By Rachel Lane
WASHINGTON, D.C. – The overall farm outlook for U.S. farmers in 2022 is expected to be good, but income and commodity success will depend on factors such as weather and international activities.
Last week, the USDA Agricultural Forum was online only for the second year in a row. More than 5,000 people from every state and 90 countries registered to participate. This year’s focus was New Paths to Sustainability and Productivity Growth, but the primary speakers at the opening events spoke about how international agreements and disagreements will likely impact the U.S. agricultural industry.
USDA Secretary Tom Vilsack said the outlook for international trade this year looks better than ever. He had just returned from the first trade mission trip abroad in two years where more than 40 U.S. agriculture representatives met with more than 300 interested buyers in Dubai.
The trade trips are important for building relationships between different companies and teaching people in those countries what U.S. agriculture has to offer, Vilsack said. When talking to a similar group in Japan, he remembered that they suddenly started writing and when he asked why, he was told the information he was providing about sustainability and environmental stewardship was what the Japanese consumers were interested in.
He said China has started purchasing U.S. agricultural products again and, with the drought in South America, U.S. soybeans will likely be in even higher demand this year.
Elizabeth Economy, senior advisor on China at the U.S. Department of Commerce, spoke with Vilsack in a pre-taped conversation. She detailed the complexities of working with China and how China tries to use its economic power to get everything it wants. Economy said the United States and its allies want to maintain a working partnership with China.
“That includes continuing to trade with China, continuing to promote our products in China, and … central to that, of course, is agriculture,” Economy said. “If you look at the phase one trade deal, agriculture is the brightest spot of all.”
She said Xi Jinping, president of the People’s Republic of China, wants to increase self-sufficiency, but the Chinese middle class continues to grow, and she thinks the United States and its allies need to continue to push for a level playing field for companies and exports, understanding that China wants access to the U.S. market, too.
“If I were going to advise (farmers and agricultural manufacturers), diversification is probably not a bad idea… and thinking about markets outside of China as well,” she said. “(Jinping) will be making it more difficult or trying to make it more difficult for U.S. brands and U.S. exports, but I think we can continue to push.”
Seth Meyer, USDA chief economist, said China was the largest export market for U.S. agriculture products in 2021, purchasing more than $32 billion in products. He expects the country to purchase more than $35 billion in agriculture products from the United States this year.
In 2022, Mexico and Canada are expected to purchase more than $25 billion in U.S. agriculture products, but Mexico is expected to surpass Canada to be the second largest export market for the United States, he said.
Japan is the fourth largest market, followed by the European Union and then South Korea, which is expected to import about $10 billion in U.S. agricultural goods, Meyer said.
He said it was important to develop smaller markets as well. There are many countries not represented on his graph. While they were not the largest markets, they could account for a large increase.
Supply chain issues will likely continue for two more years, and he thinks cattle and hog inventories will continue to decline, meaning less accessibility to meat and higher prices. There has been a growing international demand for soybean oil while domestic biofuel standards are expected to help sustain corn prices, he said.
In 2021, net farm income across the United States was higher than in previous years and he thinks there will be slightly lower, but higher than average income in 2022. The Midwest, specifically, had higher increases in the prices of the commodities produced there, specifically corn, soybeans, wheat and livestock. Other areas of the country that had different commodities did not see the same increases in profit.
While he thinks there will be similar prices for the products this year, he does caution that it depends on the climate in the United States and other parts of the world, as well as the political complications. He referenced the Russian “incursion” into Ukraine as an example of uncertainty, but did not get into details as the situation had only occurred a few hours before he spoke.
The drought in South America means they are producing fewer soybeans, giving U.S. soybean producers an opportunity this year.
Overall, Meyer said the outlook is positive, but uncertain. Crops and livestock have a strong domestic and export demand. Supply chain disruptions, labor availability and logistics and trucking remain important concerns. “Weather will have the last say on supplies,” Meyer said.
Reports detailing the outlooks for U.S. commodities can be found on the USDA website.