

Getting loans through the fsa has been the biggest help to us. The terms are so much better than regular bank land notes.  It had still better pencil or you will be in trouble. It's not a gimme by any means. Beyond that, I don't know what other people think. 

Interesting read I hope more will jump on this thread.

i wish the  gal from arkansa  would pop on they were a big operation in arkansa . iknow my uncle ran a smal farm in mo that they varied crops cattle hogs chickens and did well but they died  and jimmy when into hogs big time and bottom dropped out and they dam near lost farm  buty for his sisters bailed him out.    i hear about the dairy farms and chicken farms here in the south and its a struggle but no real knowledge

great subject bear

also i read where foregin countries are buyingh land and sending the produce back to their countries. i also read  that cattle the beef you purchase

in store does not have to show orgin of country? i only eat deer and chicken so..

What is the current status of "country of origin" labeling?  I know the law made sense, but my understanding is that some of it was repealed under Obama for some products because the WTO dictated it to us, basically.  If that's true, it really chaps my ass.  If I can help it, I'll go out of my way to buy food raised in the US.  I sure as hell don't want to buy any meat from China. They feed poop to fish.  
I'm trying to figure out government's best role in supporting farming and ranching without being too medlesome.  Seems to me the best approach is to do whatever it takes to promote a level playing field, but I also know that the subject is very complicated and dynamic.  That's why I'm asking for opinions and experiences.  
Yesterday I got into it on FB with a friend who thinks Trump is the devil.  She claims Trump is screwing over farmers and ranchers and suicide is on the rise because of him.  Personally, I think Trump's approach on trade is long overdue and the tariffs are a painful but necessary tool to leverage more fair trade, which is long overdue.  He's the only one willing to take the political hit for imposing tariffs.Seems to me it's paying off.

https://www.ams.usda.gov/press-release/usda-amends-country-origin-labeling-requirements-final-rule-repeals-beef-and-pork

i google and found this i read somewhere chicken had to have country of orgin  and its on mine that i buy  cattle /beef  if direct from country to retail it has to show orging but if its a carass process and cut in usa no its does not  as they figure usda inpected. at least thats how i understand it

u would think wwith the past history of far east  country no one would buy any food dog treats etc from them

i try not to buy anything not in usa but banana that tough i love banana

About 2015 cattle were insanely high. Nice steer calves brought $1200-1500+. We ranch and my husband hauled quite a few cattle back then. The insurance on his truck would have barely covered the load had he had an accident. Not sure why they were so high. Steer calves averaged $875 in my area this fall. 

In all honesty, talking with local farmers. If feed is high, cattle are low and vice versa.. Drought, excessive rain that destroys pasture and or crops plays its part as well.

OK, I'd like to know why they exempt beef and pork (including ground beef and pork) from those COOL regulations.  Can someone give me the lowdown on this?  The government does a lot of worthless junk regulation, but it only seems sensible to me that I know where my meat was raised.  I don't know about you, but I don't want to eat meat grown outside of North America.  How the hell do you know that ground pork from Asia is really ground pork and not cat or dog meat?  Many Asian countries eat dog meat.  
Of all the BS regulations our government imposes, why did they eliminate this sensible requirement?  I do know that DNA testing has been developed to detect things like dog, snake, cat, and rat meat in "ground beef".

This doesn't make sense to me.

I think you may be talking about Three 4 Luck. . . . 

I know in our area (Southeast Arkansas) foreigners own so much land it's ridiculous.  And Bill Gates (yes, THAT Bill Gates) has been buying parcels left and right around here.  The small family farmer is almost a thing of the past.   Heartbreaking. . . 

Chandler sent me this from one of his farming websites just yesterday

That's amazing, when you consider the tariff war.

I haven't asked him what the results are several days into the poll. . . 

Probably 90 % of my clients are farmers, and overall I'd say they all still support President Trump.  The tariff wars have made them cuss a lot, but I think they still trust him to work this out.   The subsidies have been lifesavers for most of my farmers,  but it's not what they want--they want fair market prices for their crops.  Period.   Hearing our HARDWORKING farmers put down for "taking welfare" makes my blood boil.  My son is a fifth generation farmer; we have farmed everything from cattle to cotton to beans to rice to catfish.   I have prayed for Chandler to not farm, but it's his dream, been what he's wanted to do since he could speak.   Catfish farming almost put him under, but he's digging out.   I support him but also know what a hard (almost impossible) road he faces as a young/beginning farmer. . . 

I'm not a farmer or a rancher but I deal 100% in commodities. 

The last two years have been 2 of the worst years I've ever endured. 


But I still feel like something had to be done to even the playing field. 

I thought you were a garbage man.

I guess you are not very knowledgeable 

IT is my understanding that COOL is not in effect at this moment.  I wish it was.  I will have to research what happened to it.  Not on the top of my head.

