Former Ag Secretary John Block’s Weekly Commentary – “New Year 2017”


Hello everybody out there in farm country. This radio commentary is brought to you by John Deere, the National Corn Growers Association, and CropLife America. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary—

The new year is upon us. 2017, like any new year, presents many unknowns – perhaps even more this year. I want to review where we are at today and look at where we may be going next year.
Since Donald Trump’s election in November, the stock market has soared. Confidence in the economy was rising throughout most of 2016, but it has exploded since the election. Of course, we don’t know if that optimism is justified.

From the ag industry’s perspective, 2016 was not a good year – neither was 2015. In 2016, farm income was down more than 10% below 2015.

The ag industry exports more than 25% of our production. Our exports in 2016 are expected to reach about $127 billion with ag imports at $113 billion. That gives us a trade surplus of $14 billion, which is the lowest surplus since 2012. Farmland values are down for the third year in a row. It is understandable that there is a lot of anxiety in farm country.

Looking ahead, there is hope that Donald Trump’s tough trade policy could pay off. There is also concern that it might not.

Farming and ranching is like any other business. The way to prosper is to have net income – more money coming in than going out.

At this point, prices are relatively low because we have too much – too much corn, too much soybeans, too much milk, and too much meat on the market. We need some weather problems this year to cut the yield. Right now, everyone is looking at Brazil and Argentina. Drought down there would be a Godsend to farmers up here. If we had a few weather problems up here, that also would help to balance supply and demand.

The supply side will be adjusted some with farmers planting more soybeans and less corn, but the weatherman is in control. If we can cut the cost of raising the crop, maybe we can move into the black. Nitrogen fertilizer is down in cost. That is a big deal. Where do we get nitrogen? It is made from natural gas. And, natural gas is down in price. That brings nitrogen down. Let’s keep drilling; let’s keep fracking. Build the Keystone pipeline. Complete the stalled North Dakota pipeline. The ag industry is hopeful that Donald Trump can get this done.

Seed prices have not come down. They should. Farmers will try to find a little cheaper seed. Good luck. I am convinced that, in 2017, farmers will use less chemicals to control pests and weeds. As we should in a market economy, we will look for any way to cut costs.

There will be some marginal farmland that will not be farmed under such uncertainty.

If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com. Have a great weekend.

Until next week, I am John Block from Washington, D.C.


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