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Notwithstanding a promised $12 billion relief plan, a great number of US agricultural producers argue the assistance is not enough to stop a tide of anticipated agricultural failures this calendar year.

Growing Financial Stress for Row-Crop Producers

Row-crop producers, specifically soya bean farmers, have been disproportionately impacted by trade disruptions stemming from the Trump administration's trade war. China, which acquired over half of US soya bean exports recently, reduced buying amid the trade war.

But, agricultural economists point out that the lump-sum bridge payments fail to alleviate underlying fiscal problems. Soaring input costs and depressed commodity values have afflicted producers for several years. Data from industry analysts, US row-crop producers have faced billions in losses before insurance is accounted for.

"This assistance that provides about $50 an acre will not save the many thousands of independent farms that face bankruptcy before the end of the year," said one state agricultural association president.

Expanding Economic Ripples

The economic pressure goes past the farm gate. Leading farm machinery manufacturers have also warned substantial negative impacts due to trade policies. This represents the second round in the past several years that substantial taxpayer support has been used to the farm economy amid trade-related challenges.

At the same time, agricultural credit conditions have tightened, per central bank data. Reduced producer revenue has eroded financial flexibility and boosted the need for financing as producers prepare for the upcoming planting season.

Challenging Decisions for the Spring Season

Looking at grim economic outlooks, many growers are calculating seasonal plans based on reducing red ink rather than seeking gains. For some, this means planting commodities like soybeans, which are less expensive to grow and demand less inputs, even if international markets is soft.

"It's just nearly a repeat of last year, only with more difficult factors," explained one experienced producer from Arkansas, whose business has operated at a loss for multiple seasons.

Potential Turning Points

In the future, agricultural economists point to that the agricultural sector may improve under two critical conditions:

• Stronger Chinese Purchases: A significant return of farm product purchases by key trading partners.
• Increased US Renewable Fuel Mandates: Expected increased mandates that would raise demand for crops like corn domestically.

Included in the government's promised new farm policy may involve an boost in biofuels under existing standards. This policy would generate a alternative domestic market for crops.

"If those two events take place, then I think that we could move toward mending the ag economy and move in a toward recovery," concluded one lead market analyst.