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Trade and economic interdependence prove to not be a match for ruthless intentions

Luther Markwart discusses how Russia's actions against Ukraine have tossed long-held beliefs about the power of trade and connectivity on their head, and also looks at other hot-button issues impacting agriculture and ag policy.

A room full of people listen to a speaker who has a presentation on a screen.
Luther Markwart discussed ag policy and geopolitical tensions at the International Sugar Beet Institute in Grand Forks, North Dakota, on March 17, 2022.
Jenny Schlecht / Agweek
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As the world recoils from the Russian atrocities against the people of Ukraine, it is causing countries to reflect on long held ideas about trade and foreign interdependence. For decades, global leaders felt that by binding countries together economically we could reduce conflict, avoid costly wars, and stem major migration of people fleeing conflict. This has been a founding principle for the multilateral trade agreements and a multitude of bilateral trade agreements around the world.

One senior European official recently explained the current dilemma quite well. “We thought interdependence, connectiveness would be conducive to stability, because we had correlating interests. Now, we’ve seen this is not the case. Russia was highly connected with Europe, a globalized country. Interdependence, we’ve now seen, can entail severe risks, if a country is ruthless enough… We have to adapt to a situation that is absolutely new.”

The war in Ukraine has only increased global supply chain disruptions for both inputs and goods. Washington continues to work towards mitigating this and other disruptions. U.S. Agriculture Secretary Tom Vilsack and the House and Senate Agriculture committees know full well the challenges farmers are facing across the board on availability of inputs and skyrocketing costs. This message was delivered to hundreds of congressional offices during our virtual visits in March. None of these issues have quick, easy, or cheap solutions waiting to be executed. No stone is being unturned.

Inflation has raised its ugly head and will likely to be with us for a good while. Demand for goods that go unmet due to a long list of interconnected challenges in the supply chain. Again, these are the aftershocks of a disjointed economy through a long pandemic. Higher interest rates now become a much bigger issue for industries, like agriculture, that rely on credit to produce its products. The structure of future farm policy will require enhanced safety nets for commodities. This will be a tough issue to manage.

Imports: Each month USDA monitors supply and demand for sugar. From time-to-time it makes various adjustments on imports based on expected demand, sugar production, beet storage, and processing of beet and cane. April is typically when the last import adjustment is made for the fiscal year. This year in April, domestic ending stocks for FY 2022 (Sept. 30) were projected to be at 12.5%, which is lower than the 13.5 -15.5% range they use to manage the program. Imports were increased by 221,706 short tons raw value to make sure the market was adequately supplied. Typically, not all the sugar allowed actually comes in. We are closely monitoring any further steps USDA may be considering in terms of adding additional sugar to the market this year.

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Politics: Over the course of May and June, 30 states will conduct their party primaries. It will give us a much clearer view of the issues and the players who will influence the November elections. This is a very exciting time to see how political strategies play out as voters cast ballots. Throughout this time we will be talking with members of Congress and candidates to understand local dynamics across our nation. This will be the political environment we will need to pass a farm bill in, and it will critically important to understand members' motivations.

Luther Markwart has been the executive vice president of the American Sugarbeet Growers Association since 1982. Luther can be reached at lmarkwart@americansugarbeet.org.

Related Topics: SUGARBEETSAGRICULTUREPOLICY
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