MENOMONIE — From weather and trade negotiations to the priorities of the new Congress and a federal government shutdown that long ago wore out its welcome, delaying implementation of the 2018 Farm Bill, there are a lot of unknowns for agriculture heading into 2019.
But that doesn’t mean farmers can’t be prepared, AgDay TV news anchor Clinton Griffiths told dozens of producers attending a Jan. 22 conference hosted by Ag Risk Managers of Barron.
In a talk entitled “Grit and Grease,” Griffiths encouraged farmers, in the year ahead, to fine-tune their management, diversify, consider niche markets and get creative. Forecasts peg 2019 U.S. farm income at about the same levels as 2018.
“A lot depends on where you live and your year-to-year situation,” said Griffiths, a father of three who farms in northwest Indiana.
Despite ongoing cash-flow concerns in the industry, he said he’s optimistic about agriculture. Those who succeed this year will have persistence, passion and the ability to push aside distractions in the normal day-to-day of running their business.
“It’s not necessarily about making big changes, seeing big wins. Sometimes, it’s just about getting up, going out and doing the work,” he said. “Don’t forget to be around for people. ... This year, encourage each other.”
John Deere recently indicated that it’s bullish about 2019, he said, and the industry tends to follow their sales. The El Niño weather pattern calls for a wetter and warmer year than normal, and commodity prices likely will be steady.
Griffiths said trade is the big wild card for agriculture this year, and it has the potential to have the biggest impact. Negotiations continue with the European Union, United Kingdom, Korea and as part of the U.S.-Mexico-Canada Agreement. A March 2 deadline has been set for negotiations between President Donald Trump and Chinese President Xi JinPing. China is the world’s largest soybean buyer, and the U.S. traditionally has been a major supplier.
But “my expectation is that can gets kicked a little further down the road,” Griffiths said of China trade talks.
Turmoil here and China’s slower economic growth have put downward pressure on the U.S. economy, he said, so “I think there’s incentive on both sides to get something worked out here.”
Other headwinds in the market include a massive 955-million-bushel soybean carryover, compared to the normal level of 300 million bushels. 2019 soybean yields are predicted to be about 52 bushels per acre, and corn is forecast to hit more than 178 bushels per acre. The U.S. Department of Agriculture has predicted that, by 2028, yields will reach 55 for soybeans and 194 for corn.
Uncertainty lies ahead, but Griffiths said there’s one thing he does know: “This is not the 1980s; we are not in a 1980s farm crisis.”
Defaults have been manageable, he said, and land prices are holding. Working capital loans are on the rise, and decent yields have helped farmers overcome some of their issues related to low commodity prices. Real estate values are stabilizing. One red flag is that non-real estate debt is the highest it’s been in 16 years, according to Griffiths. A big concern of many ag bankers is operating interest expense.
Those in the dairy industry will want to keep close watch of changing consumer trends, he said. Research has shown that Generation Z (those born between 1994 and 2012) is 550 percent more likely than Baby Boomers to choose dairy-free beverage options. By 2025, Generation Z will make up about a fourth of all U.S. consumers, so the dairy industry must adjust to that.
“The market has changed some and (producers) will have to deal with that,” he said. “The dairy industry realizes those shifts and is working on ideas.”
Griffiths said agriculture will see an influx of new technologies in the next five years. For example, IBM recently bought The Weather Company, so a private company will be competing with government-generated forecasts, potentially increasing accuracy of forecasts worldwide.
“We’re standing on the cusp of big changes in this world of agriculture,” he said.
Already used in many milking parlors, robotics is coming to crop production, where they will be used to spot-spray weeds. Drone usage is increasing, and seed companies are working on dwarf corn.
“But will this all be affordable?” Griffiths asked. “It has to pay back with real value.”