Agriculture  markets - commodities due to weather, supply/demand, all plays in.  THe CME , cold storage, on hand inventory report all play into the cattle market.

cattle market is based off the corn market - when the corn mprice goes up the the price of feeders come down. (WHy; you ask; because then it costs more to feed them,) .  You have a live market and a feeder market.  all done on the CME  as the crops are too.  all traded.  You can buy puts/options (hedging) to protect your costs, but that cost money too.  and if you don't know what you are doing - you can dig yourself deeper.  

At the time the feeders were brining 1300-1500/hd - the cow inventory was down - due to the sell down of the cow/calf operators during the drought of 2011-2013.

I myself do not farm/ranch but my family does. My parents still farm/ranch, and my younger brother does so full time, and my older brother does part time. ( I purposefully put myself in the medical field because I know how much a 24/7 job farming/ranching is!!!) So I can't speak some details but instead generalities.

Overall, my family is extremely happy with what Trump is doing. Yes, the tariffs hurt in the short term but they are looking ahead to the long term. In the end, it should help famers to get paid more. It's sad if you think about it. The price for a bushel of grain has hardly changed in 50+ years. Farmers are forced to farm more land in order to stay in business, which is why you see small family farms selling out to corporations. You just can't stay small anymore if you want to make ends meet.

Farming has overall sucked in 2019 (excuse my language). We had no spring with lots of late snow and barely got the crops in. Then it did nothing but rain this fall and couldn't get all the crops harvested. My family was lucky that the small grains got done (flax, wheat, etc) but just ran out of time to get the corn off so it's still standing. This is the WORST YEAR my dad has ever remembered for farming, just dealing with the weather.  Even those that did get the corn out of the field, you couldn't take it to the elevator because the moisture was too high. (and how do you dry corn that is FROZEN?) Of course, the weather has nothing to do with Trump. I was chatting with my brother how he had to remove the header from the combine three times on one field, just to get some of the MUD off that was caking up and clogging it. This shouldn't happen in harvest season. Just frustrating.

Hay crop was good this year for the cattle (if you could get it baled up in-between the rain). Corn prices I believe are still down and often times then the cattle prices are down.

Either that or you are cooler online.  

The last few years have really changed how our marketers have approached their daily advice and commentary. We deal in wheat and corn for export, domestic feed and mills. I was actually just talking to my boss about this last week. He has been merchandising grain for close to 40 years and said before it was fairly predictable as far as watching the weather and disasters around the world. Now the trade wars have made it really hard to guess if we will be up 2,5,20 or down 30 just in the course of a trading session.

I would say that the vast majority of our producers are very much in support of President Trump's approach to the trade situations. Most have positioned themselves coming off the 2007-2012 prices to weather the downturn of the effects from the trade wars and are looking at the long term results of these trade deals. The agreements we made many years ago no longer benefit us and have needed to be revisted for a while now. Our bank does a fabulous job of getting some very intelligent and entertaining speakers on Ag Econ. One of my favorites has been Dr Dave Kohl. He puts out a weekly blog (not sure that is the appropirate name for it) but they are always an interesting read I think its called the Ag Globe Trotter. Another one who does a great job is Peter Zeihan, he actually has a few books out available on Amazon. I heard him speak at a conference last month and while some of his points were a bit dark overall he paints a pretty promising picture for the future of Ag revolving around the demographic and geopolitic changes both our partners and rivals will be facing in the near future. Interesting topic, will be fun to follow along with this discussion  

I guess it's a good thing your dad owns the bank. 

Huh?

That's what I think as well.  It took a lot of guts to tackle the China trade imbalance.  He knew there would be some serious fallout from this, at least in the short term.  

I'm still interested in hearing opinions on what, exactly, politicians should do to stabilize the farming and ranching economy.  Should they do less (ie: hands off) or more?  In the latter case, what can/should be done?  Has government been too meddlesome?  Ethanol is one example of government muddying up the water.
It seems to me that if ethanol had economic merit, no government assistance would be needed. Investors would pour money into the ethanol business and profits would be made, even as alcohol displaced oil in the markets for liquid fuels.  This seems to be a policy motivated by demagoguery and politics, rather than sound fiscal policy. If ethanol lacks economic merit, however, no amount of subsidy is likely to provide it. And now we are stuck with it, because any politician is committing political suicide if he/she suggests phasing this out.  This is the brainchild of the climate change hysteria.  Like Reagan said, "The closest thing to infinity on earth is a government program."

Ethanol subsidies are here to stay, and this is an excellent example to illustrate our increasingly bloated deficits....one of many such examples.  This is what happens when politicians try to create a hybrid form of economy...Statism and free market capitalism.  

dang!!!! Why so mean!!!!!

