Johansson: 2020 should be ‘more normal’

ARLINGTON, Va. — Describing 2019 as “a year filled with uncertainty,” the Agriculture Department’s top economist gave those attending the USDA’s Agricultural Outlook Forum this morning a measured but optimistic forecast for 2020, saying it “is shaping up to be a year with less uncertainty, giving producers a better chance to plan and innovate.”

USDA Chief Economist Robert Johansson noted that there was “one challenging uncertainty after another” last year, including weather that was too wet, too hot and too cold on top of unresolved relationships and tariff wars with China and other major trading partners.

“More normal” conditions are expected this year, Johansson said, projecting total U.S. agricultural exports should reach $139.5 billion in 2020, up $4 billion from 2019, now that new trading agreements with Mexico, Canada and Japan have been made, and phase 1 of a new agreement with China has been signed.

Canada is projected to be the largest market this year, importing $21.5 billion, Johansson said, while exports to Mexico are expected to increase to $19.8 billion.

He noted that the forecast for exports to China, however — projected to reach $14 billion this year, up from $10 billion in fiscal 2019 — was made before the U.S.-China agreement was signed, and so do not reflect it.

President Donald Trump has said the agreement commits China to purchase $40 billion in U.S. agricultural goods, but there have been questions of whether or not China will follow through.

Agriculture Secretary Sonny Perdue, speaking later in the morning at a news conference, said USDA is “optimistically” looking at phase 1 of the China trade agreement, with “enforceability” a potential concern. “I don’t want us to be anxious about it,” Perdue said, pointing to Trump’s ability to “leverage tariffs.”

Perdue said he couldn’t answer the question of when China might begin buying U.S. goods at the projected agreement level. He said he was hopeful it would start happening by spring, although he said the coronavirus crisis hitting China is an unknown factor.

Johansson also mentioned that the coronavirus “tops global economy concerns” with disruptions to shipping and supply chains, and is a note of uncertainty for 2020.

And while he said that the three recent trade agreements amount to over half of U.S. agricultural exports, “there are a number of key markets that have tremendous potential for increased trade if barriers to U.S. agriculture are addressed,” saying more access to India, especially, would boost the outlook.

Johansson forecast improved crop and livestock production this year, compared to 2019, with rebounding corn and soybean planting after last year’s wet weather. Corn is expected to hit 94 million acres, or a 5% increase, and soybeans 85 million acres, or a 12% increase.

Total wheat production is projected at 45 million acres, down slightly from 2019, with cotton acreage dropping by 9% to 12.5 million.

He said the outlook for livestock and dairy is for “continued record total meat and dairy production,” with production of total meat and poultry to reach nearly 109 billion pounds in 2020.

Milk production is expected to grow by 13% over the next 10 years, although milk prices are only expected to increase by 5%.

“Much of the gain in production has been through increased gains in animal efficiency,” Johansson said, adding that the distribution of dairy farming operations has been changing “from many small dairy farms to fewer, but much larger, operations.”

USDA said the 2020 commodity outlook reports would be posted online Friday at 7 a.m.

–The Hagstrom Report