A conversation with….
Robert Fox, director of the Knowledge Exchange Division for CoBank
OCJ: So what is the outlook for agriculture as we move in 2022?
Robert: I’m pretty confident 2022 is going to be a nice year for agriculture in general. Commodity prices are very strong and fundamentally supported. I don’t have too much concern about a decline in prices. Of course, commodities are natural hedge for inflation. If inflation become a further concern, I see commodity prices escalating with that. I know people have been concerned about input costs, and rightly so. Still, prices are strong enough to withstand those input costs.
We are left with some wildcard events. One is the COVID Omicron outbreak in China. Up to this point China has had a zero-COVID policy. They have been very rigorous and have been able to control COVID in China. Omicron is a different beast and if it starts to spread in China we don’t know how aggressive they will be in shutting down plants and ports. We have a supply chain problem that is bad and it theoretically could get a lot worse. The other thing is China is just embarking on their lunar holiday where people go and spend time with family. At the same time the Olympics are about to begin in China with thousands of people coming in from all over the world.
OCJ: As you look at the supply chain issues we are seeing, is China the key?
Robert: China is a big component, but there is much more to it than that. We are importing things from all over the world. We are importing more manufactured goods today than we ever have. There is no recovery back to a normal situation because we are in a new normal. We are not going back. All supply chains are completely maxed out. What affects U.S. agriculture more than anything is trucking. The trucking segment is completely maxed out. We can’t get new trucks and trailers. We have almost gotten back to the number of truck drivers that we had pre-pandemic, but the demand for shipping is up 10% to 20%. There is really no end in sight. It is going to take 2023 probably before we start to see trucking rates start to ease off.
OCJ: What does this look like in terms of the domestic food supply?
Robert: Here in America we are blessed to have food security. We have the most stable, safe and abundant food supply in the world. In a way, though, that is a curse because we depend upon exports to support our abundance. There have been some export hiccups in the last few years with China and trade wars. Things are smoothed over for the moment but there is always a risk we could have another incident with China or another trade partner. Moving forward, we really need to stay focused as an industry on free trade. We need to open up markets around the world for our abundance. The rest of the world is moving on with free trade. Australia and New Zealand, for example, are busy making great headway into Asian markets and making free trade agreements with Japan and Korea and so forth and we are left sitting outside. That is not good for U.S. agriculture.
OCJ: Are you finding there are more people interested in trying to find the answers and information to help them make decisions on the farm during these challenging times for the supply chain and farm inputs?
Robert: When I started as an ag economist in the mid-90s, there were a handful of print papers that would be faxed to you if you could afford to get them. Really, though, it was tough to be an analyst as a businessman 25 years ago. Today, there is so much information out there for free or at a low cost. Just at CoBank we have the Knowledge Exchange Division with sophisticated, free reports and industry-leading economists right at your fingertips. And there are plenty of other sources. There is so much information out there and it all starts with the basis of USDA’s commitment to provide information. Without those numbers and statistics, we’d be flying blind. I have always been grateful we have a commitment in this country to support this information gathering and analysis. Without USDA we’d just be arguing in the dark.
