There’s room for optimism in agriculture, once the short-term challenges of trade conflict and grain prices are resolved, the head of Farm Credit Services of America said Thursday.
“It’s the biggest thing that’s affecting the industry right now,” said Mark Jensen, who joined the five-state cooperative ag lender, which is based in Omaha, in 1992 and was named president and chief executive in November.
The trade conflict has contributed to farm prices dropping by one-fourth so far and threatens to shut the United States out of important foreign markets, Jensen told about 120 people at a meeting of the Association for Corporate Growth at Happy Hollow Country Club.
Farmers generally support President Donald Trump’s effort to renegotiate international trade agreements, especially with China, he said, and are willing to endure short-term pain caused by those governments’ retaliation to tariffs he imposed.
“We believe Trump is just trying to bring this to a head,” Jensen said, while China may be trying to “outlast Trump” so it can deal with the next president. China has a history of undergoing serious economic pain in order to make gains in the long term, he said, so it’s difficult to tell how the trade dispute will turn out.
Farmers seem to be following a “three H’s” strategy, he said: Harvest their crops, hold them instead of selling at today’s prices and hope the trade war is settled favorably as soon as possible.
He said farmers don’t want the federal government to spend $12 billion to assist farmers hurt by the trade conflict, as Trump has proposed, because they are generally conservative and don’t want to see government adding to its spending deficit in their name.
“They just want access to markets to compete on a global trade basis,” Jensen said. “That’s what they’re good at.”
American farmers as a whole are in a good financial position to withstand a trade war, Jensen said, with debt of about 10 percent of their assets and 80 percent of farmland debt-free. In the farm crisis of the 1980s, farm debt was about 25 percent of assets and much of the land was highly mortgaged.
For the long term, he said, world demand for protein, especially from animals, will continue to grow as national economies improve and more people enter the middle class.
“The U.S. is in the driver’s seat when it comes to doing this,” he said, with the best production, processing and delivery system in the world.
Self-driving tractors, drones that can seek out and spot-spray weeds, electronic monitoring of animals, financial management software and other technological advances promise lower costs and higher productivity, Jensen said. “There are a lot of reasons to be optimistic about agriculture in this country.”