Partial Government Shutdown Grinds On

Farmers See Lack of Data, Loan Access as Another Layer of Uncertainty

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A barn in eastern Nebraska still reflects the strong rural enthusiasm for President Donald Trump two years after the election. The president continues to battle Congress over funding for a border wall in order to reopen parts of the federal government that remain closed. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- As the president and congressional Democrats keep fighting over border wall funding, farmers are feeling the impacts of the partial federal government shutdown in different ways.

Terry Detrick points to the high amount of natural disasters farmers and ranchers have faced in Oklahoma, including wildfires. That opened up the state to more disaster and Farm Service Agency operating loans.

"We have been one of the higher states with disaster loans and FSA farm loans. That's all shut down, but the bills continue," said Detrick, president of the Oklahoma Farmers Union.

The partial government shutdown is approaching three weeks, though the holidays limited much of the initial impact and FSA offices stayed open until the end of December.

Farmers nationally relied just a little less on FSA loans in 2018 than they did a year earlier, but direct and guaranteed FSA operating loans still reached nearly $2.2 billion. In fiscal year 2018, Oklahoma had the largest number of all forms of FSA loans with 3,146 applications and 2,433 approved. Iowa was second in such loans and Nebraska ranked third.

"If they have even a disaster loan, they have bought posts and fences to fix after the fires, and now the bills are due but there's no payment to access," Detrick said. "So it's a difficult time and it's happening during a depressed market economy."

Prior to the farm bill passing, lawmakers from both parties highlighted net farm income for 2018 was 47% lower than five years ago and 12% lower than 2017.

The Federal Reserve on Wednesday released its Federal Open Market Committee meeting minutes from December's gathering before the shutdown. The Fed was already pointing to financial problems in agriculture.

"Contacts in the agricultural sector reported that conditions remained depressed, in part because of the effects of trade policy actions on exports and farm incomes, uncertainty about future trade agreements, and continued low commodity prices," the Fed stated. "Banks continued to report a gradual increase in agricultural loan delinquencies in recent months. Nonetheless, participants cited a few recent favorable developments, including new trade mitigation payments as well as legislative action to maintain crop insurance that was seen as reducing uncertainty."

Commodity markets, though, are trading on rumors and positive quotes rather than export sales data. On China soybean buys, for instance, traders and farmers don't exactly know how many soybeans the U.S. has sold to China because USDA stopped reporting large sales and weekly reports when the shutdown began.

Jim Sutter, CEO of the U.S. Soybean Export Council, said the "best guess" right now is that the U.S. has sold "somewhere between 4 [million] and 5 million" metric tons of soybeans to China since the G20 summit in Argentina. Sutter noted, "We are not getting the normal sales report data from USDA."

The South China Post reported Monday that Chinese traders were buying U.S. soybeans, with state-owned Chinese companies buying up to 180,000 metric tons, though the article stated, "One (trader) said the total was closer to 15 cargoes, or about 900,000" metric tons. Analysts now are gleaning export inspection reports for some solid numbers.

For Sutter and the entire commodity export infrastructure, they have faced challenges since the farm bill expired at the end of September over Foreign Market Development funds. Now, the shutdown is affecting access to trade aid set aside specifically for these export groups. Funding for regular trade programs is tied up with the shutdown as well.

"If the shutdown continues for very long, it will start to have an impact on our overseas marketing/promotion activities, and it is already delaying us getting started in earnest with our 2019 programs using FMD/MAP funding," Sutter told DTN.

Detrick said the shutdown adds to the complications farmers have had since fall harvest because the trade disputes and retaliatory tariffs have gone on longer than people anticipated. Still, he credited President Donald Trump for tackling unfair trade practices.

"We also realize that we have been suffering from unfair trade practices for many years in several respects," Detrick said. "And I think most people in agriculture respect the fact that President Trump is willing to try to tackle that."

USDA has tried throughout the shutdown to ease some concerns of its various constituencies. Tim Murtaugh, a USDA spokesman, said more than $3 billion in 360,000 Market Facilitation Program payments was sent to farmers since the shutdown began, and more than $5.2 billion in total in MFP payments have been sent out.

To help farmers who haven't made it to the Farm Service Agency offices, USDA extended sign-up for MFP beyond Jan. 15 to an undetermined date once the government reopens. USDA also found a language technicality that will allow it to fund food-aid benefits to 38.6 million people at least through February.

The lack of data on crops will become more apparent after Friday when a trove of USDA reports will be missed.

Tim Johnson, a research and policy analyst with the Iowa Farm Bureau Federation, said that lack of information on grain stocks, commodity usage and production will affect farmers who use that information to tweak their planting intentions and seed orders.

"Many of our members look at that to help make planting decisions for spring, and that is one less data point they have to work with," Johnson said. "I'm sure some folks will find some other way to get that. With the trade issues and the prices where they are now, that's just one more thing that adds uncertainty to the market, and that's never a good thing for farmers."

Furloughed USDA workers also could be starting work on the new farm bill if the government wasn't shut down. The dairy program was overhauled, and rules have to be rewritten for the Agricultural Risk Coverage and Price Loss Coverage programs. Then there are people in various states looking to submit plans to USDA about farming hemp in their states.

"It takes an awful lot of background work to get a farm bill implemented, and they are not there," Detrick said. "So that's another difficulty."

Detrick also pointed to the loss of timely crop reports. Farmers now can't get up-to-date access to trade data or production data, he said. "So it makes it real difficult for a farmer to be able to make any plans."

"There's enough data there to really help us out. If someone takes a glance every once in a while, it may not seem that significant. But if someone is following the trends, that information can be a big help," Detrick said. "Because the trade issues and now the government shutdown, how is a person on the farm supposed to make any plans?"

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Chris Clayton