What a world we live in.
We now know that we are in a trade war with China. When a trade war was just a threat, China began canceling US soybean contracts and Brazil is now filling that gap. This shift in markets will impact conventional US grain farmers for years to come. This has caused already low soybean prices to drop even farther putting many conventional farmers in a bad situation. Now that the trade war is official it is going to get worse. We have already begun to get inquiries from conventional farmers needing to sell some of their farmland to survive, some going into bankruptcy.
RaboBank, a big ag lender in the US, told me that conventional grain prices are under such stress that they can now only lend to 20% of the farm market because the other 80% of farmers don’t have the liquidity to back either a mortgage or operating loan. A local bank in SE Iowa also told me that they had 50 farmers to whom they could no longer renew operating loans.
Fortunately, organic grain farmers are not negatively impacted. Demand and prices remain high and our organic grains sell immediately to the local US market. As the stock market recoils from this trade war and so many other stress causing issues around the world, owning operating organic farms is an even more enviable position to be in. Regardless of the market and economy, people need to eat healthy food.
The Farm Bill in limbo. The House and Senate have different versions and the bill must now go into conference. Conservative legislators in the House are holding the bill hostage in an effort to get non-farm related legislation into the bill … drastic immigration reform being one major leverage point. I’ve asked our SFP advisor in WDC to update me on where the bill sits. I’ll let you know more as I hear back.
If ever there was a good time to invest in high-quality farmland with an organic program, we are in that window now. The adage in farming is sadly true … when one farm does poorly, another farmer does well.