Thank you for being one of our most loyal readers. Please consider supporting community journalism by subscribing.
As we look to the future of 2019 and what it will bring, it may be beneficial to review 2018 and the situation and events that unfolded into what has proven to be one of the most difficult farm years since the mid-’80s.
I was born in 1971, so in the early ‘80s I was still a child on up to young teenager. At this age, my mind was on tractors, crops and many other things farm-related, but it was most definitely not on the financial crisis that existed at that time on farms throughout the United States, and I really do not remember the strain that it caused. While serving as an extension agent, on many occasions I have heard farmers recall the crisis of the ‘80s and the struggles of that era.
The ‘80s were a definite benchmark for farmers that they remember if they are old enough. There were many factors to this financial crisis, which included very high interest rates reaching 21 percent, tight money policies of the Federal Reserve intended to bring interest rates down, a grain embargo from the Soviet Union, an oversupply of commodities, farmland for sale at low prices with no willing buyers and the list goes on.
I really hate to be pessimistic or the bearer of bad news, but I am very afraid that 2018 will set a new memory benchmark for farm struggles. This is especially true in North Carolina. I mentioned in an earlier column that the farm economy often cycles opposite of the general economy. When the general economy is good, the dollar is strong, exports are weaker, commodities like oil and grain tend to be lower. While the general economy has seen a long and strong period of growth, the farm economy has struggled. Exports of tobacco (still a major crop for us) are down, the trade war with China has exacerbated this situation since they are major customers for the products that we grow like meat, tobacco, soybeans and the list goes on. Our exports are down and our prices are depressed.
At the beginning of 2018, Johnston County farmers immediately saw weaker demand for tobacco. This was evidenced by delayed purchase contracts, contract cuts and even price cuts. Some growers were cut out completely by leaf dealers or others who generally purchase their tobacco. This weak demand carried forward into the marketing season with tough leaf grading at the point or sale and rejection of many grades of tobacco that were previously acceptable in the marketplace. Soybeans traded above $9 per bushel and up to $12 for most of 2016, 2017 and early 2018. However, the tension with China has kept soybeans mostly below $9 per bushel since June 2018.
Sweet potato has been a bright spot for eastern North Carolina farmers for many years. However, 2018 saw depressed prices for sweet potatoes born mostly from competition among packers to fill the market demand. For the past two years or so, sweet potato prices have been depressed to the point that North Carolina sweet potatoes were even selling cheaper than those produced in other states due to marketplace competition. In 2018, this competition began to take its toll on the packers in our state with two major sweet potato packers filing for bankruptcy in the past 24 months. This left some growers unpaid for potatoes that were delivered and packed until the bankruptcy is settled.
We have all heard the saying, “the perfect storm,” but this saying came true in 2018 with weather-related problems for certain. The season started well enough, but wet early-season conditions followed by extreme dry weather in June and July really slowed the development of crops. Ultimately, different crops were affected in various ways, but these conditions set Johnston County farmers up for a late tobacco and sweet potato harvest.
So, when Hurricane Florence struck North Carolina in mid-September, it destroyed millions in value for tobacco, sweet potato, vegetable crops, corn, soybean, hay, poultry and swine. The wet weather continued in the fall and has hampered harvest of many crops with what will go down as a record to near-record rainfall year in many areas. I recently heard a crop insurance firm owner say the company had paid more dollars in insurance claims in 2018 for damaged crops than ever before.
In addition to all the trouble I’ve noted, farmers in North Carolina were also confronted with litigation in 2018 due to perceived nuisance issues associated with farm production. The rest of this chapter is yet to be written, but juries in North Carolina have awarded substantial settlements thus far that threaten the existence of many farms in North Carolina. I want to point out that this has occurred even though farms were following appropriate laws without violations.
So, I have painted a pretty bleak picture of 2018 for farmers in Johnston County and North Carolina. This is a picture that will not necessarily change to a great success story in 2019 because many of the negative pressures on agriculture still exist. However, I do not want to leave you with the impression that all is lost or that there is no hope. There are still many differences in the agricultural situation today when compared to the farm crisis of the ‘80s.
Interest rates are creeping up but remain manageable for farms and other small businesses. Land values in North Carolina and especially Johnston County have been steadily increasing over many years and farmers maintain much of their equity in land. While we saw dips in real estate values in the recession of the 2000s, prices have recovered and moved beyond previous territory.
In the United States, we still have the most advanced agriculture and most skillful farmers in the world. Because of the short crop of 2018, the price of sweet potatoes has recovered a bit and this is good news for the farmers who produced a decent crop. There has also been some movement of soybeans to China and hope exists that other ag products will begin to move as well. And farmers are constantly searching for new opportunities like the production of industrial hemp, direct marketing to consumers and value-added enterprises to bolster farm income.
No one knows what the weather will bring in 2019, but farmers are tough and they are survivors. They make their living by working hard and they do not give up easily. As we in the Cooperative Extension have assisted farmers with applications and reminders regarding disaster assistance, I have been humbled at farmer reactions to the opportunity. Many have said, “I am sure there are people who need it more than me.” Or “I hate to apply for fear that I may take money away from someone who may need it worse than I do.”
And that is a good illustration of the hearts and minds of many farmers. Even now, as they begin the process to make plans for what will come in 2019.
But one thing is for sure, we all plan to eat next year and as for me, I do not intend to wear a great deal of polyester. Therefore, we all need farmers to be successful in 2019 and long into the future.
Bryant Spivey is director of the N.C. Cooperative Extension office in Johnston County.