on Monday, December 16, 2019
By Michigan Farm News
The farm economy is in one of its worst slumps since the Great Depression, the American Farm Bureau says.
Farmers are experiencing difficulties ranging from bad weather to trade difficulties throughout the United States.
Farm bankruptcies increased 24% increase from 2018 to 2019, the organization said. Dairy, livestock and grains have been the biggest sectors hurt in this crisis, but that doesn’t leave the rest of the agricultural sector untouched.
From cherries to dairy, Michigan exports have been dropping all year, according to Ernie Birchmeier, the livestock and dairy specialist at the Michigan Farm Bureau.
“The farm economy can be very challenging,” Birchmeier said. “Farming, in the last five or six years, from an economic standpoint, has been tough. There have been some farms in Michigan that have been facing economic challenges, and some that have exited their operations, especially in the dairy industry. You’re looking at five years of negative returns in the dairy industry and I don’t know of any businesses that can survive five straight years of negative returns.”
Nature is only one problem plaguing farmers.
The current trade war with China is causing a significant deficit in Michigan’s trading environment, experts say. A significant example is soybeans, one of Michigan’s most valuable exports.
A massive export to China used to feed pigs, the state’s soybean exports topped $185 million this year, according to the Michigan Economic Development Corp. (MEDC).
However, over 100 million of China’s pigs were decimated in an African swine flu epidemic, dramatically cutting demand for Michigan soybeans.
On top of that impact, a 25% Chinese tariff caused a catastrophic effect on Michigan’s farmers.
“It’s definitely caused a decline in soybean prices because China was a big market for U.S. soybeans,” said Theresa Sisung, the Michigan Farm Bureau’s field crops specialist. “Soybean prices have been impacted by trade challenges. It’s a big problem in the world of field crops.”
The U.S.-Mexico- Canada Agreement posed another recent hurdle for farmers.
The unfinalized agreement is intended to make a “level playing field” in trade among the three countries. Mexico is one of Michigan’s key trade partners.
“There are imports that come in from Mexico, but we export a lot as well,” said Audrey Sebolt, the horticulture specialist at the Michigan Farm Bureau. “We export a lot of pork, also fruits, vegetables. We also export a lot of apples to Mexico, so apple-growers are looking towards the agreement to be finalized.”
When farmers sell their products, most of the revenue goes right back into the business, according to Steven Johnston, the owner of S. Johnston Farms in Croswell. The farm specializes in hay, soybeans and wheat.
After paying workers and buying feed for farm animals, the real income that farmers earn is much less because tariffs take a chunk out of the remaining earnings, he said.
“As of right now, to stay afloat, I have set aside money to pay my current bills,” Johnston said.
“I am attempting to get a loan so I can continue to operate for next year through (the federal) Farm Service Agency. This is something I have never had to do,” Johnston said.
“I was once told one bushel of wheat that we sell at market for $4 makes 90 one-pound loaves of bread. To bring it into perspective, my grandfather tells me how he got the same price for products in the 1970s, although yields were less then,” he said.
“Still it has a huge impact,” he said.