CoBank: Trade War Takes a Toll on Ag Economy

Despite the strongest global economic growth the world has seen since 2011, the uncertainty surrounding trade disputes is causing escalating concern for U.S. agriculture. CoBank’s Knowledge Exchange Division says seventy percent of U.S. ag exports are heading to countries that are currently in negotiations or outright trade disputes. CoBank’s Rural Economic Review says the shift from trade war rhetoric to reality tempers a lot of the optimism in the first quarter of this year. In addition to losing market share in some of the emerging markets, the U.S. may face some historical shakeups in supply chain commitments as customers may look for new trade relationships. Tanner Ehmke, manager of CoBank’s Knowledge Exchange Division, says trade concerns pose the greatest threat to the projected global economic growth of three to four percent. “The U.S. and China have been driving the economic growth, which benefits emerging markets around the globe,” Ehmke says, “and a trade war between the two is dangerous for economies around the world.” Overall, Ehmke says current market conditions, including rising interest rates, high fuel costs, relatively high land rental rates, and little price relief for other inputs all point to a net farm cash income decline in 2018.