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January 2020, Volume 26, Number 1

US Ag, Trade, EU

US farm debt is projected to top $416 billion in 2019, as large harvests of corn, soybeans, and wheat depress prices and reduce net farm incomes. Some farmers have so much debt that banks do not want to lend them more money, forcing them to turn to higher-interest alternative lenders.

The 2017 Census of Agriculture found that farm owners or managers were an average 58 years, up from 51 in the early 1980s.

The 2017 COA reported 37,750 dairy farms, including 6,800 with farm sales of $1 million or more. Most dairy farmers belong to co-ops that process and market their milk. Dairy Farmers of America is the largest co-op with 14,000 members, and DFA in December 2019 announced plans to buy bankrupt Dean Foods, DFA's largest customer. DFA has been accused by some farmers of trying to suppress the price it pays for farmers' milk. Dallas-based milk processor Borden filed for bankruptcy in January 2020.

Bayer bought Monsanto in 2018, becoming the largest seller of seeds and herbicides including Roundup, a weed killer mired in lawsuits alleging that those who used it developed cancer. Roundup, used on about two-thirds of US crops, generated $5 billion in revenue in 2018 for farmers who plant seeds whose plants are not harmed by Roundup. Bayer has extended its seed and weed package with a new weed killer that uses dicamba under the Xtend label.

Rival Corteva (Pioneer) developed a rival gene-edited seed and weed killer called Enlist, which depends on 2,4-D rather than Roundup's glyphosate to kill weeds.

Trade. The US is a major agricultural exporter, exporting about $150 billion worth of farm commodities a year. Canada is the major destination for US farm exports, followed by China, Mexico, the EU and Japan. However, the trade war with China has pushed China down on the list of buyers of US farm commodities.

China imported $29 billion worth of farm commodities from the US in 2013, $24 billion in 2017, and less than $10 billion in 2019. President Trump in October 2019 said that China would import $50 billion worth of farm commodities a year by 2021, which experts say could happen only if China removes restrictions on US beef and pork.

Boeing, the largest US manufacturer, employs 130,000 workers and supports even more jobs among its suppliers, was in turmoil in January 2020 after the release of internal communications decrying the quality of the 737 Max, the $100 million plane that was expected to be a major profit generator. Boeing's culture appears to have changed from focusing on engineering and safety to profits, especially as Boeing argued that pilots did not need additional training to fly the Max if they were certified to fly previous versions of the 737 airplane.

European Union. The EU spends $65 billion a year supporting its farmers through the Common Agricultural Policy, 40 percent of its $162 billion a year budget. Most subsidies are based on each farmer's acreage of farm land. The 20 percent of recipients who receive the most EU subsidies receive 80 percent of the total.

In nine Eastern European countries, the distribution of EU farm subsidies is shaped by political leaders. Hungary's ruling Fidesz party allegedly sold and leased state land to supporters so they could receive EU subsidies. In Bulgaria, the largest 100 recipients receive about three-fourths of the country's EU farm subsidies.

Czech PM Andrej Babis owns Agrofert, the largest farming firm in the country. Agrofert through its 100 domestic subsidiaries is the Czech Republic's largest recipient of EU farm subsidies.

At the behest of Copa-Cogeca, Europe's largest organization for farmers, the European Parliament has rejected proposals to ban sitting politicians from receiving EU subsidies. The Parliament also rejected proposals to restrict the ability of farmers to subdivide land among friends and relatives and avoid payment caps.

One purpose of EU subsidies is to improve the environment, but heavy usage of fertilizers means that farming is often associated with nitrate damages, producing dead zones in the Baltic Sea and green algae on France's Brittany coast due to runoff from nearby dairy and hog farms. The Baltic, one of the world's most polluted seas, is often called a bathtub with stale water. Poland is the largest single contributor to Baltic pollution.

The UN projects a world population of 10 billion in 2050, up from the current 7.7 billion. The UN projects that the demand for food will increase by 70 percent as richer consumers buy more valuable commodities, such as meat rather than grain. The UN projects only five percent more arable land in 2050.