Ag leaders in Kansas learn what’s ahead. With Kansas bringing in more than $67 billion in agriculture, corn, sorghum, soybeans and wheat play an important role in the state’s economy.
About 150 grain leaders and producers met in Salina at the 2022 Kansas Commodity Classic to discuss the past, the present and the future of commodities in the Sunflower State.
In addition, U.S. Senators Roger Marshall and Jerry Moran, along with U.S. Representatives Tracey Mann, Roger Estes and Jake LaTurner, spoke about the temperature in Washington, D.C. toward agriculture, as well as the national picture of trade, ethanol and the future farm bill and how these measures relate to Kansans.
Along with the Agriculture Committee paying little heed to the Farm Bill, Mann is disquieted that many in Washington do not see the importance of farming and ranching. “I have been very concerned by the lack of focus on production agriculture,” Mann said.
Mann also told the group that regulations will “gear up” in the near future, reminding producers to be aware.
As for trade, Estes reminded the group that agriculture is the “bedrock” for Kansas, and trade is an essential ingredient. But, he said, many of the agreements that were negotiated during the previous administration in Washington were “allowed to expire.”
The need for ethanol and oil came up several times, as did the Mexico/U.S. border. LaTurner spoke on both matters, urging the U.S. to get back to energy independence and having a more secure border. But, he said, being for a strong border does not mean you don’t support a guest worker program.
For Senators Marshall and Moran, strong agriculture is key to a strong economy in Kansas. “I would say that this White House is not prioritizing agriculture in any way, shape, or form,” Marshall said.
Kansas Secretary of Agriculture Mike Beam opened the conference, telling the crowd that Kansas agriculture is doing well. “Kansas has really made huge strides in meat processing, biofuels, dairy processing, pet food, and those are just some examples,” Beam said. “I can think of where there’s been a lot of growth, and those are paying dividends. And I think there’s even more growth potential.”
The chair of the Kansas House Committee on Agriculture, Kansas Rep. Ken Rahjes, spoke about what is coming up in Topeka, reminding Kansans that issues related to water will be at the top of the funnel and who they elect to represent them is crucial. “It is important who you send to Topeka, as there are decisions being made that affect you,” he said.
The future of agriculture is mixed. Trade from China, Ukraine and Russia is at best volatile. Prices of commodities are fluctuating. “We all have got very profitable prices right now,” David Brock of Brock Associates said. But, he continued, “the high cost of inputs and inflation is a factor that cannot be ignored.”
Kansas native Gregg Doud, who served as chief agricultural negotiator in the Office of the U.S. Trade Representative and was one of the primary architects of the U.S.-China “Phase One” trade agreement, is vice president of global situational awareness and chief economist for Aimpoint Research, a strategic intelligence firm specializing in agri-food. A graduate of Kansas State University, Doud grew up on a grain sorghum, soybean, wheat, swine and cow-calf operation in Jewell County near Mankato.
Doud told the group the top importers from the U.S. are China, Canada, Mexico, Japan, the European Union, and South Korea. He also said China’s demand for food and renewable green diesel will continue to grow.
What does China import? For Doud, looking at the big picture is key. He explained that half of the world’s hogs live in multi-story buildings in China. Several years ago, the hogs were being fed swill or table scraps. When the animals started being infected with African Swine Flu, the Chinese changed course. They began a program to feed hogs grains.
How could they get the grains quickly? They imported them, driving up the price and number of corn exports from the U.S.
“We have all-time record exports to China,” Doud said. “(With the China trade agreement), we jumped this thing about $8 billion from year to year.” Doud believes China will continue to import grains, saying, “we’re just getting started.” China imports almost a quarter of agricultural commodities, about $150 billion a year, he said.
Only about 10% of the Chinese population is buying beef, Doud said. The beef eaters, he noted, are mainly young, and the beef they want is the type of beef raised in the Midwest — the beef with the white fat.
“They are importing 3,000 tons of beef a week,” he said. “When you add China and Hong Kong together, it’s going to be over a $2 billion market.”
Will there be an increase in demand for soybeans? Doud predicted that the demand for soybean oil will increase dramatically in the next few years, but he warned, one does not know whether the price will increase as dramatically. “We’re talking about needing more soybeans,” he said. “California has mandated that they use renewable diesel.”
But this increase will leave the nation with an excess of soybean crush. To produce the crush, soybeans are cracked and rolled, the hull is removed, and then they are soaked to extract the oil. After the oil is removed, the flakes are dried, toasted and ground.
Currently, slightly less than 2 billion bushels of this crush is processed annually, according to the CME Group. Doud said this increase in the need for oil will lead to a dramatic new build-up in U.S. soy crush capacity. More acres of the bean will need to be planted.
“The value of soybean oil is going to be more than half of the value of the crush,” he said.
What does the future hold for Kansas farmers? Hold onto your seats, was the general message from Doud as he brought up price volatility, trade and inflation. “This is crazy,” he said. “This thing is set up to be so wild. There are so many new variables driving this thing.”
Doud said he thinks the number of farmers might decrease in the next decade as corporations set their sites on land and farming. “The venture capital coming into agriculture is spellbinding,” he said.
He also expects the demand for non-dairy milk products to increase by 18%, with the demand for non-meat protein products going up by a larger percentage. “What keeps me up at night is the change,” he said. “This thing is changing dramatically. You’ve got to keep up with it.”
Doud also spoke of the increase in indoor farming and how the European Union has instituted a farm to fork practice, which he feels will decrease their output and in turn increase their need for products.
“Who’s going to grow this stuff?” he asked the group. “There’s nowhere else in the world who has the feed, the water and the technology, than here in North America. Get geared up for it, folks. This is coming. Get ready.”
As reported in The Hutchinson News.
