By Clint Thompson
Jeffrey Dorfman, Georgia’s state fiscal economist and professor in the University of Georgia (UGA) Department of Agricultural and Applied Economics, believes agriculture is currently in an “OK place” amid low commodity prices.
Speaking at the UGA College of Agricultural and Environmental Sciences Ag Forecast meeting at the Tifton Campus Conference Center on Jan. 31, Dorfman highlighted recent trade deals the United States finalized that could signal brighter days ahead for farmers in the Southeast.
“Commodity prices aren’t at historic highs, and I think farmers kind of wish they were. But really, historically, they’re OK right now,” Dorfman said. “I think as long as we get decent weather, and trade wars don’t flare back up again, it’s going to be an okay 2020. People aren’t going to get rich, but they’ll make money.”
Dorfman believes two trade deals that were finalized in the past few weeks should boost the financial markets for U.S. agricultural products.
The United States signed the phase-one deal with China on Jan. 15. As part of the agreement, China pledged to increase its purchases of U.S. agricultural goods to $40 billion over the next two years.
Pecan growers are one commodity group hoping to benefit from improved trade relations with China.
“There’s no buyer in the world that can replace China in pecans. Other things, yes, you can shift the world’s supply chain and find some other buyer. If China doesn’t buy them, prices are terrible,” Dorfman said. “Hurricane Michael shrunk the crop (in 2018), and we should have had a high price. Instead, we had a low price because China wasn’t buying. It’s really important that they’re getting back in the marketplace.”
On Jan. 31, the United States-Mexico-Canada agreement (USMCA) was finalized. According to https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/strengthening, the agreement ensures food and agriculture will be traded more fairly and expands the exports of American agricultural products.
“For the Southeast, the USMCA should help. We’ll be able to send more peanuts, probably, to Mexico. We’ve got some dairy opening up in Canada, which should help milk prices, which should help farmers in the Southeast for the few dairies we’ve got left,” Dorfman said. “I think it’s a positive picture on trade compared to where we were struggling a little bit internationally.”