Interesting topic. I come from a farming background and work as a crop insurance adjuster. It has been challenging for farmers for several years. I think there are several different factors- some that the government affects, and others that it has nothing to do with. 

My thoughts in no particular order

1) Tariffs - yes its hurting them. But farmers understand cycles and swings better than any other part of the population. They look to the long haul and will weather short term swings. The subsidy money is a god send right now. Its helping the ones that are good managers already. Those that aren't good managers were already on the downhill spiral. Overall, there still seems to be major support for Trump. They believe that he is trying to work for them for the long term.

2) Many farmers have gotten away from the lessons they learned in the 80s. You can google “farming in the 80s” to get an idea of what was going on to create that storm. Some of the same factors are happening again. Then it was Jimmy Carter's Russian Grain Embargo coupled with lots of banks calling in loans - So many farmers today are running on borrowed money and the banks keep giving it to them. Many are just a bad year away from going under.

3) Technology.  Farmers are on a treadmill of technology. New seed genetics keep upping the amount of production from the same acreage- causing a surplus in product- and thusly a drop in prices. Farmers need more acreage to keep the same income at lower prices. Gone are the days when a small farm can support the family. If the farmers that are farming less than 1000 acres aren’t diversifying with other forms of income (poultry, cattle, outside jobs) - they are just scraping by. Larger acreage demands larger equipment. Implement prices are ridiculous. More technology in equipment costs more money. Land is high. Seed, fertilizer, chemicals keep going up – all the while grain prices keep going down. Farmers have to be exceptional managers and marketers to make it these days.

4) Weather   I’m not getting into global warming or anything like that. But the weather patterns are changing. There are more and more incidents across the US of bad farming conditions. It used to be that the crop insurance industry would have a busy year every now and then – but some slow ones too where conditions were good for farming. Now, there is no down time. I’ve worked more claims in the last 3 years than I have in the previous 10 years combined. This is true across the US.

I don’t know the answers. Hopefully, more markets can be opened up to create a demand again and keep the price steady. If they don’t, the farmers, and thusly the US, will be in a world of hurt.

Thanks for your input.  That helps a lot.  I agree with most of what you said.  I'm still looking for some answers regarding the role of government, outside of dealing with trade imbalances.  I think you pretty much hit the nail on the head when you suggest that successful farming today requires more acreage, more science, and more technology, combined with savvy.  That's just a harsh reality.  It boils down to intense competition, when you think about it. 
As to the climate, we haven't seen anything that compares to the infamous "dust bowl" of the 1930's. Many areas had as much as 8 years of extreme drought.  We haven't seen that kind of "climate change" in our lifetimes. Back then, there was no crop insurance.  I can't even imagine.

This really spoiled a lot of cattle ranchers. When the price of cattle leveled out all you could hear was cattle aren't worth anything, even though when the market went back down it was still higher than it had been before.

So true. They still complain. We saw a few go under too. They went out and bought things they didn't need. Ranches that had been in the family for generations went under years later from bad business practices. 

I just now saw this, haven't signed on in a while.

Re:  trade war support.  
I tend to believe (from what I know) that it could have been handled differently in the beginning.  Rather than jumping straight into a tit for tat trade war, IMO we should have waited for the results of our WTO case against China, which we won.  That would have been an excellent jumping off point if we had just waited a bit longer.  That said, something absolutely needed to be done about China.  We had been told by politicians for years that China was too big to stand up to so we just had to take whatever BS they threw at us (like defaulting on contracts because they didn't like the price).   This is why you see so much Trump support among farmers--we were very aware of the problem and most are glad it's being addressed even if we question the methods.

Those MFP (market facilitation program) payments have saved a lot of our asses.  It's a big part of why we have a little money in the bank right now to get by until our 2020 operating loan is approved.  Because of the way the averages are figured for ARC/PLC payments, most program payments are down from where they were when the markets first nosedived.  We got a decent cotton PLC payment this year from 2018, the first year cotton has been a program crop since 2013 and also the first year seed cotton was included instead of just lint.

Had we rather have good markets or government subsidies?  Is that a rhetorical question?  

The ethanol subsidies were abandoned several years ago and as far as I know haven't been reinstated, but the RFS mandate is still in place.  We run a soy diesel blend in our farm equipment and pickups.  It's not only cheaper, the engines run better and cleaner on it with no mpg penalty.  Cold weather gelling is the only downside.  As for ethanol, it can actually raise the octane level of lower quality gasoline.  It does attract moisture which can be a problem in small engines, but there are ways to manage that, like using SeaFoam.

