McKinney, Panelists Identify Priority Ag Concerns
Published: Friday, April 23, 2021
For agricultural economists to see clearly while searching for conclusions that impact the farming community at large, they have to focus on the past, present and future.
All at the same time, more often than not.
That triple vision was on full display during last Friday's James C. Snyder Memorial Event hosted virtually by Purdue University's College of Agriculture.
The panel of four former top U.S. government ag economists—Ted McKinney, Matt Erickson, Rob Johansson and Joe Balagtas —explained the role played by ag economists to students viewing the presentation. They also shared their viewpoints on what farmers have been through in recent years, what's happening now and what it all means going forward.
Washington may seem like a universe away from most Michiana farms, but the decisions made and policies set by those wearing tailored suits often link the global agricultural economy to the bottom line maintained at the corner bank in the producer's community.
McKinney, a Tipton, Ind. native, Purdue graduate and the USDA's first undersecretary for trade and foreign agricultural affairs, wasted no time driving that point home.
"Economics, it seems to me, is one of those broad, but very important areas, that touches everybody," McKinney said. "For sure, you can get an animal science degree, or an agronomy degree or a hort degree, but you're still going to find ag econ, and the numbers and figures, touching all of those—perhaps more than we'd like sometimes."
Based on his interactions and observations, McKinney identified some of the top concerns American agriculture is facing: the World Trade Organization, China, the makeup of U.S. farm exports and the European Union's obnoxious ag policies.
He proclaimed the WTO, the world's largest international economic body since its inception in 1995, to be outdated and broken.
"I do believe we need a WTO but we need to update that," McKinney said. "China, both its opportunities and its challenges, has to rank in that top three, and frankly, diversifying our exports so we're not beholden to any one country.
"We spent a lot of time diversifying the exports and I think had some real success. If you wondered whether trade out there is free, fair and reciprocal, the answer is unequivocally no, and maybe even hell no."
McKinney said he was given permission to work from a position of strength while always seeking a resolution that was fair to U.S. farmers and ranchers as well as the foreign negotiating party.
"When you're looking across the table at the E.U., who will try to screw you at every moment, you've got to have some spine, and we provided that," he said. "The E.U. is on a very, very wrong track in so many of their philosophies and policies."
Johansson, formerly the USDA's chief economist, summarized just how difficult times have been for American farmers.
"The past four years was no walk in the park for agriculture," he said. "Farmers, ranchers and forest owners all had to deal with immense uncertainty each of those years."
The situation was compounded by falling ag commodity prices, declining trade values, multiple government shutdowns, rising debt-to-asset ratios, increased low non-performance and falling working capital, which made adjusting to those challenges all the more difficult for producers.
The costliest hurricane season ever occurred in the U.S in 2017, with $300 billion in damages, much of which was sustained by agriculture.
"We had the longest government shutdown we've had ever, 35 days between December and January of 2018 and 2019, and while that may not seem like that big of a deal to folks not in Washington, it's hard to deliver USDA programs," Johansson said. "Just think of SNAP for example, providing more than 40 million Americans with food assistance, which had to get done on a skeleton crew.
"Who could forget 2019 with the worst prevent-planting on record (with) more than 20 million acres?" he said. "And who could forget 2020 with the worst fire season ever, with more than 10 million acres burned?"
Last year, there were 22 different, $1-billion climate and weather disasters, Johansson said.
He pointed out several government programs that kicked in to help producers. Some were built into the Farm Bill and others were ad hoc actions—the Market Facilitation Program and the Coronavirus Food Assistance Program, for example—implemented in response to retaliatory trade tariffs leveled at U.S. ag exports and the COVID-19 pandemic.
Economists crank out the data policymakers use to address all those losses with financial support. Over the past four years, four different ad hoc programs paid about $58 billion in assistance to producers in addition to normal appropriations.
"The Market Facilitation Program was extremely targeted to those producers affected by trade with China in particular, and of course you needed economists to help estimate where those trade damages landed," Johansson said. "CFAP pretty much touched on every single ag commodity you can think of.
"I would say, our producers, without having MFP, would have been in pretty bad shape in 2018 and 2019 with the tariffs being put on our exports."
Johansson advocates for strong disaster relief and crop insurance provisions built into the farm bill that farmers can plan their risk management around, instead of reactionary governmental responses that could undermine set policies over the long haul.
Erickson served as the chief economist for the Senate Committee on Agriculture, Nutrition, and Forestry for six years. While partisan politics has impaired Congress' ability to get much of anything accomplished in Washington, he opposes efforts to do away with the filibuster because bipartisanship works.
"One of the beauties of the Senate is to get 60 votes (to pass legislation) and have that common ground where you have to have bipartisan support," Erickson said. "The beauty of the Senate is to have that collaboration and have that debate. It's the most deliberative body in the world, and so hopefully folks can have their heads on straight, we can keep the filibuster and we can have the integrity of the Senate maintained."
As the former senior economist for the White House's Council of Economic Advisers, Balagtas had an insider's view of the push and pull of policymaking at the highest level of government.
"President Trump's CEA early and often was arguing privately that the trade wars were costly and the tariffs, because demand curves sloped down, were paid in part by U.S. consumers of imports," Balagtas said. "Among economists who look at the evidence and think about trade, this is pretty uncontroversial.
"But there are other voices in the White House telling the president that trade wars were easy to win, (saying that) against all evidence that U.S. consumers were not paying higher prices because of tariffs. The evidence for that position was pretty weak, but the president doesn't really make decisions based on the strength economic evidence alone. So the CEA, at least early, lost that argument in the White House."
Balagtas said it's important for ag economists to not let politics influence their analysis.
"In the few months since the Biden administration took office, on trade, I'm struck by how similar the policy is to the Trump administration," he said "There's more similarities than differences, at least so far."
McKinney said that while the tariffs that resulted from the trade war were difficult, they were also necessary to level the import-export playing field. He expressed optimism for ag policy going forward under USDA Secretary Tom Vilsack, who served in that role previously under President Obama and then-Vice President Biden.
"I'm greatly comforted that he had been in the role leading the U.S. Dairy Export Council because he has seen up close and personal the unfairness of trade," McKinney said. of Vilsack's position between USDA stints. "He lived it big time in the world in which he was operating. So, and for him to have that experience, and for him to have a very close working relationship (and) personal relationship with the president is a very good thing.
"I'm anxious to get back so some sense of normalcy with policies. Oh my gosh, I can't imagine being a farmer facing the downside of tariffs, and weather and all the things that went on the few years. But I can also say I hope we get back to where things are more predictable and we have to make some tough decisions."
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