As the ag industry prepares to flip the calendar and head into a new year, even experts and insiders have more questions than answers. The long-delayed farm bill and 45Z biofuels tax credit guidance have kept the industry in a frustrating limbo, while high interest rates and low commodity prices push it toward recession.
Some economists are already calling the current situation a recession. Arlan Suderman, chief commodities economist for StoneX, a financial services provider for global markets, is one of them.
“By definition, a recession is when you have back-to-back quarters of contraction in GDP [Gross Domestic Product],” he tells hosts Tyne Morgan and Clinton Griffith on Farm Journal’s Unscripted podcast. “We’re not growing as an industry, we’re contracting.”
However, he believes that comparisons to the 1980s, a historically bleak period for agriculture, are misguided.
“I don’t think we’re in that type of scenario,” he says. “Fortunately, as an industry, we’re not as highly leveraged as we were in the 1980s, particularly when you think of land. We have some safeguards in place.”
In fact, he tells the hosts that he’s more optimistic about the ag economy than he was just a few months ago, noting that a new tax policy and less regulation under the Trump administration could lead to renewed growth.
Suderman is also optimistic about global trade, foreseeing new agreements with major partners, such as Mexico, Canada and even China. Those countries, he says, are in weaker negotiating positions than they were during the first Trump administration. “We’re hearing from our people in China that maybe there might be some type of trade deal hopes,” he says. “That would mean more agricultural products bought from the United States in exchange for Trump easing up on tariffs on consumer goods.”
Of course, many challenges and questions will persist as the new administration takes over. How can the industry boost domestic demand for soybeans, corn and pork? Will the Trump administration show more support for biofuels than it did in its previous time in office? How can U.S. soybean exports succeed despite growing competition from countries such as Brazil and Argentina?
For Suderman, the clearest certainty is that changes will occur quickly in the new year. The president-elect knows that losing control of Congress in the mid-term elections is a possibility, so he will enact his new policies with as much speed as possible. “He has two years to get his agenda done,” Suderman says. “So we’re going to see things happen fast and furious.”