Good years?  We thrived 2012-2014.  The markets started falling off pretty badly in 14, but we had forward contracted most of the crop when prices were higher so it was still a great year for us.   There were some local guys who couldn't pay out at the bank that year, but I'm going to blame that on management.  The driver behind that price runup was the major drought in the midwest, but we also had strong exports in that time period because the dollar was weaker.  Not only is the ag economy cyclical, it tends to run counter-cyclical to the general economy.

tl;dr version

Yes, farmers mostly support Trump and what he's trying to do.  Yes, we're hurting, but we were already hurting.  Government programs are helping keep our heads above water, the safety net is working, but strong markets would be vastly preferable.  The fact that China lost a large percent of their swine herd at the same time the trade war kicked up was hugely unfortunate for us and likely helped prolong this deal, but hopefully it will be resolved ASAP.

Bear - my opinion and mine only - the less government would stay out of the markets - perhaps better.  so much of the highs and lows are determined on market

reports,  the stock market, USDA market reports weekly and quarterly.    I feel some of this is manipulated by the gov't on prices.  Cattle prices when steers

were brining 1200 -1500 head was good on the selling end, sucked if you were the buyer or didn't have a good protection.  Personnally, I wish the gov't would

stay out of marketing which they do a point in the livestock market.  We don't have subsidies as the crop producer, so as a double edge sword, those subsidies can be good or bad.  And as a poster commented, Crop insurance adjustors are working more due to weather extremes.   I also agree with another, we have not learned

the lessons of the "dust bowl" era.  We have more and more producers, requesting to breaking out beautiful pristine native meadows to be torn up to plant more row crops.  Those hay meadows will never be replaced,   so we keep breaking out ground to produce more  to pay for the high $$ equipment, cover our overhead costs, and

as I said early it all goes back to supply/demand.   We have the most efficient producers in the world,  and we produce a surplus of commodities. 

Giving this a bump back up since its a intersting read.

this would be a great idea if you could convince the rest of the world to do the same. 


Want to see American farmers and ranchers go out of biz quick? 

Stop protecting them from foreign competition that is gov. supported. 

i head chuck bad mouthing  this trade argreement say how little or no good it was doing and last night in the debates shees  they all thought the tarriffs and such were terrible and saying how bad they are  

i read on here that most of the one that do farm and ranch are good with it

also my thought on corn based fuel is ethanol  is why ? and my own belief that its run the cost of feed up  i may be showing my ignorance but  i trust you guys and gals won/t call me stupid

No one has brought up interest rates ..... Yes, larger operations have more input and acres to break even, however almost all farmers utilize some form of bank payment - operating notes, land loans, equipment loans, etc.  When the fed increases the interest rates, the bottom line gets chopped as well. Think the 80s farm crisis if you need examples. 

We run a smaller operation for our area of KS - diversified with livestock, hay, and row crops.  We're building and thankfully are set up pretty well to do so.  The lean years in the past, always revolved around high interest rates and terrible weather.  BUT, that terrible weather can also be beneficial depending on the area it happens - snow storms wipeing out cattle populations in the north drove cattle prices higher (believe it was around 2014/15) which benefitted some stockers and cow/calf operations in the south when the packers still needed numbers. 

Similarly, watching trends - when the government protects its producers on a global scale, we do better. Trump and his trade war are setting us up to be able to market to China - so we don't have a previous situation like the recent soybeans and South America driving us from $11 beans to $8 or less at some points.  

Viruses and disease also play a major roll - right now its ASF allowing us to export more pork while the Asian markets can't keep up with the demand.  Anyone remember the Foot and Mouth outbreaks back in the early 2000s? Beef exports also went up because of demand for product that wasn't available. 

Anyone looking for really good information on market trends of the past can look at the USDA Stats Reports - Economic Research Service doesn't predict, they only report what happened and how much was in trade - Foreign Ag Service has open reports for trade as well. https://www.ers.usda.gov/data-products/livestock-and-meat-international-trade-data/ 

For those interested in COOL - the Capital Press had a great article explaining its current state - https://www.capitalpress.com/ag_sectors/livestock/country-of-origin-labeling-resurfaces-in-senate/article_591b2e84-fce1-11e9-97f7-9f7f814b3361.html 

So, since this thread started, what is the consensus on the recently signed "Phase 1" trade deal with China?

We have cattle and have had for many years and we also raise barrel horses.  So much of the farming depends on mother nature...rain, drought, fire.  Several years ago when we had the drought we had to sell off over a third of the cattle just so we could feed the others.  We had to buy hay at a very high cost....many price gougers out there.  Then we prayed we could make hay the following year.  We still to this day have not been able to fill all of our hay barns.

We totally support our President on the trade deals.  If the President didn't work on the one sided trade deals we would soon all suffer.  

Hopeful but still waiting to see something positive at the CBOT.  The only sign I've seen so far is Bunge is offering even basis on soybeans and +.08 on corn right now. That means they aren't charging us for transport of beans and are offering a premium on corn, which means they're trying to buy acres to make sure their expected sales are covered. But the futures market is still wobbling around on the low side for now.  Same for cotton, we are being told it's going to come up, but are still waiting.