2020 a strange year for ag, Farm Bureau economist says

2020 was a memorable year for U.S. agriculture, marked by the pandemic, increased federal aid and more exports to China, according to the chief economist of the American Farm Bureau Federation.

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Trade with China has been a bright spot in 2020, reported John Newton, chief economist with the American Farm Bureau Federation, during a session of Prairie Grains on Dec. 10, 2020. (AFBF graphic)

After facing major challenges in 2018 and 2019, American farmers had hopes that 2020 would be better. Then the coronavirus pandemic struck, an agricultural economist said.

"Unfortunately, that light we saw at the end of the tunnel turned out to be a freight train," said John Newton, chief economist of the American Farm Bureau Federation. "This virus really has significantly impacted food and agriculture in a way that we simply could not have anticipated in early March."

Even so, "We're going to find ourselves with a (2020) farm profitability scenario that looks pretty darn good across the country," in large part because of increased federal aid, he said.

Newton spoke Dec. 10 at the annual Prairie Grains Conference in Grand Forks, N.D. The event, hosted by a number of North Dakota and Minnesota commodity and general farm groups, was held online this year, with all the sessions on one day instead of the normal two.

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U.S. farmers and ranchers struggled in 2018 and 2019 because of natural disasters, poor commodity prices, difficult growing seasons and the trade war with China, Newton said.
But going into this year, "I think folks were optimistic that 2020 was going to be a better year" — with farmers hoping that "demand could accelerate enough to offset supplies that we were knew coming back in 2020," Newton said.

Then the pandemic struck.

Much more food was consumed at home, far less at food service facilities, stressing the supply chain. For example, restaurants typically buy bacon in 50-pound packages, while consumers buy much smaller packages. That led, among other things, to problems at meat-packing plants. Retail meat prices rose even though farmers with market-ready livestock were unable to sell it, Newton said.

U.S. ag exports also have struggled in 2020. For example, sales to Japan, a major customer, have dropped in half this year, for example.

"The lone bright spot in the world is China," Newton said.

The outbreak in China of African swine fever, which ravaged Chinese hog herds, led to "strong demand for our protein products." The Chinese also have bought large amounts to U.S. soybeans, to help to rebuild their hog herds, and corn, reflecting reports that the Chinese corn crop this year is poor, Newton said.

Implementation of the phase one trade agreement between China and the U.S. also boosted exports to China, Newton said.

Farm income, climate

U.S. net farm income in 2020 is expected to rise to $119.6 billion, one of the highest annual totals on record. Give much of the credit to special federal aid programs, without which many farmers and ranchers would be really struggling, Newton said.


He described apparently healthy 2020 farm income as "a false positive," one that is bolstered by federal payments and consequently doesn't give a fully accurate portrayal of farmers' and ranchers' financial situation.

Climate issues will become increasingly important under the administration of President-elect Joe Biden. Ag accounts for a relatively small amount of carbon emissions, but public attention is growing on what farmers and ranchers should do to limit their emissions, Newton said.

"The ag groups recognize that and we want to be part of the conversation. We want to be at the table with lawmakers," Newton said. "Farmers are willing to do more. We've long been good stewards of the land, protecting the water, protecting the air, protecting the soil. And we can do more, but it's got to be economically sustainable as well."

Agriculturalists' goal should be getting more voluntary practices, not mandatory ones, implemented across the country, Newton said.

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