WASHINGTON — The Trump administration on Thursday sought to reassure American farmers battered by years of trade uncertainty, low commodity prices, rising floods and lengthening droughts that better economic times are ahead, thanks to a recent trade deal with China and a new sustainability initiative aimed at boosting production.
At the same time, Agriculture Secretary Sonny Perdue, joined by department economists at the agency’s annual outlook event, acknowledged farmers will have to “do more with less” over the long term.
The U.S. Department of Agriculture plans to partner with the private sector, including Silicon Valley technology companies, to improve farm productivity by 40% while cutting in half agriculture’s environmental footprint by 2050, the secretary announced before a packed hotel ballroom in Arlington, Va.
“These are stretch goals,” Mr. Perdue said. “We think we can get there.”
The department’s “Ag Innovation Agenda” will involve collecting more conservation data from farmers that measure soil health and water quality, and maintain a “scoreboard” to track environmental progress. Mr. Perdue wants to boost corn-based biofuel blends to 30% of all transportation fuel consumption by 2050.
In pushing an environmental agenda, the secretary made no mention of climate change or the impact of a warming climate on wetter, drier and hotter weather conditions. Still, much of the agenda builds on the department’s work under the Obama administration, which established seven regional “climate hubs” to help farmers and ranchers adapt “to a changing climate.”
Agriculture accounts for about 9% of all U.S. greenhouse gas emissions, according to the U.S. Environmental Protection Agency.
Using a laser pointer, Mr. Perdue, a veterinarian and business owner, pointed to trends over previous decades showing lower rates of soil erosion and lower methane emissions from dairy farmers despite a doubling of milk production.
“The story of American agriculture is doing much, much more with much, much less,” he said.
Average farm income is projected to increase in the coming fiscal year to the highest levels since 2013. Farm exports will increase by $4 billion, which does not include recent commitments by China to buy $40 billion of U.S. agricultural goods over the next two years.
Mr. Perdue said he hopes China will begin making those purchases — as required by the partial trade deal signed by President Donald Trump last month — by the spring. But he said the coronavirus, currently wreaking havoc on China’s economy, caused some uncertainty.
Asked by reporters about specific timing, Mr. Perdue said, “I can’t say when.”
“The hardline numbers in the phase one deal [with China] will come to bear fruit,” he said
An undercurrent of the lofty goals unveiled Thursday was the immediate hurdle of helping family farmers transition to a high-tech space dominated by larger operations.
The department forecasted total farm debt will inch up to $425 billion, the highest mark since the 1980s. The debt strain is likely to raise some concerns about over-leveraged operations, as farmers’ debt-to-equity ratio will reach the highest since 2003.
Department officials emphasized that low interest rates and low inflation will continue to help farmers easily pay back loans.
The U.S. dairy industry will continue to face long-term market challenges stemming from higher milk production and waning demand from consumers who favor non-dairy alternative drinks.
Over the 2020 fiscal year, which ends Sept. 30, the department expects U.S. dairy prices to edge up by 1% to $18.85 for a hundred-weight of milk — the standard measurement that amounts to 100 pounds. Prices remain lower than the 2014 peak of $23.97 a hundred-weight of milk.
Meanwhile, farmers continue to increase supply: Milk production will increase to 222 billion pounds in the next year, up by 2% from 2019 and up 15% from 2010. About a fifth of U.S. dairy is exported to other countries.
The dairy industry has consolidated in recent years to fewer and much larger operations, and half of all U.S. dairy farms have 1,000 or more cows, the department noted.
“Dairy remains a sector experiencing structural reform,” said Robert Johansson, the department’s chief economist. “We expect to see continued consolidation in the dairy industry.”
Western Pennsylvania has been roiled in recent years by low milk prices. In 2018, Dean Foods, one of the country’s largest dairy distributors, pulled out of milk contracts with regional dairy farms before filing for bankruptcy last year.
This week, Dairy Farmers of America, the country’s largest milk cooperative, agreed to purchase a “substantial portion” of Dean Foods.
The department’s two-day summit in Arlington attempts to build connections between farmers, academics, tech companies and department officials. Sessions cover topics like mitigating extreme weather, big data, China’s economy, African swine fever and food waste.
Mr. Perdue, speaking with reporters, said he believes the dairy challenges are part of a natural cycle that the market, rather than government directives, should correct.
“We can’t continue to stop innovating because we have more milk than we’re consuming,” Mr. Perdue said. “Technology’s gonna be the key to productivity. ... We will see periods of overproduction. That’s why exports have been an opportunity, but almost a necessity.”
Rep. Glenn Thompson, R-Centre, a top member of the House Agriculture Committee, has said he will be closely monitoring China’s purchases of U.S. farm commodities, in particular dairy and hardwood lumber.
“The agreement with China is an optimistic blueprint for trade relations moving forward,” Mr. Thompson said, though he cautioned that “it will take time to implement and see progress.”
Daniel Moore: dmoore@post-gazette.com, Twitter @PGdanielmoore
Story updated at 3:14 p.m. on Feb. 20, 2020.
First Published: February 20, 2020, 6:43 p.m.
