As we begin the new year and look at where the prognosticators think the new year will take us, the outlook is overshadowed by the federal government shutdown. This doesn’t mean everything is at a standstill but instead that decisions are being made with more caution than in previous years. Consider whether:
The migrant work force used in 2018 be available in 2019?
Farmers will receive the payments promised by the government before the shutdown?
Consumer confidence in the food supply mean lower sales in certain categories?
There be a food safety scare before the government brings back more furloughed food inspectors?
Uncertainty is the keyword for the agriculture industry as they move into spring. Weather and other variable factors make farming a very uncertain professional. But this year is especially concerning since crops need to be planted and plans made for summer harvesting in the midst of the uncertainty brought about by the situation in Washington.
The Good News
The Agriculture Improvement Act (aka the Farm Bill) signed by the president late in 2018 provides some reassurances for the industry in the form of support for various programs. These include improvements in risk management programs and much needed funds for trade development and agricultural research. The bill also increases the investment in beginning farmer programs, critical to industry growth and our food supply. It’s interesting to note that the most discussed portion of the bill, that which provides nutrition assistance to needy Americans through the Supplemental Nutrition Assistance Program (SNAP), accounts for about 75 percent of the farm bill’s total cost.
Labor Costs and Availability
Labor costs represent one of the largest percentages of any agriculture entity’s annual budget so it’s always an important factor in economic outlooks. For 2019, nearly every source we reviewed reports there will continue to be a labor shortage, regardless of the type of worker. Farmers of all sizes are faced with increasing competition for workers, a shortage of skilled workers, health care and other benefit requirements, and the increase in the minimum wage requirements in various parts of the country. Even small farmers are putting together programs to demonstrate why their operations are the best choices as businesses compete for available workers.
In addition to the supply of labor, the sector is concerned about immigration. Many farms, especially in the West, rely on undocumented workers to tend and harvest crops. As long as the immigration crisis in America remains unsolved, this will be a large area of uncertainty for farmers. Changes and restrictions to the H-2A Guest Worker Program could put further constraints on the availability of workers. Continued discussions in Congress are concerning to farmers in need of a previously consistent group of workers.
Technology that reduces the number of workers needed is putting additional strain on the labor budgets. This is because with the use of technology comes a requirement for a more highly skilled workforce.
Available Clean Water and Weather
Access to water is critical for farmers and something that’s become harder to come by over the past several years. According to the Farm Bureau, restrictions put in place by the Obama Administration hurt them considerably so there is cautious optimism surrounding the new Waters of the U.S. definitions in the proposed Clean Water Act. These regulations will be debated and discussed this year in Congress with likely heated discussions from both the agriculture and environmental industries.
Droughts which have been prevalent in Western states only heighten water concerns for farmers as they fight for what they believe is their rightful share.
Trade negotiations during the third and fourth quarters of 2018 only heightened insecurities for agricultural interests tied to exports. As of this writing, there seems to be optimism that negotiations are proceeding in good faith with China and other countries. According to the Farm Bureau, the ratification of the United States-Mexico-Canada Act in Congress means increased dairy imports to Canada, but not in high enough numbers to make a large impact.
Most agriculture experts focused on exports have settled on the results of talks with China, according to various sources. It is important to remember that 95 percent of the world’s population is outside the U.S. while only 20 percent of our agriculture production is exported. So, for those who focus on exports, these markets are critical. It’s especially concerning that countries involved in trade negotiations not only import a lot of American goods but are also in talks with other countries to find new sources for things like soybeans and corn. That makes the current talks even more important.
In Alaska, where seafood exports account for $1 billion, they’re facing something of a double jeopardy situation as well. The tariff talks are aimed at leveling the playing field for products exported from the United States against those imported. However, in the case of seafood, according to a November article in National Fisherman, “A number of the products identified are American seafood products, caught in U.S. waters by U.S. fishermen, but processed in China before being re-imported for U.S. consumers. Ultimately, the cost of the additional duty on products from China will be felt not by the Chinese but instead by American companies, Alaska fishermen and U.S. customers.” This seems inconsistent with the original intent of the tariffs. Alaska’s fishing industry is anxiously watching the talks to ensure the end result provides the expected benefits.
As we all continue to navigate the variabilities of business, we do know that farmers and agribusiness people are critical to our future. It is important to understand the issues from their eyes and help them produce the best foods they can for us to enjoy in our land of plenty. Here at Food PR & Communications we work hard to stay abreast of these issues and share our thoughts with readers.
This post first appeared on food-pr.com
Photo credit: Noah Silliman on Unsplash